What Is Ecommerce?

Ecommerce (which stands for ‘electronic commerce’) is the process of trading online. It encompasses all the online activity involved in buying and selling products and services. This exchange could take place between two businesses (B2B) or between businesses and consumers (B2C).

When you go to your favourite online retailer to buy a new pair of shoes, you’re engaging in ecommerce. If you pay online for a ticket to attend a music concert or travel by plane, that’s ecommerce, too.

Ecommerce doesn’t only occur on desktops, though. Most ecommerce traffic happens on mobile devices. Spurred by the influence of smartphones and the convenience of online shopping, mobile commerce sales make up almost 57% of ecommerce market share. That means nearly three out of every four dollars spent on online purchases today is done through a mobile device.

Consumers used to rely on brick-and-mortar shops, product catalogues, and their trusty landlines to purchase goods and services. But the internet changed all that.

Early ecommerce platforms like eBay and Amazon transformed how businesses and consumers engage. The convenience of comparing prices and ordering products from the comfort of the home meant ecommerce has steadily grown in popularity since the turn of the century.

Mobile shopping changed the game by allowing billions of people to shop online. This changed consumer perspectives and ushered in a demand for convenience and personalisation, which brands were too happy to provide. What resulted was an enormous popularity surge in the 2010s — and the growth of digital shopping hasn’t slowed since. The gap between retail and ecommerce sales is narrowing each year.

How important has online shopping become for businesses and consumers today? Check out these ecommerce statistics on online shopping trends:

• Ecommerce sales are projected to reach 57% of retail sales by 2024.
• There are 2.6 billion digital shoppers in the world. If you’re not selling online, you’re missing out on the chance to convert a vast pool of potential buyers.
• Over half (57%) of all customers prefer to engage through digital channels.

To win your market share, it’s important to stay on top of the latest ecommerce trends and know what motivates customers to make purchases.

The rise of digital trading has impacted almost every industry and business, from small mom-and-pop cupcake stores to enormous legacy media conglomerates. But just how beneficial has this rise been?

Let’s look at some of the advantages and disadvantages of ecommerce, both for consumers and businesses.

Ecommerce advantages for consumers

Benefits for consumers first. Here are four advantages of ecommerce for the end customer.

• Anytime, anywhere: Consumers can shop from their favourite brands 24/7 from wherever they are, without waiting for a brick-and-mortar store to open at 9 am sharp.
• Home delivery: Purchases arrive on the customer’s doorstep, often within days, which is a huge plus for those in remote areas or with mobility issues.
• Product selection: Customers don’t have to rely on local shops to stock a range of products. Ecommerce offers a broader range of goods and services from stores worldwide.
• Reviews: Concerned a product is low-quality? Checking reviews online lets customers evaluate an offer before they buy.

Ecommerce disadvantages for consumers

Next, let’s talk about the disadvantages of ecommerce:

• No hands-on experience: See a dress you like. In a physical store, you can try it on to see if it fits. But with ecommerce, you have to wait til your product arrives before you can check it’s right for you.
• Scams and misinformation: When you visit a physical store, what you see is what you get. However, it can be tricky to work out online if you see a real article or a fake product.
• Impersonal experiences: Many consumers like visiting shops in person because it allows in-person interactions. Some believe ecommerce is disconnected and impersonal.
• Sustainability: Ecommerce often involves excess packaging and complex shipping processes, contributing to waste and increasing carbon footprints.

The benefits of ecommerce for businesses

Next, let’s talk about the businesses. Here are four benefits of the ecommerce industry to mull over:

• Global reach: You no longer need to rely on 9-5 footfall to sell your products. Any business in any industry can sell its goods to a global audience around the clock, increasing sales opportunities.
• Data collection: Ecommerce makes collecting data about your customers' buying habits easier. You can then use this info to create targeted marketing campaigns and personalised experiences.
• Scalability: Ecommerce makes scale less expensive (and much faster). There’s no need to expand your current store or buy new premises. You can add new products and services in a few clicks.
• Costs: Owning a website is much cheaper than paying rent and electricity each month, which saves you a lot of money on operating costs.

