What is Ecommerce? Everything to Know Before Starting an Ecommerce Business

For those who have never heard of the term e-commerce before, the first question that comes to mind may be, what is ecommerce?

If you are still asking this question, then it means that you have not fully understood the wealth of opportunities in owning an e-commerce business and making money from e-commerce.

Because the truth is that e-commerce is a very big industry.

Still, doubting? Then check this out…

In 2024, EMARKETER forecasts US retail sales to reach $7.450 trillion, a 2.8% increase YoY. Physical retail accounts for 83.7% of those sales, but e-commerce sales are growing faster than physical retail sales (8.2% versus 1.8%, respectively).

Mobile commerce, or m-commerce, is a rapidly growing new avenue of eCommerce that’s mostly driven by the expanding market and influence of smartphones and millennials’ comfort with shopping online.

So the question again is, “What is e-commerce?” and “how can you start an e-commerce business?”

In this article, we discuss in detail what exactly e-commerce is, how to start an e-commerce business, how to run an e-commerce website, and much more.

We share some of the tips and actionable strategies that we teach our students on e-commerce in our digital marketing class including how to design a fully functional e-commerce website, social media for marketing, email marketing, and how to increase your sales conversions.

You can also check out our course outline here.

Back to the post…

If you’re interested in anything to do with e-commerce or just need the question, “What is e-commerce?” answered, then this is the article for you!

Are you ready? Let’s begin with the basic question…

What is Ecommerce?

Ecommerce is a shortened version of the phrase “electronic commerce” which means any type of exchange of goods or services through online means.

E-commerce is an umbrella term that covers everything there is to do with buying or selling online, and can sometimes be otherwise written as “ECommerce,” “e-commerce,” or “eCommerce.”

Any variation of the spelling is correct, and it all describes the same act of performing business via the Internet.

Since the definition of e-commerce is so open-ended (it includes any type of buying or selling of goods or services online) there are so many different types of e-commerce businesses that exist.

In this article, we dive deeper into the different options that are available for e-commerce business owners to run e-commerce businesses.

The Types of Ecommerce Business Models

First things first, when you ask yourself, “What is e-commerce?” the best way to begin to describe different e-commerce businesses, and the different types of e-commerce businesses, is to break them down into the types of e-commerce business models that exist.

Ecommerce business models can be differentiated into three main categories:

• What types of products are sold
• Who the products are sold to
• Where the products are sold on

Let’s look into these three identifiers further:

What types of products are sold

Every e-commerce business can be differentiated by the types of products that it sells.

There are four main products that any e-commerce business can sell and they are:

• Physical Products
• Digital Products
• Services
• Affiliates

Every single e-commerce business online can fit into one or more of these categories, and this just tells you what type of products they sell to their customers.

Some e-commerce businesses sell physical products which means that the business has actual tangible products that they ship to their customers, and when their customers open the shipping package there will be a physical product they can touch, feel and see.

Digital products, on the other hand, are something e-commerce businesses can sell online but they’re not actual physical products that can be shipped to their customers.

Businesses can also provide digital or in-person services that their customers can purchase online.

These services can include anything from website design services or streaming services (both are digital services) to home decoration services or home tutoring services (which are in-person services).

Any business that provides a service, rather than a physical or digital product, can be included in this category.

Finally, e-commerce businesses can also earn commissions via affiliate links which pay them a portion of the revenue for facilitating a sale.

Ecommerce businesses that earn affiliate commissions could be blogs, influencer websites, or even websites.

Who the Products are sold to

Next, e-commerce businesses can be differentiated by who the business is selling their products.

While it might be common thinking to assume that all products are sold to consumers, that isn’t always the case.

Sometimes, the “consumer” can be another business.

These are the three main categories in which e-commerce businesses sell their products or services:

• B2B: This stands for Business-to-Business. Ecommerce businesses that sell physical or digital products or services to other businesses fall under this category. For example, this could include manufacturers or suppliers that provide materials or products for other businesses.
• B2C: This stands for Business-to-Consumer. Ecommerce businesses that sell physical or digital products or services to consumers fall under this category. This includes retailers or e-commerce retailers that sell products to the end consumers.
• B2G: This stands for Business-to-Government. Ecommerce businesses that sell physical or digital products or services to government institutions or agencies fall under this category. For example, this could include businesses that create specialized software, office furniture, uniforms, etc. for government agencies.

While most businesses generally sell their products to one of these categories, e-commerce businesses can sell to more than one category of consumers or even all.

Where the Products are sold on

Finally, e-commerce businesses can also be differentiated based on the way they sell their products to their customers.

These options are:

• Branded Ecommerce Stores: These are e-commerce stores that are owned and operated by the founder(s) or creator(s) of the store, and they sell their own products on their own terms to their customer base.
• Ecommerce Marketplaces: Ecommerce businesses can also sell through online marketplaces such as Amazon, eBay, or Etsy.
• Conversational Commerce: With social media being the main part of consumer’s daily routines, social media platforms are making it easy for consumers to shop through the posts on their newsfeeds. Instagram, Facebook, Pinterest, and Snapchat all have conversational commerce options that e-commerce brands can sell their products through.

