What is eCommerce? Definition and History

About the Article

Think back to the last few purchases you made. How many of them did you make online? According to an NPR/Marist poll, 69% of Americans have shopped online – 25% at least once per month. A recent report by Statista also reveals the number of digital shoppers in the United States is projected to reach 230 million in 2021.

To meet this growing demand, many businesses now have an eCommerce presence so their customers can make purchases online. Here you’ll learn exactly what eCommerce is, its benefits, and how to put it to work for your own business.

  • What is eCommerce?
  • Benefits of eCommerce
  • 6 Types of eCommerce
  • Starting Your eCommerce Business
  • eCommerce Order Management and Fulfillment
  • Marketing Your eCommerce Store
  • eCommerce Platforms

What is eCommerce?

eCommerce refers to any type of commercial transaction made over the internet. eCommerce platforms enable sellers to list their products and services so buyers can purchase those goods online. Companies that have brick and mortar retail locations can use eCommerce platforms to create an integrated omnichannel experience. 

The first eCommerce transaction took place in 1994 on a website called Netmarket. Since then, it’s only gotten easier to sell goods online, as eCommerce platforms serve large companies and small businesses alike. Statista estimates revenue from eCommerce will reach close to $600 billion by 2024.

Discover all the aspects of creating a seamless omnichannel experience

Benefits of eCommerce

eCommerce drastically increases the convenience of shopping as consumers can make their purchases almost anywhere at any time from their smart devices. This convenience is complimented by a wealth of shipping options which make rapid delivery possible.

Sellers who take advantage of eCommerce also realize a significant boost to their bottom line. An online storefront can reach untapped consumer audiences across the globe, capturing incredible opportunities for expansion and revenue growth.

Without the need for a physical storefront, companies can save on rent and personnel costs. eCommerce platforms are also built to scale so companies do not have to spend time or money on back-end infrastructure as they grow.

Aside from the convenience of shopping online, an omnichannel approach gives consumers the option of ordering online and picking up their purchase in-store. Businesses can even use the additional information they learn about their customers to personalize marketing campaigns, both in-store and online.

Finally, an online presence lets you take part in the rapidly growing mobile commerce space, which is soon expected to account for over 54% of all eCommerce sales. Creating a mobile-friendly eCommerce website is key to satisfying consumer experience demands, maintaining a competitive edge, and diversifying your revenue streams. 

eCommerce Business Models

While eCommerce merchants can find success across a wide range of business models, there are two main approaches which define the digital commerce landscape.

Business to Consumer (B2C)

B2C is the process of a retailer selling products and services directly to consumers. A simple example of a B2C transaction is someone purchasing an article of clothing from their favorite retailer.

Business to Business (B2B)

B2B eCommerce or Business-to-business involves one business in a commercial transaction with another. This is most common with businesses sourcing materials for their production process. B2B eCommerce accelerates the sales process by eliminating the need for these businesses to meet and negotiate the sales and exchange of goods in person.

Starting Your eCommerce Business

After determining which business model defines your company best, you need to determine how you’ll deliver your products or services, what market space you’ll operate in, and how you can distinguish yourself from the competition.

eCommerce offers a variety of ways you can structure your business. You might act as an online retailer, purchasing or creating items that you then stock and sell. You can also take a  dropshipping approach, using a third party supplier to fulfill orders you receive. Wholesaling, crowdfunding, and subscription-based models are all potential options as well. 

The option that will best fit your eCommerce brand depends on your market space. Consider how your products and services can fulfill genuine consumer needs. At the same time you should avoid gravitating towards trendy, oversaturated markets. 

If you are looking for additional guidance on starting your eCommerce business, check out our complete guide to getting your eCommerce brand off the ground. 

