What is eCommerce? Definitions, examples and tools for your business

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This post was last updated on December 10th, 2023.

eCommerce is the online exchange of goods and services over the internet. It involves online transactions between businesses (B2B), businesses and consumers (B2C) as well as between consumers and consumers (C2C). eCommerce encompasses a wide range of activities, including electronic business, online shopping, online marketplaces, electronic payments, online banking and online auctions.

eCommerce is an integral part of the modern global economy. Over the past couple of decades, it has transformed both the way we shop and the way we do business. In fact, eCommerce is on track to take over traditional retail sales altogether. According to Nasdaq, by 2040, eCommerce could facilitate as much as 95% of all retail sales.

With Wix, it’s easier than ever to set up an eCommerce website. An online store created with an all-in-one platform like Wix lets you sell products or services anywhere in the world.

If you’re brand new to eCommerce, you’ve come to the right place. This article will answer all of your questions about the world of online retail.

Ecommerce (short for “electronic commerce”) is an umbrella term for any transaction done over the internet. Ecommerce can involve the sale of physical or digital products as well as services of all types, from scheduling a yoga class to booking a hotel. It's like a digital marketplace that's always open.

In an increasingly digital world, eCommerce is more prominent than ever. The U.S. Census Bureau reported that eCommerce sales totaled $277.6 billion during the second quarter of 2023 alone. And according to Statista, global eCommerce sales are forecast to reach $8.1 trillion by 2026.

Ready to start selling? Create your online store with Wix.

Here is a simplified overview of how an eCommerce transaction works:

Each of these steps could look a little different depending on the exact nature of your eCommerce business. For example, you could partner with a third-party logistics company to handle packaging and shipping for you. Or instead of selling retail goods, you may choose to sell online services or courses that don’t require any physical inventory.

At its core eCommerce includes:

Ecommerce now comes in many shapes and sizes, and often involves multiple players. It also involves a variety of touchpoints, including a well-built website.

If you want to succeed in your endeavor, it's crucial to know how to create a website that's tailor-made for eCommerce. Simply put, an eCommerce website allows your business to sell products and services online. It's a digital storefront where your customers can browse, select and purchase items (see eCommerce website development). A typical eCommerce website includes features, such as:

Business to consumer is one of the most common types of eCommerce models. B2C businesses sell goods and services directly to the end customer, and can include anything from physical products to online services. Think: Amazon, Nike or an online tutoring business.

Business-to-business models are also very common, and refer to companies that provide goods or services for other businesses. B2B eCommerce covers a wide range of businesses, including wholesalers, raw material manufacturers and service providers.

Any transaction done between two people, rather than business entities, is considered consumer to consumer. This type of business model includes transactions done on platforms such as eBay or Craigslist, or on social media marketplaces like Facebook Marketplace.

Consumer to business covers services provided by individuals, for businesses. This model is often used to include freelancers and other small service providers. A common form of C2B is when a business purchases stock images, videos or music created by individuals.

Business to government provides products and services for the federal or local government to purchase. These include a wide range of sectors like cyber security, waste management, urban planning, etc.

Government-to-business transactions reverse the B2G model. This model is often used to refer to information that companies can purchase access to, such as blueprints or legal files.

There are several types of common eCommerce businesses that operate under the structures listed above. A useful way of breaking them down is by explaining the various types of products or services they offer.

Dropshipping is a business model in which you can sell products online without physically holding any inventory. Think of it as being the middle-person who connects the customer with the manufacturer or supplier.

When a customer places an order for a product in your online store, the order details are forwarded to a trusted supplier, like Modalyst. (Alibaba, Taobao and Aliexpress are China based suppliers and wholesalers popular with global drop shippers). The supplier then ships the product directly to the customer. When you start a dropshipping business, you don't have to stress about logistics, manufacturing, inventory, warehousing or order fulfillment. You're also not limited by space—you can sell an unlimited array of products.

Take Wix merchant The Boho Birdy, for example. The Australian e-tailer offers a wide array of clothing, including colorful boho, beach and bridal fashion, housewares and baby items to a global customer base. According to the store’s FAQ page, it partners with “suppliers and manufacturers to ship directly to … the customer.”

Try our dropshipping website builder to launch your eCommerce business today.

The print-on-demand business model is a form of dropshipping. As a business owner, you’ll create designs and artwork, then select what products you want those designs printed on. A third-party supplier like Printful handles the actual printing, fulfillment and shipping.

