What is eCommerce? – Definition, Types, and Trends

eCommerce, also known as electronic commerce or e-Commerce, is the process of buying and selling goods or services over the Internet.

As eCommerce has become more prevalent and complex in recent years, there are many varying definitions which generally support the idea that it can be simply called Commerce, and there shouldn’t be any distinction.

However, the most common definition is that eCommerce is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily using the Web.

Besides, eCommerce traditionally refers to buying and selling physical goods, but as Commerce has evolved, it encompasses all transactions carried over the internet.

Today, there are all kinds of eCommerce platforms catering to different needs of businesses looking to buy and sell on the web.

Continue learning more about what eCommerce is, its benefits for businesses, and the different types of eCommerce models that exist today.

eCommerce Definition

eCommerce, or electronic commerce can be simply defined as buying and selling products through the Internet.

In today’s digital age, eCommerce has become a crucial part of the overall business world. These days, eCommerce also entails selling and buying nonphysical goods, including digital products and services.

eCommerce, thus refers to trading of goods and services, and other commercial actitivies using electronic medium such as the internet.

With the rapid growth of the internet and the web, eCommerce has revolutionized how businesses and customers engage with each other.

From selling their products to managing customer accounts and processing payments, businesses can now conduct virtually all of their operations online.

Additionally, eCommerce has opened up new opportunities for businesses by allowing them to expand into global markets instantly and seamlessly. As such, eCommerce is not just a growing trend in the world of business; it has become a standard practice.

And with eCommerce activities taking over other sales from other offline channels such as retail, it’s not surprising that eCommerce is simply ‘Commerce’.

Don’t get confused with variations of how eCommerce is mentioned all over the web such as e-Commerce, e-commerce, or eCom. You will see it written in all forms;

• e-commerce or E-commerce
• eCommerce or Ecommerce
• e commerce or E commerce

Irrespective of how a publication mentions it, all the terms have the same meaning. If you are including the term in your work, just make sure you stay consistent throughout.

For your reference, the ‘e’ in ‘eCommerce’ refers to ‘electronic’. You can go through the eCommerce synonyms to see other similar terms that are often used to define and discuss eCommerce.

---

Types of eCommerce Business Models

Broadly speaking, there are four types of eCommerce business models that exist today:

1. Business to Consumer (B2C)
2. Business to Business (B2B)
3. Consumer to Consumer (C2C)
4. Consumer to Business (C2B)

Each type of eCommerce business model entails different types of activities and, consequently, the distinct nature of transactions.

1. Business to Consumer (B2C): A business-to-consumer transaction is one where a business sells products or services to consumers through an online platform. The most common type of B2C eCommerce is online retail, where businesses sell their products directly to consumers through their eCommerce websites or mobile apps.
2. Business to Business (B2B): A business-to-business transaction is one where businesses sell their products or services to other businesses. The most common type of B2B eCommerce is online wholesale, where businesses sell their products in bulk to other businesses, often at a lower price.
3. Consumer to Consumer (C2C): A consumer-to-consumer transaction is one where consumers sell their products or services directly to other consumers through an online platform. The most common type of C2C eCommerce is online auctions, where consumers can sell their products to the highest bidder.
4. Consumer to Business (C2B): A consumer-to-business transaction is one where consumers sell their products or services to businesses. The most common type of C2B eCommerce is online freelancing, where businesses can hire workers from freelance websites for specific projects.

Further, if we were to include eCommerce activities between business, consumers, and government or administrative agencies, we would see these kinds of eCommerce business models.

• B2G – Businesses sell to governments or administrative agencies.
• C2G – Consumers sell to governments or administrative agencies.
• G2B – Governments or administrative agencies sell to businesses.
• G2C – Governments or administrative agencies sell to consumers.

---

Benefits and Challenges of eCommerce

With its evolving business models discussed above, eCommerce has become an increasingly important part of today’s modern business landscape.

As more and more consumers adopt the web and turn to online stores for their shopping needs, businesses are beginning to shift their marketing efforts and operations to take advantage of this growing trend.

Despite its many benefits, e-commerce also presents a number of challenges that businesses must overcome in order to succeed in this increasingly competitive marketplace.

The main advantage of eCommerce is that it provides a convenient and often cheaper alternative to shopping at brick-and-mortar stores. Online shopping is available to consumers to shop 24 hours a day, 7 days a week, without having to leave their homes or spend hours navigating crowded shopping centres.

