What Is Ecommerce? Guide To Selling Online (2025)

Ecommerce is selling or buying products and services on the internet. Learn ecommerce’s definition, categories, and online selling trends.

 

History of Ecommerce

We’ve all bought something online at some point, so we’ve all been a part of ecommerce. So it comes as no surprise that ecommerce is ubiquitous. But few will be aware that ecommerce’s history stretches further back than the internet.

ecommerce actually dates back to the 1960s, when businesses utilized an electronic system known as the Electronic Data Interchange to enable the exchange of documents. It wasn’t until 1994 that the first transaction occurred. This was the sale of a CD between friends using an online retail website known as NetMarket.

The business has accelerated in its evolution since then, with players such as Alibaba and Amazon being brand names everywhere globally. Free shipping, which in superficial terms minimizes expense to consumers, has also assisted in bringing about growth to the ecommerce sector.

On August 11, 1994, a Ten Summoner’s Tales compact disc by Sting was exchanged securely in the world’s initial online sale. This marked the beginning of electronic commerce, an international shift of shopping habits.

 

Today, ecommerce is fueled by an international infrastructure of platforms and technologies, from website hosts to payments to social media. With ecommerce sales projected to reach more than $7 trillion by 2026, buying and selling online are now norms.

 

Below, explore the finer points of ecommerce: how ecommerce works, the main ecommerce models, and selling online versus selling in person.

 

And, how to create an ecommerce site and turn your dream idea into a reality.

 

What is Ecommerce?

Ecommerce is when people and businesses purchase or sell products and services online. Ecommerce may occur on a website, mobile app, social media site, online marketplace, or other sales platform.

 

Ecommerce or “electronic commerce” refers to the exchange of goods and services over the internet. The web enables individuals and companies to purchase and sell more and more physical products, digital products, and services electronically.

 

Other companies sell only online or utilize ecommerce to increase the scope of their other channels of distribution. Either method, ecommerce is successful and can be a lucrative business. Let’s explore the specifics of how ecommerce operates and determine if it’s for you.

 

Common ecommerce activities include internet shopping, electronic commerce, auctioning online, and online banking. You may conduct ecommerce anywhere you have a connection to the internet. An ecommerce vendor seeks to sell their products using electronic means and means of promotion.

 

Ecommerce is also known as ecommerce or electronic commerce, and is commonly used to define the many processes of selling over the internet, from displaying web-based advertisements to transferring payment data across a network.

 

When Did Ecommerce Start?

Whether or not a given transaction is the first ecommerce one is debatable, with some ecommerce technologies dating back to the 1970s.

 

The first online legal transaction occurred in 1994, when a friend paid another for a Sting album via the internet, selling between two people who were 300 miles apart. After that, ecommerce exploded, with Amazon and eBay occurring a year later, and then PayPal in 1998.

 

Since then, technology has moved quickly to address the consumer needs. Ecommerce sites such as Shopify made the business democratic by enabling businesses to sell to consumers across the globe.

 

Social commerce, mobile wallets, and AI complete today’s ecommerce platforms and tools.

 

Where And How Does Ecommerce Take Place?

Ecommerce gives people the convenience of buying from their computer, phone, tablet, and other devices. They visit websites, social media platforms, and other online mediums to look for what they want. Startups, small and medium-sized enterprises, large retailers, and entrepreneurs alike can utilize ecommerce to sell to international customers. Online selling could be a sole source of revenue for a business, or just one part of a multi-channel selling strategy. For instance, a big traditional store retailer can implement an online channel of sales, or a person can sell a few specialty handmade products via a social media platform such as Facebook, Instagram, or Pinterest.

 

A good example of ecommerce is social media commerce. Websites like Facebook are available that allow one to shop online. A business that generates revenue solely by existing on social media, or business owners who generate additional revenue by using social media marketing tactics, are also doing social media commerce.

 

Other ways in which you can participate in ecommerce are through building standalone websites, or going to shop on a pre-existing market site. An example is when you build a storefront to be your brand home in the Amazon marketplace.

 

How does The Ecommerce Work?

 

Ecommerce is done using web-based sequences of web-based platforms, tools, and procedures:

Ecommerce platforms: Sellers select an online selling platform and list their products there for customers to browse and order from.

