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How Does eCommerce Work?
Originally Published:  
July 7, 2022

How Does eCommerce Work?

eCommerce is something you encounter every day. It’s everywhere and finding someone who has bought nothing online has become increasingly difficult. During the pandemic, the online commerce industry exploded. 

Amazon started by selling books in the 1990s, but now it is worth billions of dollars. You’re right if you think eCommerce offers endless opportunities. But what exactly is it? How does eCommerce work?

In this post, you will learn about eCommerce and the various components that combine to build a  successful online store you’re familiar with — and the basics of how to create your eCommerce website and online business. So, read ahead to learn how it works.

What Is eCommerce? 

eCommerce, also called electronic commerce, refers to purchasing and selling products or services via the internet and transferring money and data. Many use the term to describe the online sale of physical products, but it can also refer to any commercial activity through the internet.

Unlike e-business, which relates to all aspects of operating a business online, eCommerce is relevant only to transactions involving goods and services. eCommerce transactions provide access to just about any product or service imaginable, including music, airline tickets, books, and financial services, like online banking and stock investing.

Types of eCommerce

There are four categories of eCommerce applicable to most transactions taking place between businesses and consumers:

  • Business to Consumer (B2C)

B2C involves a business selling its products or services to a consumer, for instance, buying clothes over the internet.

  • Business to Business (B2B): 

B2B involves a business selling goods or services to other companies. For instance, when a  business sells software-as-a-service to other companies.  

  • Consumer to Consumer (C2C): 

Consumers sell goods or services to other consumers. For example, when you are selling your old furniture on eBay.

  • Consumer to Business (C2B):

C2B involves consumers selling their products or services directly to other businesses or organizations. For example, when a photographer licenses their photo to be used by a company.

How Does eCommerce Work?

Apart from being online, the eCommerce working process works much like traditional brick-and-mortar stores. There’s what customers see, and then there’s what employees can only see. 

In eCommerce, employee-only areas are comparable to the management offices and the counters behind the registers. These are the backend and the frontend, respectively, in software that runs eCommerce websites.

The Backend

Online stores have a backend that serves as the business side of the site. You can refer to it as the dashboards, control panels, or admin panels. It is where you control all the aspects of your eCommerce website.

Using the backend, you can manage your website and business. It can upload products, arrange them into categories, and decide on the accepted payment methods. 

Most eCommerce platforms include templates, which streamline the design process besides inventory tracking and control, customer records, order processing, coupon and promotion creation, and more.

The Frontend

A web frontend is an interface that customers see when shopping on an eCommerce website. When talking about a website, people usually refer to a frontend and a storefront. You set options that directly affect the frontend’s appearance and functionality in the backend.

Ideally, the front end should be easy to use and organized to make it easy for customers to find what they need with little effort. Setting up a good category structure for your items and creating a simple navigation system will help you achieve this. 

You can enhance the frontend with other features, such as product reviews and Q&As, security logos and trust badges, the ability for customers to view, edit, and save their cart. 

Your checkout system is imperative to run smoothly and has a straightforward layout that reduces mistakes. Keep in mind that the design quality of your web page’s front end significantly affects your conversion.

Important eCommerce Statistics

Data is amazing. You can make wise choices that pay off in the long run by using them. Without it, you have to make assumptions, which may prove costly. 

Therefore, it would be best to look at some essential eCommerce statistics that may prove helpful for your future business decisions.

Average Cart Abandonment Rate

You should pay careful attention to your shopping cart abandonment rate every month since it’s an essential metric for eCommerce. If your cart abandonment rate is higher than average, it may show a severe issue in your store.

There is an average cart abandonment rate of 69.89% across industries. The bottom line is that seven out of ten shoppers abandon their carts, buying nothing. 

But with email marketing and website pop-ups, you can recover many of these lost revenues.

