What is an ecommerce website?
It might sound like an unusual question in today’s digital landscape, but there are still plenty of people who don’t fully understand what ecommerce is, or how an ecommerce store works.
In simple terms, ecommerce stands for “electronic commerce”. An ecommerce website, or store, is the tool businesses use to display products to customers, attract buyers, and manage transactions. Unlike a standard website, an ecommerce website gives you the tools you need to process payments, manage inventory, and even connect with fulfillment companies.
In this article:
- What is an Ecommerce Website?
- The Different Types of Ecommerce Websites
- How Does an Ecommerce Website Work?
- What are the Features an Ecommerce Store Needs?
- How Do You Create an Ecommerce Store: 2 Options
- Ready to Create your Own Ecommerce Website?
Ecommerce is far from a new concept, but the demand for digital shopping has increased significantly in recent years. In fact, by 2027, revenue in the ecommerce market is expected to reach a value of around $6.35 trillion. If you still don’t know exactly what an ecommerce store is, or how you can build your own, now might be the perfect time to start developing your education.
What is an Ecommerce Website?
So, what is an ecommerce store, or website?
An ecommerce website is an online domain or resource specifically designed to support an ecommerce business. Ecommerce is the art of buying and selling goods and services online. Rather than managing transactions in person, you use digital tools, such as hosting solutions, checkout pages, and payment processors, to connect with consumers all over the world.
The history of ecommerce started with the first ever online sale, made in 1994, when a man sold a CD to his friend using a website named “NetMarket”. This was perhaps the first ever example of an ecommerce website, introduced long before giants like Ebay and Amazon existed.
As the consumer landscape has evolved, and buyers have become more comfortable with the idea of shopping for goods and services online, ecommerce has transformed too. Ecommerce website building tools have emerged to allow entrepreneurs from any background to build their own fully functional store, capable of taking credit card payments online.
What’s more, the evolving ecommerce platform has grown increasingly advanced in recent years, allowing brands to develop more attractive sites with templates, offer more convenient payment methods, and even boost revenue through marketing strategies.
Today, ecommerce websites come in many different shapes and sizes, from single brand websites, produced by small businesses, to marketplaces which sell products from a variety of different retailers in one place, such as Amazon, Etsy, Walmart, and Ebay.
The Different Types of Ecommerce Websites
As mentioned above, high-quality ecommerce sites can come in a variety of different forms.
In today’s digital world, companies can choose from a variety of different business models, as well as specific target audiences for their ecommerce sales. The most common business models for an ecommerce store include:
- Retail stores: Ecommerce websites that sell products directly to an end-level customer, without any middlemen or additional parties.
- Wholesale stores: B2B (Business to business) companies who sell products in bulk to other retailers, as well as wholesalers and distributors.
- Dropshipping stores: Ecommerce stores that advertise products produced by third-party companies, and work with fulfillment providers to ship items directly to customers.
- Print on demand stores: Stores that work with third-party companies to create custom products for their stores, and ship them to customers through logistics partners.
- Service stores: Companies that use their online stores to sell services online, such as graphic design packages, or consulting support.
- Digital product stores: Ecommerce stores which focus primarily on selling digital products, such as eBooks, digital downloads, or access to courses and webinars.
- Subscription stores: Stores which allow customers to set up recurring payments for specific goods or services on a regular basis.
Just as businesses can use their ecommerce stores to pursue a variety of business models, they can also focus on different types of customers. Each type of ecommerce store, or e-business, has its own specific target audience. The most common options include:
- B2B (Business-to-business): B2B ecommerce companies specifically target other companies, startups, and business owners with their goods, software, and services.
- B2C (Business-to-consumer): B2C companies sell directly to an end-customer, or everyday consumer. For instance, Ebay sells directly to customers.
- C2C (Consumer-to-consumer): C2C marketplaces such as Ebay and Etsy allow consumers to sell directly to other buyers.
- C2B (Consumer-to-Business): C2B allows consumers, such as members of the creator economy, to sell their services to companies. For instance, an influencer could sell their promotional support to a brand.
Further reading 📚
How Does an Ecommerce Website Work?
So now you know what an ecommerce website is, the next step is figuring out how they actually work. Answering this question can be a little complex, as the functionality of any ecommerce website will depend on how it’s built, and the goals of the business.
Online marketplaces work by allowing companies to list their products on a “directory” platform where customers can browse through various options to find their ideal product. Alternatively, a standard ecommerce platform gives business leaders the freedom to develop their own store from scratch, where they can showcase their brand with website design techniques, market their products, and manage online transactions, all in the same place.
Typically, an ecommerce store works like this:
- Companies build a website, using a hosting provider, an ecommerce platform or website builder, or code leveraging an open-source ecosystem. They design product pages for each of their items, and showcase pictures of each product, as well as pricing information, to help customers make the right decision based on their needs.
- Customers find the website online, either by searching for specific keywords or typing a domain address into their search browser. They click on buttons to add the products they want to their cart, then checkout using a payment processing system.
