What is Ecommerce? – Definition, Types and Much More Answered!

A simple question with quite a complicated answer! But I am going to answer this question and many others in the post to help you understand exactly what ecommerce is, the different types of ecommerce and what what types of products and services can be sold.

Ecommerce Definition

Ecommerce stands for electronic commerce and is the term used for the buying and selling of goods or services over the internet, along with the associated transmission of money and data between the parties involved in the transaction.

While ecommerce is primarily thought of as the sale of physical goods via the internet, it also includes digital products, services and any other commercial transaction that is carried out purely online.

Ecommerce or E-commerce?

A very common question and one that there is no definitive answer to as both terms are correct.

E-commerce was the original way of spelling it as it was a shortened version of electronic commerce but as the term has become more commonly used, many people started dropping the hyphen.

This is very similar to the way that e-mail has now become email, so there is a good chance that in the future that the non hyphenated version will become the most commonly used version.

For this site and all of my blog posts (as you may have already guessed), I use the non hyphenated version.

Different Types of Ecommerce Business Model

Test Test Test

Ecommerce is most commonly associated with the buying of physical products online but there are many different types of ecommerce out there, that encompass a variety of different products and services.

What is B2C Ecommerce?

B2C stands for Business to Customer and is the most common type of ecommerce out there and it is when an individual buys a product or service from any business that has an online sales portal.

This could be things like buying a new pair of jeans from Asos, an ebook for your Amazon Kindle or your Netflix subscription.

What is B2B Ecommerce?

B2B stands for Business to Business. This is when one business buys a product or service from another business using an online transaction.

This could be a retail business placing an order for new stock using their suppliers or manufacturers website or a business paying for ecommerce software such as Shopify, EKM or Bigcommerce.

What is C2C Ecommerce?

C2C stands for Customer to Customer and most commonly takes place within online marketplaces such as Ebay or Shpock. This is most commonly done with physical products as it is one individual looking to sell something they no longer need to another individual.

What is C2B Ecommerce?

C2B stands for Customer to Business. This is a sector of the ecommerce industry that is seeing considerable growth due to platforms like Fiverr, Upwork and Freelancer where individuals can offer their skills and services to businesses for a fee.

This can also work for physical products as well as where individuals can sell products to businesses who will then sell the products on for a profit. Pre-owned retailers and sites like Music Magpie are examples of this type of ecommerce.

What is DropShipping?

Dropshipping is a form of ecommerce where the seller doesn’t hold any of their own stock, instead they advertise a range of products on their website from a chosen supplier or suppliers.

When they receive an order for one of the products that they advertise, they will then place an order with their supplier, who will ship the product direct to the customer.

This can be a very cost effective entry in to the world of ecommerce but as with everything, there are some pros and cons around this business model.

DropShipping Pros

DropShipping Pros

• Easy to get started
• Reduced capital investment
• No tying money up in stock
• Can be automated in many ways

DropShipping Cons

DropShipping Cons

• Low barrier to entry
• Lots of competition
• No control over shipping or dispatch times
• No chance to quality control products
• You may be stuck with returns

What are Ecommerce Marketplaces?

Ecommerce marketplaces on websites that allow multiple vendors to sell their products through the platform. These can be general marketplaces like Ebay and Amazon that allow a variety of different goods to be sold or they can be more specialised and niche specific such as Asos marketplace for clothes and Etsy for handmade goods.

Marketplaces can be a great way to get started selling online as you do not need to build or manage your own website, instead you have a storefront on the marketplace and the products you list on there will appear in relevant searches that are made on the site.

As with all things when it comes to ecommerce, there are pros and cons for selling on marketplaces.

Marketplace Pros

Marketplace Pros

• Easy to get started
• Quicker access to market
• Marketplace markets your products
• No technical knowledge required
• Small learning curve

Marketplace Cons

Marketplace Cons

• Shop subscriptions can be expensive
• Transaction fees can be high
• Difficult to build a brand
• Less control over your business
• Disputes usually go in buyers favour

What Can You Sell Online?

I have mentioned briefly through this post, the kind of things that can be bought and sold online but I am going to go over them in a bit more detail in this section.

Physical Products

Choose a Delivery Method

The most commonly sold thing online is physical products and pretty much anything you can think of can be bought or sold online, including:

  • Clothing
  • Watches and Jewellery
  • Electronics
  • Furniture
  • Food
  • Housewares

Many traditional bricks and mortar retailers sell physical products, just like they do in their stores. Many of the larger, well known online retailers such as Amazon and Asos, also sell mainly physical products.