Payment processors: Customers pay with channels such as credit cards or digital wallets during the checkout process. Transactions are protected by web-based payment gateways.

Fulfillment and shipping: Sellers package and ship products to customers. They can ship on their own or use a fulfillment service that handles shipping. For digital goods such as ebooks or courses, the product is delivered through a portal or download link.

Supporting services: Several industries and services support ecommerce, such as product suppliers, advertising networks, and ecommerce apps that assist sellers in improving the shopping experience.

 

Where Does Ecommerce Occur?

Ecommerce happens within a range of digital platforms, each with benefit for sellers and buyers. Here are the predominant channels where ecommerce occurs:

Ecommerce Websites

Ecommerce websites are web storefronts established by brands or organizations to sell items and services to consumers directly. Ecommerce software such as Shopify offers tools for creating and managing ecommerce websites, from designing the storefront to executing payments.

Important Features

Seller control: Sellers can exercise full control over the design of their website, customer experience, and data. This facilitates easier brand building and shopping experiences that can be tailored to a target market.

Customer relationships: Ecommerce sites allow sellers to directly communicate with customers, which strengthens customer support, data gathering, and marketing activities.

Marketing needs: Ecommerce sites do not have customers pre-installed. Sellers must bring traffic to their shops using SEO, social media, and other marketing forms.

 

Online Marketplaces

Amazon, eBay, and Etsy are websites that enable several sellers to list their goods. They get many shoppers who visit them, thus providing businesses with high visibility.

 

Major features

In-built traffic: Marketplaces are popular with large crowds, and sellers get access to a consistent flow of consumers, often in exchange for a fee.

Ease of use: Marketplaces manage much of the tech aspects of ecommerce, including web design, hosting, payment gateway, and occasionally shipping, which makes it easy for sellers.

Loss of branding: Marketplace selling entails trading off some control over the way your brand looks to consumers. Also, sales and customer data can’t be passed on to sellers.

 

Social Selling Channels

Social media sites such as Facebook, Instagram, and YouTube have features that enable direct sales via posts, ads, and social storefronts. Social selling platforms embed ecommerce into the social browsing experience.

 

Key characteristics

Audience participation: Social media has vast audiences segmented through profound data insights, reducing the cost of acquiring relevant customers.

Smooth integration: Selling can be made a part of social media management, hence becoming a natural extension of social media marketing efforts.

Algorithm reliance: Social sales tend to be driven by a seller’s social presence, with platform rules and algorithms controlling their reach and success.

Most online sellers employ multiple sales channels to connect with more customers.

 

Ecommerce Payment Channels

Online purchases can be made by consumers using a number of methods. Ecommerce store payment channels are:

Payment processing with credit cards and debit cards through a third party such as Shopify Payments

Third-party payment portals, such as PayPal

Apple Pay, Google Pay, and Shop Pay mobile wallets

Buy now, pay later (BNPL) channels

Recurring billing for subscriptions products and services

Pay online then in-store using a point-of-sale tool such as Shopify POS

Ecommerce sellers often provide customers with multiple payment options by incorporating several of these payment options into their website or sales channel.

 

Ecommerce Business Types

Ecommerce business types refer to the relationship between sellers and buyers. The most popular online business models are:

 

Direct to Consumer (D2C)

Direct-to-consumer company refers to a company in which companies offer products or services directly to consumers, without any middleman distributor or retailer.

 

Most D2C ecommerce companies do it all from developing a product to delivering it to your front door. To illustrate, an online shoe company may create, sell, and distribute sneakers directly to customers.

 

Ecommerce has made and lowered the cost of sellers communicating directly with consumers.This has driven a huge expansion of D2C companies, with D2C online sales increasing over three times between 2016 and 2021. Most D2C sellers are digitally native companies selling only online (sometimes called digitally native vertical brands, or DNVBs).

 

Business to Business (B2B)

A business-to-business model consists of one business selling goods or services to another. For example, a tech firm could sell technology licenses to a small enterprise, or a bed linens company could sell sheets to a hotel.

 

Ecommerce allows companies to rethink the B2B model, implementing strategies usually applied in D2C, even merging B2B and D2C sales into a single online store.