- The payment processing system securely collects information about a customers’ credit card or payment details, and transfers funds from the customer’s bank account to the business. The details of the customer are passed through to the backend of the ecommerce store, allowing the store owner to fulfill the service, or ship the product required.
- In the case of a digital product, items are either automatically delivered after a purchase or via email. When customers purchase a physical product, companies either work with delivery or shipping companies to fulfill the order, or access the help of third-party logistics companies and fulfillment providers.
What are the Features an Ecommerce Store Needs?
Since ecommerce is quite a versatile landscape today, the features of an ecommerce store or website can vary depending on a number of factors. In most cases, today’s online business leaders can exert a lot of control over the features of their store, using custom code, add-ons, and plugins, and even APIs.
While the exact features of your ecommerce website might vary, most companies will need to access at least the following capabilities:
- Website hosting: If you choose a SaaS platform to build your online shopping experience, you’ll usually be able to access ecommerce hosting as a built-in service. On the other hand, if you use an open-source solution to build your storefront, you’ll need to choose a host provider separately. Your hosting company ensures potential customers will be able to access your store pages and payment gateway options online. They also often allow you to choose a specific domain name or URL for your store.
- Web design tools: Web design tools are the solutions that allow you to build your web pages and create attractive online shopping experiences. You’ll use these tools to design your homepage, product pages, customer service and FAQ pages, and even the navigation for your store. Most tools like Shopify and Wix will come with their own website builder included, featuring templates you can use to enhance your store.
- Payment processing tools: The main difference between a standard website and an ecommerce website is access to various payment options. Most hosted solutions will come with their own payment gateway and payment processing tools included, which allow you to offer customers various ways to pay for their goods. If you’re using an open-source tool, you might need to integrate your own payment processing tools, like Square or PayPal.
- Marketing tools: While not all ecommerce website building tools come with marketing features included, most will integrate with other platforms that help you to advertise your products or services. You can experiment with things like email marketing, search engine optimization (SEO) and content marketing, and social media marketing. Some tools also allow you to engage customers with pop-up notifications and landing pages.
- Security tools: All ecommerce websites should put the security of their customer’s data first. Most ecommerce website builders and platforms come with encryption tools, SSL certificates, and other features to help you minimize the risk of any security issues. There are also apps and add-ons you can use to enhance the security of your store, and improve the user experience for your customers.
- Order and fulfilment management: If you’re going to be selling physical products, you’ll need tools within your ecommerce website that allow you to track your orders, inventory volumes, payments, and shipping options. Some companies even offer access to fulfillment services, so you can pass the task of shipping items to customers to another business.
- Reporting and analytics: All business leaders need to be able to access data and metrics to track the performance of their store, and their finances over time. Most store building tools come with access to reports that can help you to track things like your taxes, your most popular products, and even where your customers are coming from.
Depending on the type of store you want to run, you might also need to prioritize other forms of functionality. For instance, if you want to align your ecommerce website with a brick and mortar store, you might need a platform that offers integrations with popular payment processing tools.
How Do You Create an Ecommerce Store: 2 Options
There are a number of steps that go into creating an effective ecommerce store. You’ll need to research your audience and choose the right products based on what you know about your target market. You’ll also need to develop an engaging brand, so you can connect with your target audience, and design an eye-catching website. You may even choose to work with web design experts to enhance the appearance and functionality of your store.
However, the first, and most important step in building an ecommerce store, is deciding on your platform. There are two primary options available: Self-hosted, or SaaS.
If you choose to create a self-hosted store, this means you’ll use open source commerce platforms like WordPress (WooCommerce), OpenCart, or Magento to design your store yourself, using code, templates, and plugins. You’ll also be responsible for hosting your store yourself, which means finding a hosting provider who can keep your site up and running.
A self-hosted store gives you more freedom to truly customize your store and add all the features and functionality you like. However, it does require a lot more technical knowledge. You’ll need to learn how to work with code, or hire a website developer to work with you. Plus, you’ll be responsible for making sure your store runs properly, stays secure, and offers the right checkout process.
If you opt for a SaaS (Software as a Service) solution, you’ll subscribe to a monthly plan for a website building or ecommerce platform. Options like
, Wix, BigCommerce, and Squarespace all give you access to all of the tools you need to design and manage your store in one place.
These tools host your store for you, and give you access to domain names, so you can brand your site. They also come with far more straightforward tools which allow you to design your store to match your branding. Hosted solutions are much easier to use, and combine numerous tools into one package, from responsive templates for mobile devices, to a shopping cart system, payment processing, and even marketing tools. However, they don’t give you as much freedom to work with.
Ready to Create your Own Ecommerce Website?
Today, ecommerce is quickly becoming the most popular way for consumers to access products and services from around the world. With various platform options to choose from, virtually anyone can build an ecommerce website, with or without technical knowledge.
However, it’s worth noting that even with an easy-to-use website building solution, you’ll still need to invest in making your online store a success. Just like with a physical store, you’ll need to research the right products, get to know your audience, invest in marketing, and offer amazing customer service if you want to make a profit.
Check out our reviews of the best ecommerce website builders, and our tips on how to design and develop an ecommerce store for more insights.
