What Is Ecommerce and How Does It Work? The Basics

white keyboard with blue ecommerce key and three online shopping tabs

If you’ve ever considered opening your own business, then you’ve probably already heard of ecommerce. What is ecommerce? It’s a business model that refers to the selling of goods online. More and more people are using it in this day and age. Why? Because it’s much more convenient than going all the way to an actual store to buy what you need. Since we live in a consumer-based digitalized era, it makes sense that ecommerce is the way most of us choose to buy and sell products. Today, we are going to learn more about ecommerce and how it actually works.

We’ve become so accustomed to buying and selling things online, that we rarely think about what this means.

What Is Ecommerce?

As we’ve already briefly mentioned, ecommerce (short for electronic commerce) is a business model that relies on transactions made over the internet. You can apply ecommerce to all main market segments: consumer to consumer, business to business, consumer to business, and business to consumer. You can basically sell and buy anything online, from plane tickets, to books and jewelry.

It all started in the 1960s and it has been a growing business ever since. Nowadays, almost everyone uses ecommerce, although they might not think about it this way. That is because we’ve become so accustomed to buying and selling things online, that we rarely think about what this means.

How Does Ecommerce Work?

It doesn’t matter if you want to buy or sell something online. Either way, you will have to deal with a transaction, so basically an exchange of money for services or goods. Think of it as you would the process of buying a book in a library. You choose the book, you go to the checkout, pay for it, and then take it home with you. The only thing that is different about ecommerce is the fact that you don’t get to actually handle what you bought. Not until you’ve already ordered the item and someone has delivered it to you.

Sometimes, people fear ordering things online precisely because they can’t always know what they get. However, the person selling the goods also has to deal with creating a database where all the items are stored. This means that whenever someone orders something, the database has to be updated. This is done so as not to misinform people about what is still in stock and what not. Not to mention the fact that a seller also needs to figure out how to send the goods to the buyer. For this, they are going to need a dispatch system.

While this is the case for most ecommerce transactions, some of them don’t need a database or a dispatch system. This is especially true of smaller businesses or independent sellers. Since they don’t offer as many goods and services, they can keep track of them more easily. For instance, if you are going to use an auction website such as eBay to sell a collectible, you won’t need a database. Furthermore, you can simply send the item using the post office.

Even though every ecommerce transaction is different, we hope we’ve managed to answer the question “What is ecommerce?” and provide you with some basic information about it.

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Author: Amanda Knowles

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