What is Ecommerce?

By | Last Updated: 4th June 2019 | This post may contain Affiliate Links

Ecommerce is the buying and selling of goods or services using the internet, and the transfer of money and information to perform these transactions.

Ecommerce is often used to refer to the sale of physical products online, but it can also describe any kind of commercial transaction that is enabled through the internet.

There are four main types of ecommerce models that can define nearly every transaction that takes place between consumers and businesses.

  • Business to Consumer (B2C): When a business sells a good or service to an individual consumer (e.g. You buy a pair of shoes from an online retailer).

  • Business to Business (B2B): When a business sells a good or service to another business (e.g. A business sells software-as-a-service for other businesses to use) 

  • Consumer to Consumer (C2C): When a consumer sells a good or service to another consumer (e.g. You sell your old furniture on eBay to another consumer).

  • Consumer to Business (C2B): When a consumer sells their own products or services to a business or organization (e.g. An influencer offers exposure to their online audience in exchange for a fee, or a photographer licenses their photo for a business to use).

Ecommerce can take on a variation of forms involving different relationships between businesses and consumers, as well as different objects being exchanged as part of these transactions. For example:

  • Retail:  Which is the sale of a product by a business directly to a customer without any middle man.

  • Wholesale: The sale of products in bulk, often to a retailer that then sells them directly to consumers.

  • Dropshipping: The sale of a product, which is manufactured and shipped to the consumer by a third party.

  • Crowdfunding: The collection of money from consumers in advance of a product being available in order to raise the start-up capital necessary to bring it to market.

  • Subscription: The automatic recurring purchase of a product or service on a regular basis until the subscriber chooses to cancel.

  • Physical products: Any physical good that requires inventory to be restocked and orders to be physically shipped to customers as sales are made.

  • Digital products: Downloadable digital goods, templates, and courses, or media that must be purchased for consumption or licensed for use.

  • Services: A skill or set of skills provided in exchange for payment. The service provider’s time can be purchased for a fee.

The first modern transaction in ecommerce occurred on 11th August 1994. Around noon that day, Phil Brandenberger of Philadelphia logged into his computer and used his credit card to buy Sting’s “Ten Summoners’ Tales” for $12.48 plus shipping.

This particular transaction made history because it was the first time that encryption technology was used to enable an internet purchase. Many consider that moment as the first “true” ecommerce transaction.

Since this early beginning, the world of ecommerce has obviously grown massively, ecommerce in the USA grew by 16% in 2017, reaching over $450 billion dollars. Equally Ecommerce accounted for 13% of all US retail sales in 2017.

According to eMarkerter, global ecommerce sales are expected to top $27 trillion in 2020 — and that’s just statistics for the retail sector.