Additionally, the use of online deals and coupons, online sales offers, and other promotions can help customers save money on their purchases. This is particularly beneficial for businesses looking for ways to reach budget-conscious customers in an increasingly competitive economy.

However, along with these many benefits comes a host of challenges that businesses must address in order to succeed with e-commerce.

One major challenge is the threat of cybercrime, which occurs when hackers obtain sensitive data such as credit card numbers through systems vulnerabilities or by manipulating users into giving out personal information on eCommerce websites.

In addition, greater reliance on e-commerce means that companies must ensure that their supply chains are properly integrated and managed in order to deliver goods quickly and accurately to customers’ doorsteps.

Besides, since much of digital commerce takes place on mobile devices such as smartphones and tablets, companies must constantly update their eCommerce platforms or websites and apps to adapt to frequently changing technology standards.

Despite these challenges, however, the future looks bright for eCommerce as it continues to present new opportunities for growth and innovation for businesses.

What are the benefits of eCommerce?

There are many benefits of eCommerce for businesses, including:

1. Increased reach: With eCommerce, businesses can instantly target a global audience and expand their reach. All they need is a website or mobile app, and they can start selling their products to anyone in the world with an internet connection.
2. Lower costs: Setting up and maintaining an eCommerce store is generally much cheaper than setting up and maintaining a brick-and-mortar store. Additionally, businesses can save on costs such as rent, utilities, and staff salaries by selling their products online.
3. Increased efficiency: An eCommerce platform enables businesses to automate many of their operations, from managing customer accounts to processing payments. This can free up time and resources that can be better used to grow the business.
4. Improved customer service: With eCommerce, businesses can offer their customers a more convenient and personalized shopping experience. For example, they can recommend products to customers based on their purchase history or provide live chat support to answer any questions they may have.

What are the challenges of eCommerce?

There are also some challenges that businesses need to be aware of when selling their products online, including:

1. Competition: With millions of businesses already selling their products online, it can be challenging for new businesses to stand out from the crowd. eCommerce businesses need to ensure their products are competitively priced and offer unique features or benefits that will appeal to customers.
2. Fraud: Unfortunately, there is a high incidence of fraud in the eCommerce industry. eCommerce businesses should be vigilant in protecting their customers’ personal and financial information from criminals who may try to steal it.
3. Returns: Since customers cannot physically inspect products before they purchase them online, there is always the risk that they will need to return them. This can be costly for businesses, as they will need to account for the shipping and handling fees.

---

Online Marketplaces

The most popular examples of eCommerce are online marketplaces. Amazon, eBay, and Etsy are all leading and well-known online marketplaces where businesses can sell their products to a global audience.

Social Commerce Plaforms

Social media platforms such as Facebook, TikTok, and Instagram have been integrating eCommerce features and quickly becoming popular places for businesses to sell their products. Businesses have the ability to add their products and created their own online stores that are accessible from their social media pages.

Digital Downloads

Another popular type of eCommerce is digital downloads. This can include anything from music and movies to software and games. iTunes, Spotify, and Steam are all examples of companies that offer digital downloads.

SaaS Businesses

SaaS businesses provide their customers with access to software that can be used online. Some popular examples of SaaS businesses include Dropbox, Slack, and Zoom.

Online Services Businesses

Finally, there are companies that sell services online. This can include anything from consulting services to design services to dating services. Upwork, Fiverr, and Tinder are all examples of companies that sell services online.

Dropshipping

Dropshipping is a type of eCommerce business model in which businesses sell products without having to carry any inventory. When a customer places an order on a dropshipping website, the business will then purchase the product from a supplier and have it shipped directly to the customer’s door. Dropshipping businesses don’t need to invest in any inventory, which makes it a low-risk way to start selling online.

Subscription Boxes

Subscription boxes are another type of eCommerce business. Businesses curate boxes of products that are sent to customers on a monthly or quarterly basis. Some popular examples of subscription boxes include Birchbox, Blue Apron, and Dollar Shave Club.

Digital Subscription Services

Many companies offer their digital products on a subscription basis. This means that customers can pay a recurring fee to have access to the product or service. Some popular examples of subscription services include Netflix, Spotify, and Amazon Prime.