The drawbacks of ecommerce for businesses

Lastly, let’s highlight four of the challenges of ecommerce for businesses.

• Competition: Your small bakery might be popular with the locals, but this won’t necessarily translate to ecommerce success when hundreds of other bakeries offer next-day shipping online.
• Pricing: When customers have the chance to compare prices online, this makes it easier for other businesses to undercut you. Being priced out is a significant concern for small businesses.
• Ecommerce security concerns: Ecommerce generates data. While this is gold for your business strategy, it also introduces security risks. If you don’t protect sensitive information from cyber threats, you could face hefty fines.
• Technological reliance: When you run an ecommerce business, you’re entirely dependent on technology. If that tech fails, this can interrupt your selling and impact customer trust.

New ecommerce technology

You’ve heard it before, but it bears repeating: Generative and predictive AI are changing the ecommerce game. They’re making teams more productive and giving them new and valuable ways to engage with customers.

Thanks to AI trained on large language models (LLMs) and historical business data, tasks that used to take your teams days or weeks now take just hours. For example, generative AI can automatically write accurate, detailed product descriptions. With low-code generative development tools, business users at all skill levels can create landing pages and localised sites with less time and effort. Ultimately, new technology means that ecommerce teams can work smarter and faster.

AI is also improving the customer experience. Remember when chatbots could answer only a few select questions? Now, their conversations are more human, more personalised, and more helpful.

Chatbots trained on LLMs can guide shoppers to specific products based on their purchase history, preferences, and past searches. The bots can also answer more complex questions, such as: How does this blouse fit? Does it run true to size? Businesses can significantly boost their bottom line and customer satisfaction by providing these tailored experiences in real time and at scale.

New commerce channels

Customers want to shop, however, wherever and whenever they like. This means online, offline, and, increasingly, in spaces like messaging apps, voice platforms like Amazon’s Alexa, or social media. In the future of commerce, new channels will crop up. Businesses that find ecommerce successful will move quickly and engage customers in new spaces as they emerge.

Customers use multiple channels to browse products and shop online, and businesses must ensure a cohesive omnichannel experience. That’s the purpose of unified commerce: It means all your back-end systems are connected with your customer-facing channels. This creates a seamless customer experience, whether a shopper visits your website, mobile app, social media, or anywhere else.

New customer expectations

We know that customers already want personalised experiences. In fact, 53% of them expect companies to anticipate their needs. As AI improves the shopping experience with predictive intelligence and natural language processing, customers will notice which brands are doing it right. A staggering 81% of customers expect faster service as technology advances and 73% expect better personalisation.

An ecommerce channel is any digital space where a customer shops. Think of all the ways you can browse or buy online: You can search for items on a brand’s website, download the brand’s app on your mobile device, or shop on social media. These are a few of the most popular ecommerce channels:

Mobile commerce: Simply put, mobile commerce is shopping through a handheld device (like a smartphone or a tablet). As more customers prefer shopping this way, businesses must meet demands for stellar mobile experiences. No matter what device a customer uses, shoppers want it to be simple and intuitive to browse products, add to a cart, and purchase.

Social commerce: Social commerce brings the entire shopping experience — from browsing to checkout — to social media. Customers can discover products as they scroll their social feeds, browse your brand’s social posts for products that match their needs, and buy directly on a social platform through shoppable content. Social commerce is a convenient way for customers to find and purchase products. It’s a great way for businesses to expand your reach and customer base quickly.

Ecommerce websites: An ecommerce website is a powerful sales tool where customers can visit, browse, and purchase your products via mobile or desktop. These sites should include a home page representing your brand well, product pages enticing shoppers to buy, and a pain-free checkout experience.

Ecommerce brings businesses and customers together on different channels. To make ecommerce work, a business needs to create a user experience on a given channel where customers can easily search for and buy products. This requires certain elements and features, including:

Content: This is where you create and update your user experience. It includes all the content — images, video, product descriptions, and other written ecommerce content — across your entire site. Anything you see on an ecommerce site’s home page, product listing pages, and detail pages is all part of content management. Merchandisers, marketers, designers, and developers are responsible for creating the user experience and bringing it to life on the web.