Who Can Start an Ecommerce Business?

The short answer is:

ANYONE.

Anyone can start their own e-commerce business.

Yes, Anyone can go from asking themselves, “What is e-commerce?” to building their very own e-commerce business in weeks, months, or years.

Some e-commerce businesses are easier to start than others, some e-commerce business owners may have more industry knowledge than others when first starting out, but the great thing about e-commerce is that anyone can build, launch, and grow their own e-commerce business if they have the time, resources and skill.

And that is all you are going to learn and more from our digital marketing training when you join the class. You will learn how to go from being a novice with little or no knowledge in e-commerce to a professional in starting and growing a successful e-commerce business.

Click here to learn more.

The Pros and Cons of Starting Your Own Ecommerce Business

As with anything, starting your own e-commerce business comes with a range of advantages and disadvantages.

Even though you might just be in the early stages of wondering “What is e-commerce?” and don’t know if you’re going to start your own e-commerce business for yourself, it’s useful to know the pros and cons ahead of time so you can decide whether it’s a good fit for you or not.

Advantages of Starting an Ecommerce Business

• Building Something from Nothing: With e-commerce, you can take ideas, knowledge, and inspiration and use them to build your own business from scratch.
• Connecting with Your Audience All Over the World: You’re not limited to one area or region when it comes to the customers you can sell to; you can sell to customers all over the world.
• Being Your Own Boss: When you build your own business you can be your own boss and have the autonomy to bring the vision of your business to life.
• Selling Online, Offline & Anywhere in Between: You’re not restricted to where you can sell. You can have a brick-and-mortar business and an online business, you can sell at pop-ups, you can sell at festivals, etc.
• Working from Anywhere: As long as you have an internet connection and some of your systems and processes are automated, you have the freedom to work from anywhere at any time.
• Making it Your Full-Time Job or Part-Time Hobby: You don’t have to go all-in on your e-commerce business if you don’t want to; it can be your side hustle. But, you make the rules so if you want to make it your full-time job and get out of the rat race you can do that, too!

Disadvantages of Starting an Ecommerce Business

• No Physical Storefront: Most e-commerce businesses run solely online, which has its advantages but when you don’t have a physical storefront it can be a hurdle to acquire initial traffic or to connect with existing customers.
• No Face-to-Face Time with Your Customers: Because you can’t see your customers face to face, you aren’t able to connect with them personally so to build a very personal brand you’ll have to go to greater lengths to connect with your customers.
• Competition & Standing Out from the Crowd: There’s a lot of competition online, and differentiating your e-commerce businesses from others can be a challenge. To stand out from the crowd your e-commerce business needs to offer something that other ones don’t, whether that’s based on service, selection, price, variety, brand, or something else.
• Time & Money: While you can start an e-commerce business on a bootstrapped budget, eventually every business needs funds to grow and scale.
• The Learning Curve: Starting a business, making a website, creating a brand, building a customer base, etc. takes time and effort to learn how to do properly, so at first, it can be a bit of a learning curve. We suggest looking to reputable sources of information online such as Shopify blog and Skillshare to get started learning about “What is e-commerce?”

But your best option would be to learn the most complete and practical e-commerce class that shows you how you can go from novice to professional in e-commerce and make money from your marketing efforts.

You get all of these and more from our digital marketing course with a 1-year physical support system that helps you make fewer mistakes and more money.

Click here to learn more about the class.

How to Start Your Own Ecommerce Business

Starting your own e-commerce business has never been easier, which is good news if you’re asking yourself, “What is Ecommerce?” and want to get started with building your own e-commerce business as soon as possible.

There are so many resources out there to help you start your own e-commerce business, and these are a few places we recommend checking out first to get you started:

Find a Product Idea

To start an e-commerce business you’re going to need to have a product to sell to your customers.

This can be anything, and like we listed above it could be a physical product, a digital product, a service, or even curated affiliate links.

Plan Your Business

The next step is to start formulating a plan.

When you’re new to e-commerce, there might be some aspects of building your e-commerce business that you may not know to consider.

A good e-commerce business plan would help you identify any advantages or disadvantages you may face when building your business, plus other aspects of building an e-commerce business that is important to consider.

Sign Up for an Ecommerce Platform

Once you’ve found a product to sell and planned your business out thoughtfully, your next step is to sign up for an e-commerce platform so you can start working on the website you’re going to call your online store.

When you sign up to an e-commerce platform like Shopify you’ll be able to pick your business name right away and your domain name, then you can start customizing your website with a theme, fonts, and colors to make it personal to your brand.

It’s super easy, and it’s fun to see your website start to take shape!

What Kind of Ecommerce Business Can You Start?

It’s time to move on from asking yourself, “What is e-commerce?” and to start asking yourself, “What kind of e-commerce business can I start?”

Since you’ve read this article up to this point you already know that anyone can start their own e-commerce business and that anyone can be you.

When it comes down to it, you can start any kind of e-commerce business you want as long as you:

• Have something you can sell to consumers whether it’s a physical product, digital product, service, or affiliate link.
• Have somewhere online where you can sell your product, like the e-commerce platforms we’ve discussed earlier in this article.