The transaction process for a physical product goes something like this:

The customer adds the item/s they want to their shopping cart, they then go through the checkout process to pay for the goods. The retailer then posts the item out to their customer and once the customer receives the product, the transaction is complete.

Digital Products

Choose an Ecommerce Platform

With digital products, the retailer doesn’t have to physically stock any products, instead they have a product that can be downloaded once the item has been paid for.

Digital products has seen massive growth over the last few years and many products that were once physical only, such as:

  • Music
  • Films & TV Series
  • Books
  • Games

Are now sold as a digital product and this has been helped by the invention of devices such as the iPod and Amazon Kindle.

The transaction is also much quicker to complete for buyers as they add their selected item/s to their shopping cart, pay for them and they will then be provided a link or file that they can download directly on to their device.

Services

As with digital products, the sale of services online has seen massive growth in the last few years. This is because it has become easier for suppliers to sell services directly to their customers and the variety of services available is impressive, such as:

  • Streaming Services (Amazon Prime, Netflix, Spotify)
  • SAAS (Shopify, Quickbooks, Google Apps)
  • Consultancy
  • Teaching or Training
  • Virtual Services (Assistant, Proofreading, Editing)

How these services are delivered to the customer very much depends on the service being offered. It may be a log in so that you can access them (Streaming, SAAS) or scheduling a time when they can supply their service to you (Consultancy, Teaching) and these services may not be done online but the transaction of buying the service is.

What are Ecommerce Platforms?

Now that you know what ecommerce is, the different types of ecommerce business model and the types of products and services that can be sold online. I am going to look at the technical side of things by explaining what ecommerce platforms are, what they do and the different types that are out there.

Ecommerce Platforms are software that allows and individual or business to build a website where they can sell products or services to customers or businesses.

While there are a lot of different ecommerce platforms out there, they all fall into one of two categories. They are either Fully Hosted or Self Hosted.

What is a Fully Hosted Ecommerce Platform?

A hosted ecommerce platform is a solution that provides you with all the necessary tools for building an online shop. You pay a monthly fee to the company and your package includes ecommerce grade web hosting and purpose built ecommerce software.

Examples of Fully Hosted Ecommerce Platforms:

bigcommerce logo
ekm ecommerce logo

What are the Positives of a Hosted Ecommerce Platform?

No Technical Stuff!

One of the main positives of fully hosted ecommerce platforms is that you as the website owner, doesn’t need to take care of any of the technical aspects of running a website such as:

  • Making sure your site loads quickly
  • General website maintenance, making everything is updated and working properly etc
  • Making sure your server and website are secure against hacking
  • Fixing things when they go wrong!

This is because all of the technical aspects of running an ecommerce website are taken care of by the platform. They have their own teams of web developers and server technicians to do all of this.

This leaves you to focus on the business aspect of running an ecommerce website, such as sourcing and managing your inventory, logistics, marketing and customer service.

Support

Another positive is that you have a support team at the end of the phone, via email or over live chat (depending on the platform) that you can contact should you experience any difficulties with your running your website.

If there is something you don’t know how to do or something isn’t working properly, you can just contact the support team and they will work with you to help get the problem sorted out ASAP.

With some platforms such as EKM, there is also a team of ecommerce specialists including designers and marketers who will work with you to help you grow your ecommerce business.

Easier to Use and Learn

Now this isn’t always the case, but the majority of fully hosted ecommerce platforms are very easy to learn and use as they have been designed for people and businesses with little to no experience of running a website.

As well as having access to the platforms support teams, many ecommerce platforms also have a large online library of articles to help you get started. These can include everything from building your site to how to do SEO and Social Media Marketing.

Ecommerce platforms are purpose built by the company and these means that they work really well, lots of R&D has gone into making sure they are the best they can be. One of the main benefits of this is that the themes work exactly as they should, meaning your site will always look its best.

What are the Negatives of a Hosted Ecommerce Platform?

Limitations

As you are using their platform, you are limited to by what they allow you to do on their platform. This mainly becomes noticeable when it comes to customising the design of your site, as you may not be able to do exactly what you want.

Once you are up and running, you may find that this can extend to functionality as there may be something that you want to add to your site but the platform doesn’t offer it or offer integration with it. This can be frustrating and potentially can limit your businesses ability to grow. If you do need specific functionality, it may be worth asking the platform if they could do something for you one off for a fee.

Locked In

Now I don’t mean in terms of the contracts as they with most platforms they are rolling month to month contracts that you can cancel at any time.

What I mean is that you cannot move your site to another platform, the reason for this is that the platforms are specific to the provider. This can cause some problems if you are not happy with the service you are getting as you cannot just up and leave like you could with a self-hosted platform.

