What is Ecommerce?

Ecommerce, short for electronic commerce, is the buying and selling of goods and services over the internet. It covers everything from a single maker selling handmade goods through an online shop to global retailers processing millions of orders a day. Whenever money changes hands for a product or service through a website, app, marketplace or social platform, that is ecommerce.

How ecommerce works

At its simplest, an ecommerce transaction follows a few steps:

1. A customer finds a product through search, social media, advertising or a marketplace.
2. They view product details, compare options and add items to a basket.
3. They check out, entering delivery details and paying online.
4. The seller receives the order, picks and packs the items, and ships them, or delivers the service or digital product.
5. The customer receives the order and, if needed, returns it or contacts support.

Behind the scenes, an ecommerce platform runs the store, a payment provider processes the payment, and fulfilment and shipping partners move physical goods. Read our guides to Ecommerce Technology and Operations & Fulfillment for more detail.

Types of ecommerce

By who is buying and selling

• B2C (business to consumer): businesses selling to individual shoppers, the most familiar form of online retail.
• B2B (business to business): businesses selling to other businesses, such as wholesale, parts and software.
• C2C (consumer to consumer): individuals selling to each other through marketplaces such as eBay and Vinted.
• D2C (direct to consumer): brands selling directly to customers instead of through retailers.

By what is sold

• Physical products: clothing, electronics, homeware, food and more.
• Digital products: software, courses, music, ebooks and templates.
• Services: bookings, consultations and memberships.
• Subscriptions: products or services delivered on a recurring basis.

Where ecommerce happens

• Your own online store, built on a platform such as Shopify, WooCommerce or OpenCart.
• Online marketplaces such as Amazon, eBay and Etsy; see Marketplace Management.
• Social commerce, where shoppers buy through Instagram, TikTok, Facebook and Pinterest.
• Mobile apps, increasingly important for brands with loyal, frequent shoppers.

Advantages of ecommerce

• Reach: sell to customers far beyond your local area, nationally and internationally.
• Always open: customers can browse and buy at any time.
• Lower overheads: no need for a high-street shop, especially when starting out.
• Data: detailed insight into what customers view, buy and return.
• Scalability: grow by adding products, channels and markets without opening new premises.

Challenges to plan for

• Competition: shoppers can compare prices and options in seconds.
• Customer acquisition costs: traffic is rarely free, especially at the start.
• Delivery and returns: shipping costs and return rates can eat into margins.
• Trust: new stores must work hard to show they are genuine and reliable.
• Regulation: consumer rights, data protection, product safety and tax rules all apply online.

How to get started

Start by choosing a clear niche and checking there is demand. Pick a platform that fits your budget and skills, set up payments, shipping and essential policies, and launch with a focused range. Then choose one marketing channel, learn it properly and improve your store based on what customers do.

Our hub pages are a good next step: Marketing & Growth, Shipping & Delivery, Operations & Fulfillment, Ecommerce Technology and Customer Experience & Brand.