DTC Online Stores

DTC businesses are companies that sell their products directly to consumers through an online store. These businesses cut out the middleman and sell their products at a higher price point. Some popular examples of DTC businesses include Warby Parker, Bonobos, and Everlane.

As you can see, eCommerce today encompasses a wide range of businesses and online business activities for products and services.

---

eCommerce Platforms provide businesses with the foundation they need to sell their products online and can include everything from website builders and shopping cart software to payment processors and customer relationship management (CRM) tools.

We have a complete guide to help you learn more about what an eCommerce platform is and how to select the best one for your business.

There are many different types of eCommerce platforms available, and the best platform for your business will depend on your specific needs, such as what you want to sell, where you want to sell, types of payment methods you can accept and so on.

Some of the most popular eCommerce platforms include:

Shopify: Shopify is one of the most popular eCommerce platforms on the market. It offers everything businesses need to create and operate their online stores, including a website builder, shopping cart software, payment processing, and customer support.

WooCommerce: WooCommerce is a WordPress plugin that turns any WordPress website into a fully-functional online store. WooCommerce is free to use, but businesses will need to invest in their own hosting, domain name (get free domain from Bluehost with affordable hosting), and other required extensions.

Magento – Adobe Commerce: Magento is a powerful eCommerce platform that offers businesses a lot of flexibility and customization options. However, it can be difficult to use, particularly for businesses that are just getting started with eCommerce.

BigCommerce: BigCommerce is another popular eCommerce platform that offers businesses everything they need to create and operate their online stores. It is very easy to use and comes with a lot of built-in features, making the platform a good choice for businesses that are just getting started with eCommerce.

Wix eCommerce: Wix is another popular eCommerce software platform. It’s a good choice for businesses that are on a budget and don’t mind investing some time into learning how to use the platform.

You can check out our complete listing of the best eCommerce platforms in this detailed guide.

In addition to the tools and software, eCommerce platforms can sometimes refer to the online marketplaces that facilitate eCommerce activity.

---

What is the eCommerce industry?

The eCommerce industry is an umbrella term that includes all kinds of eCommerce businesses, including online retailers, subscription services, and digital product stores. The industry also includes the platforms and tools that businesses use to build and operate their online stores.

The eCommerce industry is proliferating, with more and more businesses adopting the online channel and the rise in complementary products to serve the demand.

Graphics | Report

The Shopify Future of Commerce report predicts that the eCommerce industry will grow by $11 trillion between 2021 and 2025.

---

The eCommerce industry is constantly evolving and growing. New technologies are emerging that are changing the way businesses operate and customers shop.

Some of the latest trends in eCommerce include:

Augmented reality: This technology allows customers to see what a product would look like in their own homes before they purchase it. This is particularly helpful for products like furniture and home decor.

Personalization: Thanks to data collected from customers, businesses are now able to personalize the shopping experience by recommending products that they think the customer will like.

Chatbots: Chatbots are computer programs that can simulate a conversation with a human. They are often used to provide customer support and can be found on many eCommerce websites.

Blockchain: Blockchain is a distributed database that allows for secure, transparent, and tamper-proof transactions. This technology is being used more and more in the eCommerce industry as it offers a high level of security for businesses and customers alike.

Mobile commerce: With the increasing use of mobile devices, it’s no surprise that mobile commerce is on the rise. Businesses are now investing in developing mobile apps and optimizing their websites for mobile devices.

Social Commerce: As social media platforms continue to integrate eCommerce features, we expect to see more businesses selling their products on social media. This will be a great way for businesses to reach a wider audience and make it easy for customers to purchase their products.

Subscription Boxes: We expect to see more businesses offering subscription boxes in the future. This type of eCommerce business is convenient for customers and can be a great way for businesses to build loyalty and repeat customers.

Direct to Consumer: We expect to see more businesses selling their products through DTC online stores. This type of eCommerce business allows businesses to own first-party data, control the pricing of their products and build a direct relationship with their customers.

What does the future hold for eCommerce? Only time will tell, but one thing is for sure, eCommerce is going to be the dominant channel for buying and selling.

---

Understanding eCommerce Basics – FAQs

Let’s look at some commonly asked questions about eCommerce to improve your understanding of the topic quickly.

---

Want to learn more about eCommerce?

If you are interested in learning more about eCommerce, explore our detailed guides and tutorials here at WebGuided.

We cover everything about eCommerce, from getting started with an online store to marketing your products and succeeding with your eCommerce journey!