Take your business into the digital commerce era

Building Your eCommerce Website

Picking the right eCommerce platform is essential for creating a memorable digital commerce experience which transforms casual shoppers into lifelong brand advocates. While there are a number of options available, you want to look for a platform with the following essential features:

  • Content Management Capabilities
    A platform should have a centralized admin interface with features that allow users to easily manage all the tasks involved in content production including publishing tools, social media integration, built-in SEO, and multi-platform capabilities..
  • Analytics and Reporting
    Integrated analytics capabilities allow you to extract meaningful insights from accumulated customer data which can be used to monitor business health, improve operating performance, and guide growth initiatives.
  • Personalization
    An eCommerce solution should have the functionality to deliver personalized customer experiences by dynamically delivering content, product recommendations and specific offers based on browsing behavior, purchasing behaviors, audience demographics, and other personal data factors.
  • Scalability
    Your website must be capable of growing along with your business so you’ll need a flexible system capable of adding operating resources over time to ensure continued peak functionality.
  • Developer Ecosystem
    Look for a platform supported by an online ecosystem composed of developers, and other stakeholders who work to continually enhance the value of digital platforms through their collective software innovations and professional services.

Once you have chosen a platform, it is time to start building your site. Branding, images, personalization all come together to create an engaging experience on all pages of your site but the process will require a significant investment of time and resources to be successful. 

You should also consider delivering your store to customers through a progressive web app (PWA). PWA technology combines the discoverability of web apps with the responsive user experience and installability of native apps. With a PWA, your customers can initially access your store online without waiting for a download, and then install your app on their device and access it like they would any other. If you’d like to incorporate a PWA in your eCommerce business, this guide has everything you need to know: Discover how to define key requirements for your next eCommerce platform

eCommerce Order Management and Fulfillment

Handling orders and shipping is a critical part of any eCommerce operation. While you could attempt to manage your inventory, track purchases, and fulfill orders yourself, this approach is both inefficient and hinders scalability as your brand grows. Fortunately, there are solutions which accommodate these needs so you can focus on expanding your business.

For instance, product information management (PIM) systems are indispensable for monitoring your products and providing accurate information to customers across all channels. A PIM system serves as a single source of truth for all your product-related data. It integrates with your eCommerce platform so customers and team members can access updated, accurate product information at a moment’s notice. If you have a broad, continually changing product catalog, you should consider using a PIM. 

To avoid the difficulty of tracking and managing orders on your own, an order management system (OMS) is beneficial. An OMS lets you monitor orders across all your sales channels, both online and offline. If you choose to go with an OMS, integrating one with your eCommerce store is a must.  

Finally, if you’re having trouble managing your stock and getting deliveries out on time, a third-party fulfillment center may be the solution. Fulfillment centers specialize in processing and shipping whatever your customers purchase, freeing up your resources for more important tasks such as growing your revenue streams. With the increased availability of fulfillment centers, you are very likely to find one which meets your needs.  

Marketing Your eCommerce Store

The saturated state of today’s eCommerce landscape means you need to work harder than ever to attract customers to your site. However, there’s no shortage of digital marketing strategies for drawing site traffic and boosting conversions in turn.

Email marketing should be every merchant’s starting point. You can set up a sales funnel built around emails which are automatically triggered when visitors take certain actions on your site. These drip campaigns can be incredibly effective at nurturing leads and motivate them to make your web store their preferred commerce destination. Modern automation solutions even let you personalize emails so they connect with recipients at a personal level.

While email marketing is effective, you first need to build your email list. Content marketing combined with SEO is a great way to do so. By investing in high quality, informative assets like blogs and eBooks, you can build brand value while drawing traffic to your website. Remember to keep your content marketing efforts focused on useful assets whose primary intent is to inform, rather than sell. Instead of hitting readers over the head with a sales pitch, include links and calls-to-action at appropriate places throughout your content. 

This is just the tip of the marketing iceberg. Social media, influencers, video—the list of marketing opportunities is substantial and requires research to determine the best approaches for your brand.  

Begin Your eCommerce Journey Today

The demand for online shopping is at an all-time high. Businesses are no longer confined by location or business model with eCommerce able to accommodate virtually any business type. Using a digital commerce platform, you can improve the customer experience, reduce operating costs, and grow effective marketing strategies tailored to specific customers needs. 

Starting an eCommerce business requires a platform that’s capable of creating a seamless shopping environment for your customers while simultaneously evolving with your business. Magento Commerce provides all the tools you need to create an exceptional eCommerce website. It supports mobile commerce, omnichannel experiences, and progressive web applications (PWAs). It also features robust analytics, order management capabilities, as well as an Extensions Marketplace for integrating with your ERP, CRM, and even global shipping providers.

Capitalize on the possibilities of eCommerce and try a free Magento demo today

What is eCommerce? Definition and History