When starting a print-on-demand business, you can choose from all kinds of products to offer, spanning T-shirts, hats, coffee mugs, phone cases, stickers and more. Plus, you have the freedom to experiment with designs until you hit your stride with one that takes off with your customer base.

For example, Wix user LemonMade Apparel operates a print-on-demand business model that partners with social media influencers. From LemonMade’s storefront, buyers can browse shirts, tote bags, ornaments, stickers and other merchandise for their favorite influencer. Both LemonMade and the influencers receive a portion of the sales.

Start building your print-on-demand shop today with Wix.

While labeling is another form of dropshipping where you can create your own brand without the need to develop products from scratch.

With white labeling, you’ll sell products that are already successfully produced by another company under your brand name. Your company name, logo and designs will appear on the packaging. The white label provider handles product development, manufacturing and fulfillment.

Private labeling involves selling products under your own brand, but having them manufactured by a third-party. This is a common practice for eCommerce businesses that don’t have the capabilities, space or capital to handle their own manufacturing.

Private labeling differs from white labeling in that the products are unique and exclusive to you and your business, while white labeled products are generic. Some providers will also handle fulfillment for you.

This approach lets you build a unique brand identity without the headache and expense of product development or manufacturing.

Ghost commerce also involves selling products under your own brand while keeping the source confidential. The foundation of a successful ghost commerce operation lies in establishing a website or online store, producing engaging content, and cultivating a strong social media presence. Characterized by low operational costs and straightforward setup, this model allows you to operate efficiently, relying on your marketing capabilities and customer service skills. Like dropshipping, you will want to find a reliable manufacturer to partner with.

Finally, another common eCommerce business model is subscriptions. Subscription box services help you gain repeat orders and customer loyalty. For a set price, your company will create and/or curate a package of products or services delivered at set intervals—usually every month or every three months. You can offer incentives for long-term commitments at a reduced monthly cost (e.g., offering a 15% discount if a customer buys a three-month subscription rather than one month).

Common examples of subscription services include meal prep delivery (like Hello Fresh or Blue Apron), fashion boxes (like Stitch Fix or Nuuly), streaming services (like Netflix or Hulu) and software as a service (like Adobe Creative Cloud or Ahrefs).

Wix user House of Suppliez utilizes this model in addition to their offering of supplies and classes for professional nail and lash technicians. Their monthly subscription box offers a curated collection of nail and lash products for professionals in the industry.

Businesses that sell their own physical products online are common, and are often what people refer to when they mention eCommerce.These online stores include both retailers and wholesalers that sell any sort of physical product; this could include clothes, books, groceries, gardening accessories, artwork, etc.

Most businesses that sell physical goods online operate through their own store website, and/or as a merchant on an eCommerce marketplace like Amazon or Etsy.

Artist and Wix user Lauren Simpson is a great example. Lauren’s website and online shop features prints, cards and stickers depicting an incredible series of paintings inspired by the Alaskan wilderness.

There is an endless variety of services you can purchase online, from hiring freelancers to streaming movies. As such, not all service-based eCommerce businesses operate similarly.

Many business owners sell their services on their own website or on a dedicated platform for similar services. It’s also not uncommon for a business to ask first-time customers to contact them or fill out a form, rather than purchase the service upfront. This often depends on the type of business, as well as the clientele.

There’s a type of eCommerce product that’s sort of in between physical products and services—digital products. This sector has gained popularity over the past couple decades with the growth of online retail. It includes software, music files, in-game purchases (in video games) and more.

Digital products are the easiest to provide to the customer, as it’s just a matter of enabling a download. They also have the added benefit of being freely duplicatable, as opposed to a physical product, which requires manufacturing.

See Sewn Ideas for inspiration here. This Arizona-based online shop offers a complete line of PDF patterns for various shapes and styles of handbags, designed for everyone from beginners to advanced sewers. Once you pay for a pattern, you also unlock a password to access instructional videos.

There are many reasons to start an online business. But before you start bouncing around eCommerce business ideas, it’s important to understand what advantages and challenges eCommerce holds.

Ecommerce can take place in spaces all across the internet. Different types of eCommerce can take the following forms:

If you’re looking to create an eCommerce business, starting an online store is a great first step. These five steps will get you off on the right foot:

The first thing you’ll need to do before you learn how to sell online is decide on what you actually want to sell.

Start by identifying your interests and passions. It's much easier to dive into a project when you're enthusiastic about it. Then, do some market research, taking notes on what similar online stores are doing. Look at trends, including what's popular, what's unique and what’s profitable. Don't be afraid to fill a niche—it's often where the magic happens. Remember, your products should not only resonate with you, but should also resonate with your potential customers.