Online Shoppers Searching a Product on Google Before Purchasing

Understanding the buyer’s journey is essential before tailoring your website for the best shopping experience. Although no two visitors are precisely the same, these statistics show online shoppers share a similar pattern. 

Google is the default search engine for 68% of consumers when searching for a specific product. You ought to be where your customers hang out.

Here, your products should be on Google Shopping, where your customers are looking for them. Your store’s capabilities allow you to reach prospects in the top-of-funnel and solve their problem earlier with Google Shopping.

eCommerce Accounts Retail Sales

Bricks-and-mortar stores are not going away with eCommerce’s rapid growth. Yet, competition is becoming more intense between the two. In 2020, eCommerce sales generated 18% of all retail sales worldwide. E-tailers appear to have an exceptionally bright future. In 2024, the eCommerce sales share will reach 21.8%.

It, however, has a downside. Online shoppers are looking for the most trusted eCommerce sites, considering many options. 

If you use trust badges on your site, you can prove your reliability to customers, ease their minds, and distinguish yourself from the competition.

Pros and Cons of eCommerce

As with everything, eCommerce also has its pros and cons. But first, here are the pros:

Easy Audience Identification

You can quickly identify and reach your audience easily. For instance, you can quickly recognize your niche market when setting up your eCommerce business. 

Wider Product Selection

Unlike their brick-and-mortar counterparts, many online stores carry a wide variety of products. Many may have exclusive products that are unavailable anywhere else.

eCommerce sites also have some cons. Among them are:

Limited Customer Service

You can’t simply ask a representative to show the features of a specific computer model when shopping online. However, while some websites allow you to chat with their staff online, this is not the norm.

Absence of Instant Gratification

Online shoppers must wait for their purchases at their homes or offices. However, online retailers like Amazon offer same-day shipping as a premium option for select products.

Examples of Successful eCommerce Sites

The key to making your own beautiful, functional eCommerce site is looking at some examples that work. Check out these ten examples for inspiration:

Amazon

Amazon may be the king of successful eCommerce sites, but it didn’t become that way overnight. Initially launched in 1994, it used a text-heavy, grating layout that’s impossible to stomach today - just like most websites at that time. Besides, the site sold only books.

Amazon has topped the list of successful eCommerce sites for many reasons, but one factor dominates them all: Data. 

Because it can gather a wealth of data on user behavior - such as the time users spend on a page and what draws their attention frequently. It has an advantage over all other brands in refining its eCommerce presentation.

For an eCommerce site to be the undisputed leader, it needs rich, comprehensive data from millions of users. However, even companies with fewer data to trade are thriving worldwide.

Walmart

Walmart has recently updated its eCommerce website to implement current best practices. It included king-sized image sliders with captivating hero shots, deals specific to your location linked to your IP address, and data-driven product categories that adjust based on your needs.

People who follow successful eCommerce sites these days are well aware Walmart and Amazon are in a war for revenue. If you browse the site, you see the brand has responded to this issue in multiple ways.

For example, Walmart’s website actively advertises its free next-day delivery service, drawing on Amazon Prime customers and integrating its supply chain and eCommerce. Aside from grocery pickup and credit cards, ancillary services like these are also available.

How To Start Your eCommerce Site

Now that you know how an eCommerce website works, you can start yours today. Regardless of how big or small your online store is, these eCommerce processes are essential to success. 

Fortunately, you don’t need to be a programmer to use eCommerce platforms, but choosing the right one is crucial.

Creating an eCommerce site involves selecting a name and a domain name, choosing an eCommerce platform, setting up marketing tools, payment methods, permits and licenses, testing your site, and launching it. 

Besides these, you also have to understand how an eCommerce website works. So, if you’ve ever wanted to take the plunge into eCommerce, now you can.

Sources:

46 Cart Abandonment Rate Statistics – Cart & Checkout – Baymard Institute

Sources of information about products in the United States 2021 | Statista

eCommerce share of total retail sales | Statista

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