Site navigation: Think of the last time you bought something online. Were products easy to find? Did you intrinsically know how to browse, add to cart, and pay for your items? That’s the result of a carefully thought-out site navigation strategy. Ecommerce works best when businesses consider the customer journey and how each shopper will use the site.

Payment: If it’s hard to make a purchase or if a payment process feels clunky, customers will find a competitor who does it better. Getting the payment experience right and making it as easy as possible is critical.

Order management: This involves the logistics of ecommerce and everything that happens after a shopper clicks the Buy button. Order management is what gets an item from a warehouse to a customer’s doorstep.

There’s an art and a science to successful ecommerce. Your digital storefront is the “face” of your brand, and it’s often a shopper’s first impression of your business. By combining the above elements with successful strategies for user experience (UX), design, and merchandising, you can create stellar, memorable shopping experiences that keep customers coming back.

It’s hard to understate the importance of a digital storefront. So, what makes an ecommerce website shine? Here are a bunch of successful ecommerce case studies.

E.l.f. Beauty

Known for bringing clean beauty to the masses with affordable cosmetics, E.l.f. Beauty is a shining example of ecommerce. Neatly categorised products, uniform imagery, and easily scannable product details make it easy — and enjoyable — to browse the site.

YETI

YETI makes tough, long-lasting outdoor gear built for all kinds of adventures, and its ecommerce site reflects that: Shoppers can easily browse by activity: hunting, fishing, travel, and more. Promotions are highly visible. Adding an item to your cart? Simple. Checkout is streamlined and the entire shopping experience is seamless.

Sonos

Wireless audio devices can be complex. Are the items compatible with a customer’s other technology? What are the product specifications? Wireless-speaker system leader Sonos offers filters by product type and feature to help customers find what they’re looking for. Product detail pages neatly display all the information a shopper needs to make a decision.

Whether you sell products directly to customers or sell services to other businesses, there’s an ecommerce model for you. Here are some of the different types of ecommerce businesses to consider before launching your online store.

Business to consumer (B2C)

Business to consumer (B2C) ecommerce refers to selling goods or services to individual customers. B2C is what most people think of when they hear the term “ecommerce business.”

Traditional B2C sales occur between a business and a single consumer. In this model, a shopper finds a business online and places an order, and the business sends the product to the customer. A B2C ecommerce strategy, then, involves using customer data to get a full view of customers across their online shopping journeys.

Business to business (B2B)

B2B ecommerce refers to selling products or services to businesses. B2B companies typically have a higher order value and more recurring purchases.

B2B ecommerce products and services may include manufacturing equipment, distribution, website hosting services, financial services, or software solutions for businesses, just to name a few. These businesses provide other businesses with the products or services they need to grow.

Direct to consumer (D2C)

Like B2C, the D2C ecommerce customer is an individual consumer. The difference is that D2C allows manufacturers to sell directly to consumers instead of (or in addition to) using third-party retailers or wholesalers.

Other types of ecommerce business models

While B2B, B2C and D2C are the three you’ll be most familiar with, there are several other more niche business models you should know about:

• Business to business to consumer (B2B2C): B2B2C involves selling products or services to another business that sells them to the end consumer. Think of a company that sells its products to online retailers who put those products in their stores.
• Business to government (B2G): B2G entails providing goods or services to government agencies or public sector organisations. Companies often need to bid to acquire the government as a client and adhere to strict regulations.
• Consumer to business (C2B): Involves an individual selling their product or services to businesses. An example is a freelancer offering their copywriting skills to brands on a site like Upwork.
• Consumer to consumer (C2C): A consumer selling to another consumer. These ecommerce transactions usually occur in online marketplaces, such as eBay or Craigslist.
• Dropshipping: This method lets a business sell products that it doesn’t have in stock. When a customer orders, the business forwards the information to a supplier, who ships the product directly to the customer. The store only handles the customer experience.
• Subscription: This model lets customers pay a recurring fee (normally monthly or annually) to access a service or product. For example, an ecommerce store might have a monthly subscription box of women’s cosmetics or men’s razors.