 

For instance, Hollis + Morris, a lighting firm, provides its business-to-business customers with a consumer-orientated site with open pricing, and the products are within everyone’s reach.

 

Consumer to Consumer (C2C)

A consumer-to-consumer structure is when a person sells merchandise or services straight to another individual. For instance, one may sell an old sofa to another individual using a selling website or online marketplace. This model flourishes on ecommerce sites that enable peer-to-peer, including Facebook Marketplace, eBay, and Etsy. Individuals who purchase and sell online may become resellers and then shift towards a business-to-consumer model.

 

Ecommerce Revenue Models

Ecommerce companies can generate revenue in different ways. Below are five popular revenue models employed:

Sales: This is the process of selling products or services for a profit. It’s the most popular method employed by online brands.

Subscriptions: Subscription companies sell products or services on a regular basis, generating a consistent revenue stream for D2C and B2B companies.

Advertising: Commonly found with online influencers and creators, this model sees money made through promotion offers.

Affiliate: Affiliate marketers get paid by providing leads for another business. People and companies can make money through this model through affiliate programs.

Transaction fee: Certain ecommerce businesses generate money by paying a fee for payment services like payment processing.

 

Ecommerce Advantages

Having an ecommerce company enables you to start a business in a matter of minutes, and tap into a worldwide audience of potential buyers seeking an easy way to purchase your product and engage with your brand. Below are four advantages of ecommerce:

 

Convenient Shopping

Ecommerce allows customers to buy anywhere, on any device, at any time, without stepping foot in a store. Customers can discover your brand and compare products, features, and prices from home.

 

Greater Reach And Access

Ecommerce companies have greater reach than a standalone physical store, selling to worldwide customers without having to have a physical presence internationally. Fulfillment businesses enable online orders to travel around the world.

 

Personalization And Data

Even though it may prove difficult to imitate in-person shopping experiences, online stores collect a great deal of customer data that can be used for personalization in marketing. This can come in the guise of individualized product recommendations, targeted marketing campaigns, and loyalty programs. Personalized shopping experiences can empower businesses to have more personal connections with consumers.

 

Lower Startup And Operating Costs

Ecommerce companies tend to have less overhead than physical stores. Some ecommerce business models like dropshipping or print on demand have a need for little to no inventory and can be cheap to implement and operate.

 

Ecommerce Traps

Ecommerce has advantages, but also traps. If you wish to create an ecommerce business, anticipate these four probable traps:

 

Security concerns

When consumers are shopping online, they need to be confident that they are able to store their financial and personal data safely. Buy secure payment gateways and SSL certificates to protect customer data. All Shopify plans offer these security measures.

 

Increased competition

Ecommerce is a highly competitive market, with numerous firms competing for the same consumers. Online companies must stand out from others by providing exclusive products, reasonable prices, and good customer experience.

 

Shipping issues

Shipping affects customer satisfaction. Utilize secure shipping services to provide prompt and secure delivery of products, and reduce lost orders.

 

Customer service requirements

Good customer service is a requirement. Have good customer service practices and return policies available to address any situation immediately. 

 

Ecommerce Trends And Statistics

Staying current with ecommerce shopping trends will put your company in a competitive position and respond to evolving customer requirements. These are three effective ecommerce trends to be aware of:

 

Social Commerce is on the Rise

Social interactions increasingly guide purchasing behavior, and social networking sites increasingly are central to the transaction.

Sales of social commerce in the U.S. will hit almost $80 billion in 2025.

Involving customers in meaningful conversation online can win the customer’s confidence and make sale more likely.

Social media has become the search engine, where platforms such as YouTube, Instagram, and TikTok are acting as primary means of product discovery.

 

Mobile Buying is Fashionable

The move to mobile is transforming the way consumers shop online, and thus the necessity of mobile-optimized shopping experiences is more critical than ever.

Mobile commerce, or m-commerce, accounted for 43% of US ecommerce transactions in 2023. Smartphones are the most popular device for ecommerce interaction in the US.

US shoppers prefer shopping from mobile apps versus websites, with global consumers spending over 100 billion hours browsing retail mobile apps annually.

 

Sellers Are Adopting AI

The ecommerce landscape is ever-changing with innovative ecommerce businesses adopting cutting-edge technologies like AI. AI tools will be used twice as much by 2029.

