What is ecommerce?
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Plain language explainers to help you keep up with the evolving digital landscape.


What is ecommerce?

Ecommerce refers to buying and selling goods and services over the Internet. It has revolutionized the way consumers shop since first emerging in the early 1980s, offering a convenient and accessible alternative to traditional brick-and-mortar stores. From browsing vast online catalogs to receiving doorstep deliveries, ecommerce has transformed the shopping experience while providing retailers with deeper insight into their customers.

How does ecommerce work?

Ecommerce requires the seamless integration of technology and logistics. Here's a breakdown of the typical process:

  • Product Presentation: Businesses create online stores or utilize existing ecommerce platforms to showcase their products.
  • Customer Search and Selection: Customers leverage search engines, product categories, and filtering options to navigate the vast online marketplace
  • Secure Transactions: Once a customer selects a product, they proceed to the secure checkout process. Ecommerce sites utilize robust encryption technologies to safeguard sensitive information like credit card details during online payments.
  • Order Fulfillment: Upon order confirmation, the seller fulfills the order. This may involve physical product packaging and shipping, providing access codes for digital products, or facilitating service delivery.

Types of ecommerce:

The ecommerce landscape encompasses a diverse range of business models, including:

  • Business-to-Consumer (B2C): This is the most common type, where businesses sell directly to individual consumers. Familiar examples include online clothing stores, electronics retailers, and grocery delivery services.
  • Business-to-Business (B2B): This involves transactions between companies. Ecommerce platforms facilitate the exchange of wholesale goods, raw materials, or even business services between organizations.
  • Consumer-to-Consumer (C2C): Online marketplaces like eBay and Etsy connect individual sellers with potential buyers. This model allows individuals to sell used items, handcrafted goods, or anything else permitted by the platform's policies.
  • Subscription-based: These businesses provide ongoing access to products or services for a recurring fee. Examples include streaming platforms for movies, music, or audiobooks, as well as subscription boxes delivering curated products to customers at regular intervals.

How to measure ecommerce success:

  • Website Traffic: The total number of visitors to an e-commerce website provides insight into brand awareness and marketing reach.
  • Conversion Rates: This measures the percentage of visitors who complete a desired action, such as making a purchase or subscribing to a newsletter.
  • Average Order Value (AOV): This reflects the average amount spent per customer order, helping businesses understand their pricing strategy and product mix effectiveness.
  • Customer Lifetime Value (CLTV): This metric estimates the total revenue a business can expect from a customer throughout their relationship.
  • Customer Acquisition Cost (CAC): This measures the cost associated with acquiring a new customer, informing marketing and advertising budget allocation.

Why is ecommerce important to marketers?

The rise of ecommerce has opened a vast digital marketplace for brands to reach potential customers.  Marketers leverage the power of this channel in several ways:

  • Targeted Advertising: Ecommerce platforms offer sophisticated advertising tools that allow marketers to reach specific demographics and interests with laser focus. This ensures their message resonates with the right audience, maximizing campaign ROAS.
  • Data Analytics: Ecommerce transactions generate a wealth of customer data, including browsing behavior, purchase history, and preferences. Marketers can utilize this data to gain a deeper understanding of their customer base and personalize marketing messages and product recommendations.
  • Global Reach: Ecommerce transcends geographical limitations. Businesses can reach customers across different countries and regions, expanding their market potential and fostering international sales.

Who needs to know what ecommerce is:

  • Digital marketing manager
  • Paid search specialist
  • Affiliate manager
  • Ecommerce manager
  • Product manager
  • Marketing analyst
  • Brand manager

Use ecommerce in a sentence:

“Ecommerce has revolutionized the retail landscape, making it possible for customers to browse millions of products and services, all from the comfort of their couch.”