How do you go about starting an ecommerce business? This guide will provide you with a solid foundation that you can use to build out your idea.

1. Find your perfect product

Before you can start launching an online business, you need to know what products you want to sell. We suggest you identify a problem before you develop the solution. Ask yourself:

• What pain points are customers facing that I can help to solve?
• Why are they having these pain points?
• What product or service could I provide that could help to solve this problem?

You don’t have to land on a completely new invention here. Oftentimes there are plenty of opportunities to improve on products that already exist. If you’ve identified a flaw with a brand’s idea, how can you make it better?

2. Validate your big idea

With a product idea in mind, you’ll want to validate it. You need to go through a process to make sure you aren’t wasting your time. Here’s what you need to do:

• Identify your target audience: Who is your target customer for your product? Create your ideal buyer persona (IDP). This will be the backbone of every other decision you make while creating your business.
• Talk to the audience: Reach out to your audience and talk to them about the pain points you’ve identified. This will help you work out if your product is something they need.
• Learn your competitors: Check your direct competitors. Is there anyone else doing something similar to you? If so, you need to know about it so you can work out how to beat them.

These three steps will help you determine whether a product idea is worth your time or a waste of money.

Haven’t landed on a winner? Sometimes the market just isn’t ready for what you’re offering. And that’s okay; head back to the drawing board and identify new opportunities.

3. Decide how you will obtain your product

Got a product that you’re confident will work? Now you need to know how to obtain it. There are a few different approaches here:

• Create them yourself: Making your products yourself gives you control over quality, but this is only really helpful for small businesses. If you need to scale, you may lack capacity to keep up. Making products yourself also typically costs more than using a manufacturer.
• Rely on dropshipping: Dropshipping is an excellent opportunity if you don’t want to worry about demand forecasts and inventory management. It involves relying on third parties to ship your products whenever you make an order. This works especially well for printed products, like t-shirts.
• Partner with a manufacturer: Working with a manufacturer takes time to set up, but once you’ve established your partnership, it’s one of the most affordable ways to create your products at scale. You can ask different manufacturers for samples to evaluate their service before deciding on the right fit.

4. Create your business plan

Now, it’s time to create your ecommerce platform. The best place to start is with a business plan. Here are some of the things you’ll need to include.

Core business details

Basics first. Specify all of the essential details about your business:

• Executive summary: An overview of your business idea, your target market, and your goals.
• Business name: Take the time to come up with a relevant, memorable name for your company.
• Mission, vision, and values: Why are you developing this business, and what values do you stand for?
• Business model: Are you opting for a B2B or B2C model? Are you intending to use dropshipping? Will you be operating on a subscription model? This will inform your sales channels.
• Profit centres: How will your business make money? Lay out different revenue streams clearly within your plan.

Customers

Who are you aiming your products at? Understanding your target market will inform everything from your product positioning to your marketing strategies.

Your market research can help with this. Create an ideal customer profile (ICP) that explains your perfect buyer. You should be able to answer important questions like:

• What demographics are you aiming your product at?
• Where does your ideal customer work? What’s their income?
• Where do they live? Urban? Rural? Hot or cold climates?
• What does your ideal customer believe in? What are their motivations?
• What are the challenges your customers are facing?
• What is your customer's shopping behaviour?
• What kind of technology does your target audience use?
• What are your customer expectations? What do they need from you?

There is no right or wrong way to create your customer profile. But the more detailed you can be, the better.

Key stakeholders

Who do you need on board to bring your vision to life? List all of the stakeholders you need to achieve your goals:

• Do you need any co-founders on board to guide strategic direction?
• Will investors be necessary? If so, you should clearly outline your needs.
• Which manufacturers do you intend to work with, if any?
• Do you need employees to handle specific day-to-day operations and provide ecommerce customer service?
• Will you be working with suppliers?
• How will you work alongside regulatory bodies and policy setters, especially if you’re considering cross-border ecommerce?
• Will you need to approach financial institutions to secure a business loan?
• Do you intend to involve the local community in your business?
• Is your goal to work with a retailer?
• Do you need to partner with a distributor to help your product reach customers?
• What supply chain management professionals do you need to work with to make sure your product reaches the end consumer?
• Are there any tech providers or ecommerce software solutions you should contact for your online commerce platform?