Some platforms do offer a kind of migration service to help make the transition from one to the other as painless as possible but you may still run into some issues that could affect sales and/or rankings.

What is a Self-Hosted Ecommerce Platform?

A self-hosted platform breaks your site down into two key components, your web hosting and your ecommerce software. This means that you need to find a good quality web host, ideally one that offers ecommerce quality hosting and choose which ecommerce software you want to use.

Getting the right combination of the two takes a little bit of work as you want to use ecommerce software that you like but you also want your hosting to be optimised for that software. But you need some web hosting to decide which software to use! To get around this, just buy some cheap shared hosting for a month, try out the various software, then go looking for the right web host.

Examples of Self-Hosted Ecommerce Platforms:

woocommerce logo

What are the Positives of a Self-Hosted Ecommerce Platform?

You Own It!

The big difference between with self-hosted ecommerce platforms, is that you own the website and you are free to move your web site from one hosting company to the next.

You can also do this with minimal upheaval as your website doesn’t change, just the web hosting that powers it does.

More Flexibility

This one does very much depend on the platform you are using but with the likes of WordPress + WooCommerce and Magento, you have much more freedom over the type of ecommerce website that you can build.

With fully hosted platforms, you are limited by what they allow you to do. Where as many self-hosted platforms are open source and this allows third-party developers to build extensions and plugins that enable you to do a variety of different things when it comes to ecommerce.

This flexibility not only applies to functionality but also design as there is usually a larger choice of themes and design options with self-hosted ecommerce platforms.

What are the Negatives of a Self-Hosted Ecommerce Platform?

No Technical Support

This is the biggest negative when it comes to self-hosted platforms, you are responsible for nearly all of the technical aspects of your website as well as the business ones.

Now it is your web hosts job to make sure that your server is running properly and that it is secure on their end. But that is pretty much all they have to do, good web hosts will help you to set your website up so it performs well but this is your responsibility. As is everything on website such as security, compliance and maintenance.

If you cannot do this yourself, then you will need to employ the services of a professional to help you manage this and if you are just starting out, this can be a large financial outlay.

What is the Best Ecommerce Platform?

The simple answer is, there isn’t one single best platform. The reason why is that they all have their own strengths and weaknesses and it very much comes down to you and your business as to which one is the best one to choose.

But there are some platforms that are just better than others and that is why I created two separate posts that look at the best ecommerce platforms overall and the best ecommerce website builders. To take a look at either of these, just click the images below.

The Best Ecommerce Platforms for UK Businesses
Best Ecommerce Website Builders

What are the Most Popular Ecommerce Platforms?

A question that is often asked is which is the most popular ecommerce platform, well thanks to the team at builtwith.com, I can show you. Now these are the most popular ecommerce platforms for the top 1 million ecommerce websites in the world (as of 1st May 2020).

woocommerce logo

#1

27%
#2

#2

21%
#3

#3

7%

Pretty much unexpectedly, WooCommerce and Shopify dominate the list with a combined 48% market share and a big gap back to Magento in third place. The only other two platforms to have any kind of significant share globally are Opencart (4%) and Bigcommerce (3%)

But what about here in the UK? What are the most popular ecommerce platforms that are used by British businesses?

woocommerce logo

#1

19%
#2

#2

19%
#3

#3

17%

No surprises what the top two are once again! But there is a much more mixed usage amongst ecommerce platforms here in the UK. Not only is the 3rd place Wix Stores much closer at 17% but the likes of Squarespace (9%), Magento (6%), Ecwid (5%) and Opencart (5%) also decent market share.

How to Get Started with Ecommerce

I hope after reading through this post, you now know what ecommerce is, what you can do with it and the kind of software that you can use to build an ecommerce website.

But how do you get started building an Ecommerce Business? Well that takes a little bit more than just knowing what ecommerce is and fortunately for you, I have written two guides for beginners on how to get started.

One of them looks at the business side of things and the other is a practical guide on how to actually build an ecommerce website from scratch and are a great starting point for anyone looking to build an ecommerce business.

These aren’t also just generic guides, they are both written from first hand experience of starting, building and growing my own ecommerce business over 7+ years. If you want to check them out, just click on the images below:

How to Start an Ecommerce Business
How to Build an Ecommerce Website

Conclusion

So that brings me to the end, I hope you have enjoyed and learnt something from this post about what ecommerce is, how it works and also how you can start your own ecommerce business.

If you are interested in learning more about ecommerce or ecommerce platforms, then please check out the blog section as well as the reviews and comparisons as there is a lot of information on this site (if I do say so myself!), that can help you on your journey.

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