As long as you have a product to sell and somewhere to sell it, you can start your own e-commerce business.

Where to Source Products for Your Ecommerce Business

Sourcing products for your e-commerce business is going to be the next most important step when starting your own e-commerce business, and it depends largely on which e-commerce business model you choose to sell through.

There are 4 main e-commerce business models and each one dictates the way you’ll source your products.

You can:

• Make your products
• Manufacture your products
• Wholesale your products
• Dropship your products

Make your Products

If you choose to make your products, you’ll be in charge of sourcing all your materials so you can bring your products to life.

The main challenge with making products for your e-commerce store is the time it takes to make your products, the cost, and difficulty incurred with sourcing materials to make your products, and how difficult it may be to scale your business should demand for your products increase.

Manufacture your Products

If you choose to get your products manufactured, you’ll need to source a manufacturer that can make your products.

To do this, you could consult online directories to find a curated list of reputable manufacturers capable of making a range of different products.

The main advantage of working with manufacturers to create your products is that you can custom-build products, you can get your products created exactly how you want them and you can keep your costs to a minimum.

Wholesale your Products

When sourcing your products from wholesalers, you’ll be able to purchase your products in bulk without having to manufacture them yourself.

Check out online wholesale directories to find wholesalers that sell products you’re interested in selling on your online store, or you could even source products in wholesale via AliExpress.

Dropshipping your Products

If you’re concerned about meeting upfront minimum order quantities or want the freedom to avoid storing inventory and shipping products, dropshipping might be the perfect business model for you.

What Kind of Budget Do You Need to Start an Ecommerce Business?

Ecommerce businesses can be built on any budget.

As we discussed in the “What is Ecommerce?” section of this article, e-commerce businesses are so vast and varied, they’re nearly impossible to define by any other identifiers rather than simply, “e-commerce.”

Since each e-commerce business is solely up to the entrepreneur(s) starting it, e-commerce businesses can truly be built on any budget.

If you’re an entrepreneur building your first-ever e-commerce business and you only have a small budget to work with, start a dropshipping business, and pay attention to money-saving resources such as blogs dedicated to helping e-commerce businesses save money such as Bootstrapping Ecommerce, and keep your eye out for discounts on services to help you build, launch and grow your business.

In any other case, your budget is entirely dependent on what you have to work with and how you want to allocate your finances.

How to Grow Your Ecommerce Business

Once you’ve gotten past the “What is e-commerce?” stage and you move on to building your e-commerce business, the final step and the step that’s going to take up the majority of your time as your business ages and scales, is how to grow your e-commerce business.

There are many ways to grow an e-commerce business but two of the main ways are through generating website traffic and conversions.

The more traffic you get coming to your e-commerce store, the more conversions you’re likely to make which means more revenue and thus, more profit.

Conclusion

While you may have come to this article wondering “What is e-commerce?” we hope all the information provided in this article has given you a thorough insight into what e-commerce is and what options are available to you to start your own e-commerce business.

Starting an eCommerce business really is accessible for anyone, so take the information, knowledge, resources, and guides provided throughout this article and start something for yourself.

Now that you know “What is e-commerce?” you’re well equipped to build, launch and grow your own e-commerce business and start the entrepreneurial journey for yourself.

Your next best step should be to take our e-commerce class included in our digital marketing training where you would learn the most complete and practical e-commerce class that shows you how to make money from your e-commerce.

You can get all of these and more from our digital marketing course with a 1-year physical support system that helps you make fewer mistakes and more money.

Click here to learn more about the class.

FAQs

How do I start eCommerce with little money?

Starting an eCommerce business with little money requires careful planning and execution. Here are some steps to follow:

• Choose a niche: Select a niche with low competition and high demand.
• Use free resources: Utilize free resources such as social media, email marketing, and content marketing to promote your business.
• Dropshipping: Consider dropshipping, which allows you to sell products without holding inventory.
• Partner with suppliers: Partner with suppliers who offer low-cost or free shipping to reduce your costs.
• Start small: Start small and scale up as your business grows.

The challenges of ecommerce businesses

Ecommerce businesses face several challenges, including:

• Competition: High competition from established businesses and new entrants.
• Marketing and advertising: High costs for marketing and advertising efforts.
• Inventory management: Managing inventory levels and ensuring timely delivery.
• Customer service: Providing excellent customer service to build trust and loyalty.
• Security and compliance: Ensuring the security and compliance of your website and data.

The future of E-commerce Businesses

The future of eCommerce businesses is promising, with several trends shaping the industry:

• Artificial intelligence: AI-powered tools will improve customer service, inventory management, and marketing efforts.
• Mobile commerce: Mobile commerce will continue to grow, with more consumers shopping on their mobile devices.
• Social commerce: Social media platforms will become more integrated with eCommerce, allowing for seamless shopping experiences.
• Sustainability: Consumers will prioritize sustainability and eco-friendliness in their purchasing decisions.
• Personalization: Personalized experiences will become more important, with businesses using data to tailor their offerings to individual customers.

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How To Start And Grow An E-commerce Business In 5 Steps + Examples

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