Learn more:

To start your online store, you’ll need to make your own website to sell using a platform that can facilitate eCommerce. That’s where Wix comes in. Wix is an all-encompassing, end-to-end solution for e-tailers of all sizes. Through Wix, you can sell goods through your online store, social media and sales channels, or in-person with Wix point of sale software. You can additionally manage shipping, inventory, shopping cart software, marketing, analytics and more, all from one unified dashboard.

Once you build your website and create your store, it’s time to design it. Ecommerce website design is crucial in creating a positive shopping experience and can make or break an eCommerce business. Wix offers hundreds of designer-made online store templates that you can customize to your own preferences.

It’s time to design your dream store. Sign up for Wix today.

After you’ve decided on a product, or line of products, you’ll need to figure out how to manufacture them. The type of manufacturer you need to find depends entirely on what kind of products you’ll be offering, and how many.

Alternatively, you may choose to dropship or only offer digital products and services, in which case you may not need a manufacturer at all.

Shipping is a big part of any online store. You want every single customer to receive their products fast and in one piece. To pull that off, you’ll need a great eCommerce shipping company.

Look for a shipping company with a track record of reliability; remember, your own business reputation is at stake with each delivery. Speed is important, too, since fast delivery times can give you an edge in online shopping. Finally, consider excellent customer service. When things go wrong, you need a shipping partner who can address concerns quickly and efficiently.

Again, for business models centered around services, digital goods or dropshipping, you may not need to worry about this step. But, for digital sales, you still need to make sure your products are distributed properly, meaning emails go out without errors and download links are always live.

No business is complete without getting paid. In order to process transactions and receive payments, you’ll need to connect your online store to a payment solution system or processpr, like Wix Payments.

To ensure customers always have a comfortable way to pay, you may want to provide several payment options, including credit cards, Buy Now, Pay Later, mobile payments and digital wallets like PayPal.

The importance of marketing in your eCommerce strategies can’t be understated. It’s a critical part of gaining new customers, as well as retaining your existing clientele. No eCommerce business is complete without it. Below are a few important ways to maximize your marketing efforts.

One of the most important ways to drive traffic to your online store is by optimizing it to appear higher in search engine results. This is called SEO (search engine optimization).
 

Boosting the SEO for your online store isn't difficult; it's about consistency and knowing your audience. Start by understanding what your target customers are searching for, and tailor your product descriptions to those keywords. Make sure you answer their search questions. Next, make sure your website is easy to navigate, loads quickly and is mobile-friendly. Good SEO is a marathon, not a sprint.

Content marketing is a common practice in starting a business of any type. In short, it means creating engaging blog posts, newsletters, social media posts and other content to attract visitors to your website. Using content marketing wisely, in conjunction with SEO, can have a huge impact on your store’s traffic.

Facebook Ads and Google Ads are two of the most common paid advertising channels for eCommerce, and they can be very effective. Between Facebook, Instagram and Google, you can cover an enormous share of all internet users.

With all that reach, you’ll need to be very precise when setting up your campaign, or you risk spending your marketing dollars on the wrong audiences. Wix can help you with built-in functionality to create, run and manage Facebook and Instagram Ads, as well as Google Ads.

Marketing emails are a great way to stay in touch with your customers after you start an online business, letting them know about new products, sales or even to send a friendly holiday greeting. Email marketing is considered to have one of the best returns on investment (ROI) in eCommerce marketing; WebFX reports that this can be as high as 4,400%.

All in all, there are many factors that contribute to the success of an eCommerce business. Here are some of the most important:

There are many regulations and laws governing the practice of eCommerce globally.

In the US many of these can be found here. Examples include, Electronic Signatures in Global and National Commerce Act which validates contracts with an electronic signature and is designed to protect consumers who must give consent to a purchase. The Federal Trade Commission Act (FTC Act) aims to protect consumers, incuding those buying online, from deceptive trade practices - it makes it mandatory for companies to publish a privacy policy, to put in place data security measures (to protect consumers private information and payment details) and puts the onus on businesses to refrain from false advertising in any form.

Other countries have enaced similar legislation or bolstered it as ecommerce grows in popularity, for eample:

Geraldine Feehily

Marketing Writer, Wix eCommerce

Geraldine is a native of Donegal, Ireland, and enjoys spending her time outdoors, hiking and being close to the Atlantic Ocean. She is a marketing writer for Wix eCommerce and, as a small business owner herself, loves hearing user success stories.