Branding is the process of creating a distinct identity for a business in the minds of your target audience and the general population. At its core, branding consists of a company’s name and logo, visual identity design, mission, values, and tone of voice.
On August 11, 1994, a compact disc of Sting’s Ten Summoner’s Tales was securely exchanged in the world’s first online sale. This transaction marked the birth of electronic commerce, a global shift in shopping habits.
Today, ecommerce is powered by a worldwide system of technologies and platforms, from website builders to payment gateways to social media. With ecommerce sales projected to surpass $7 trillion by 2026, the concept of buying and selling products online has become a part of everyday life.
Ahead, explore the ins and outs of ecommerce: how it works, the main ecommerce models, and the benefits of selling online versus in person.
Plus, learn how to create an ecommerce website and launch your big idea.
What is ecommerce?
Ecommerce is when individuals and companies buy or sell goods and services over the internet. Ecommerce can happen through a website, smartphone app, social media platform, online marketplace, or other sales platform.
Common examples of ecommerce include online shopping, electronic payments, online auctions, and internet banking. You can participate in ecommerce anywhere with an internet connection. The goal of ecommerce for a seller is to drive sales using digital platforms and marketing strategies.
Ecommerce is also known as e-commerce or electronic commerce, and is often used to refer to the wide range of tasks involved in selling online, from running digital ads to transferring payment data over a network.
When did ecommerce start?
What counts as the first ecommerce transaction is up for debate, with some ecommerce technologies developed as early as the 1970s.
The first legal online transaction happened in 1994, when one friend sold a Sting album to another over the internet, facilitating a sale between two people 300 miles apart. From there, ecommerce exploded, with Amazon and eBay launching a year later, followed by PayPal in 1998.
Since then, technology has moved fast to meet the demands of shoppers. Ecommerce platforms like Shopify democratized the industry, allowing businesses to sell directly to consumers anywhere in the world.
Social commerce, mobile wallets, and AI round out today’s ecommerce tools and platforms.
Ecommerce works through a series of straightforward platforms, tools, and tasks:
- Ecommerce platforms: Sellers choose an online sales platform like a website, marketplace, or social media to list their products and allow customers to browse and place orders.
- Payment processors: Customers pay using methods like credit cards or digital wallets at checkout. Transactions are secured by online payment gateways.
- Fulfillment and delivery: Sellers prepare, package, and ship products to customers. They may fulfill orders themselves or partner with a fulfillment service that manages shipping. For digital products like ebooks or online courses, the product is provided via a portal or download link.
- Supporting services: Various services and industries support ecommerce, including product suppliers, advertising platforms, and ecommerce apps that help sellers enhance the shopping experience.
Where does ecommerce happen?
Ecommerce unfolds across a variety of digital spaces, each offering advantages for sellers and buyers. Here are the main channels where ecommerce takes place:
Ecommerce websites
Ecommerce websites are online stores created by brands or individuals to sell products and services directly to consumers. Ecommerce platforms like Shopify provide tools to build and manage ecommerce websites, from designing the storefront to processing payments.
Key characteristics:
- Seller control: Sellers have complete control over their website’s design, customer experience, and data. This makes it easier to build a brand and create shopping experiences to suit a target market.
- Customer relationships: Ecommerce websites let sellers speak directly with customers, enhancing customer support, data collection, and marketing efforts.
- Marketing requirements: Ecommerce websites don’t come with customers built-in. Sellers need to drive traffic to their stores through SEO, social media, and other types of marketing.
Online marketplaces
Amazon, eBay, and Etsy are examples of online marketplaces where multiple sellers can list their products. These platforms are visited by large volumes of shoppers, providing high visibility for businesses.
Key characteristics:
- Built-in traffic: Marketplaces attract vast audiences, providing sellers access to a steady stream of consumers, typically in return for a fee.
- Accessibility: Marketplaces handle many technical parts of ecommerce, such as website design, hosting, payment processing, and sometimes shipping, which can simplify things for sellers.
- Lack of branding: Selling on marketplaces means giving up some control of how your brand appears to consumers. Additionally, customer and sales data may not be shared with sellers.
Social selling channels
Social media platforms like Facebook, Instagram, and YouTube include features that allow direct sales through posts, ads, and social storefronts. Social selling platforms integrate ecommerce into the social browsing experience.
Key characteristics:
- Audience engagement: Social platforms have large audiences segmented by deep data insights, lowering the cost of finding relevant customers.
- Seamless integration: Selling can be integrated into social media management, making it a natural extension of social media marketing strategies.
- Algorithm dependence: Social sales are often dictated by a seller’s social presence, with platform rules and algorithms determining their reach and success.
Many online sellers use multiple sales channels to reach more customers.
Consumers can make online purchases in several ways. Payment methods for ecommerce stores include:
- Accepting credit cards and debit cards through a payment processor like Shopify Payments
- Third-party payment platforms, like PayPal
- Mobile wallets such as Apple Pay, Google Pay, and Shop Pay
- Buy now, pay later (BNPL) services
- Recurring billing for subscription products and services
- Pay in-store after ordering online with a point-of-sale system like Shopify POS
Ecommerce sellers regularly give consumers multiple ways to pay by integrating several of these payment methods into their website or sales channel.