Defining these stakeholders in your business plan will give you a roadmap for building your business. It will also help you set realistic expectations about the relationships you need to build to realise your vision.

Financial information

Lastly, you need to talk about finances. The aim here is to show the profitability of your business. Here are the components you should aim to include:

• Sales budget: A sales budget is a document that outlines the profit you anticipate making over a specified period based on your unit prices and expected sales. It is essential when applying for investment or loans from financial institutions.
• Expenses: Create a forecast outlining all of your predicted expenses. Investors and banks will want to know that you can produce the goods and services you’re forecasting to sell. Define all of the startup costs, as well as the running costs. You can also split this into fixed costs, like rent and utilities, and variable costs, like raw materials and production supplies.
• Cash flow forecast: Create a cash flow statement that outlines all the money you expect to come in and out of the business over the coming year. You can estimate this based on your costs of production and expected profit. It’s important to be realistic here.

Your business plan will guide you strategically as you begin building your brand and marketing. It’s also absolutely essential for getting key stakeholders on board with your project.

5. Create your brand

Every successful digital commerce business has a potent brand image. You will need:

• A memorable logo
• A distinct brand font
• A slogan or value statement
• Brand colours for your designs
• A brand voice (personable, authoritative, trustworthy, technical)
• Any additional brand imagery to set you apart

The goal here is to give personality to your business. From the outset, you need to tell your consumers how they should feel when they interact with your website. This step will help you design everything from your ecommerce website right down to your shipping labels.

6. Build an ecommerce website

A strong website is the cornerstone of a successful ecommerce business. Start by choosing a content management system (CMS). WordPress is the most popular, but you can also opt for a website builder.

As you build your site, here are a few things to keep in mind:

• Choose a domain name that reflects your brand name.
• Prioritise your user’s experience. Make sure your site is fast and easy-to-use.
• Use a unique brand font and choose your brand colours wisely to reflect your brand style.
• Source high-quality imagery, but make sure these images will load quickly enough to avoid users clicking off the page.
• Set up an online payment gateway, such as Paypal, Stripe, or Worldplay, to give customers secure ways to buy your products. It’s best to establish several payment processing options to give consumers more choice.

7. Market your product

Ready to sell? If your customers don’t know you exist, they won’t land at your shopping cart, no matter how great your product is.

Your ecommerce marketing strategy will help your target audience find your ecommerce store. The first step is to take stock of your ideal buyer persona. How do your audience find things online? What are they looking for?

From there, you can take a few different digital marketing approaches depending on your audience’s needs:

• Website content: Creating information SEO-friendly blog posts can help customers find you organically online. When they search for a query that you’ve written about, they can find your content and learn about your business.
• Social media: Instagram and TikTok can help you engage younger demographics. Show a sneak peek of your brand, or invest in influencer marketing to spread the word faster.
• Email marketing: Designing an email newsletter can help to push consumers down your online sales funnel. They’re a great way to build long-term customer relationships and foster loyalty.

There’s no shortage of ways to market your local or global ecommerce brand, but these are a few ideas to help you get started and grow your business.

Ecommerce is a proven business model that helps drive revenue growth for some of the world’s largest brands. By getting started with online commerce, you’ll reach more customers online and significantly increase your business revenue.

Ready to embark on your ecommerce journey? Start here:

• Learn how to prepare your business for ecommerce success. Get the step-by-step guide to organise your teams, goals, and road map for a painless digital transformation.
• Want to get started quickly? Consider a minimum viable product approach. It’s one of the fastest ways to get a commerce site up and running.

Explore flexible tools to help you reduce costs, increase sales, and adapt quickly. To grow your revenue online, check out all Commerce Cloud has to offer.