Ecommerce sites are applying AI to understand their customers and show them appropriate ads. Shopify’s AI powers allow merchants to automate customer support and create product descriptions. About 80% of e-businesses make use of, or plan to make use of, a chatbot to manage customer care.

 

Buyers Demand Personalization

Personalized messages and customer experience drive customer retention and satisfaction.

A 2023 poll revealed 56% of consumers would be repeat purchasers if their online shopping experience was tailored to them, an increase from 49% in 2022.

89% of online businesses are investing in personalization.

 

Other New Ecommerce Trends

Augmented reality: AR-augmented shopping experiences are transforming the manner in which the consumers engage with the products online.

Flexible payment options: The buy now, pay later (BNPL) product is becoming increasingly popular among consumers due to greater flexibility of payment.

Privacy and security: Increasing demand for privacy and security facilities on online shopping websites has arisen.

Sustainability: Customers are being attracted more and more by companies with sustainable business methods, shaping the way business houses engage with production and logistics.

 

How to Begin An Ecommerce Website

 

If you have made up your mind to enter the online business world, start by selecting an ecommerce platform to assist in bringing your concept to life. Execute the following simple tasks in order to begin an ecommerce business:

Find an idea: Look for product opportunities, unexplored audiences, or market niches to determine your niche.

Do market research: Research your competition by doing market research.

Write a business plan: This is crucial if you’re looking for funding, develop a full business plan.

Build a brand: Select a logo and business name to create your brand.

Set up an online store: Organize your store, personalize your site, and input your product listings. 

Select a shipping approach: Determine how you’ll ship products to customers.

Formulate a marketing plan: Determine sales and marketing objectives and select your advertising medium.

 

Make the Jump to Ecommerce Today

The ecommerce market has ample space for new entrants seeking to introduce fresh concepts to the international marketplace. Retail ecommerce sales are on the rise, so this business model presents the perfect initial business to launch for budding entrepreneurs.

If you’re eager to begin an ecommerce venture, save this guide as a convenient reference to come back to on your path to establishing your dream career.

 

Ecommerce FAQ

Q.1 What is Ecommerce

Ecommerce, or electronic commerce, is the sale and purchase of commodities and services online. It is a two-party deal, where a business and an individual consumer, in the majority of cases, pay and receive goods or services online.

Ecommerce can exist in many different forms such as online purchases, digital downloading, online subscription, and online ticketing. It has revolutionized how people do business and is now a more desirable way to shop as it is easy and accessible.

 

Q.2 What are the 3 types of ecommerce?

There are three types of ecommerce business:

Business to consumer (B2C) is a business that offers products directly to an end consumer by using ecommerce. There are some B2C ecommerce businesses that also have a physical shop.

Business-to-business (B2B) is a business that sells a product or service to a business. A good example would be an accounting company selling services and online consultations to small businesses.

Consumer-to-consumer (C2C) means that individuals are selling to one another, such as the buy-and-sell in the neighborhood. It is also a regular situation for independent creator brands.

 

Q.3 What is an example of ecommerce

A good example of ecommerce is online shopping, where customers buy goods or services over the internet with the assistance of a B2C website or web-based marketplace. Ecommerce enables customers to peruse a wide variety of products, compare prices and features, and make secure transactions in various payment methods.Another proper example of ecommerce is mobile commerce—customers online shop via a cell phone to buy products and pay via the Internet. Ecommerce exists in many various forms that entail various forms of transactional relationships such as:

Online shop sales of goods or services online

Wholesale transactions

Dropshipping

Crowdfunding

Subscription products and services

Software licensing and services

Transaction fees

 

Q.4 What is an ecommerce website?

An ecommerce website is an online store where companies may sell goods or services to individuals using the internet. Ecommerce websites may deliver physical products, intangible products, or services. They typically incorporate product catalogs, prices, customer reviews, order tracking, customer accounts, and payment processing functions.

People who desire to start an ecommerce business may not need an ecommerce website at all. Social selling platforms and online marketplaces are completely acceptable substitutes for standalone websites. Further, these may be best suited for newbie business owners as a means of driving customers to a new venture on the internet. Getting into ecommerce with a Shopify Starter Plan is a viable option for getting started without the necessity of fleshing out a full-fledged online store.