What is eCommerce?

eCommerce, or electronic commerce or internet commerce, refers to buying and selling goods or services using the internet and transferring money and data to execute these transactions. E-commerce is often used to refer to the sale of physical products online, but it can also describe any commercial transaction facilitated through the internet.

Whereas e-business refers to all aspects of operating an online business, eCommerce refers specifically to the transaction of goods and services.

The history of eCommerce begins with the first ever online sale: on August 11, 1994, a man sold a CD by the band Sting to his friend through his website NetMarket, an American retail platform. This is the first example of a consumer purchasing a product from a business through the World Wide Web—or “eCommerce” as we commonly know it today.

Since then, eCommerce has evolved to make products easier to discover and purchase through online retailers and marketplaces. Independent freelancers, small businesses, and large corporations have benefited from e-commerce, enabling them to sell their goods and services at a scale that was impossible with traditional offline retail.

Global retail eCommerce sales are projected to reach $27 trillion by 2020.

Types of eCommerce Models

Four main types of eCommerce models can describe almost every transaction that takes place between consumers and businesses.

1. 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).

2. Business to Business (B2B):

When a business sells a good or service to another company (e.g. A company sells software-as-a-service for other companies to use)

3. 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).

4. Consumer to Business (C2B):

When a consumer sells their 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).

Examples of eCommerce

Ecommerce can take on various forms involving different transactional relationships between businesses and consumers and different objects being exchanged as part of these transactions.

1. Retail:

The sale of a product by a business directly to a customer without any intermediary.

2. Wholesale:

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

3. Dropshipping:

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

4. Crowdfunding:

The collection of money from consumers in advance of a product is available to raise the startup capital necessary to bring it to market.

5. Subscription:

The automatic recurring purchase of a product or service regularly until the subscriber cancels.

6. Physical products:

Any tangible good that requires inventory to be replenished and orders to be physically shipped to customers as sales are made.

7. Digital products:

Downloadable digital goods, templates, courses, or media must be purchased for consumption or licensed.

8. Services:

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

(Credit: Shopify)

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