What Is An E-Commerce Business?

History In The Making:

Originating as early as 1971, e-commerce, short for Electronic Commerce, is the trading of goods or services over an electronic network (usually the Internet). The term “e-commerce” covers many types of transactions, from the exchange of goods and services between corporations, through music sites, to consumer based retail sales.

E-commerce revolutionized the exchange of goods and services – using the Internet eliminated barriers such as time or distance – and has thus changed business, the economy, and society as a whole. It is a growing industry, with online retail sales topping $370 billion by 2017. Conservative estimates claim that e-commerce in the U.S. is growing at 16% per year, or doubling every five years.

As the rest of the electronic world transforms, so does e-commerce. For instance, Facebook and Pinterest now drive a significant amount of e-commerce. According to Paymill, Facebook is the biggest referrer of e-commerce platform Shopify’s traffic. Further, as the number of Internet users increases, so do the various e-commerce markets. Currently, more than 40 percent of people using the Internet have purchased goods online, and these figures will only increase as Internet use grows across the world.

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Categories of E-commerce:

The 4 different categories of e-commerce depend on the identity of the buyer and seller.

C2C (Consumer to Consumer): E-commerce in this category is made up of transactions between individuals, and they take place via forums, online classified ads, or marketplaces. Examples of C2C e-commerce are Esty and Ebay.
B2C (Business to Consumer): B2C is what most people associate with e-commerce. B2C consists of transactions between businesses and the general public via the Internet. A good example of B2C is any website of a traditional brick-and-mortar store, such as Nordstrom, through which consumers can buy product without any form of human interaction. Amazon is also a huge company in this space.
C2B (Consumer to Business): A great example of innovation due to the growth of Internet usage, C2B e-commerce reversed the traditional B2C business model and allows consumers to sell goods and services to companies. For instance, C2B occurs when the author of a blog shares a link to an online business in exchange for affiliate revenues from its resulting sales. Elance, an online staffing platform, was the first C2B model e-commerce site.
B2B (Business to Business): B2B e-commerce describes businesses doing business with each other. When wholesalers sell to retails online, they engage in B2B e-commerce, and Alibaba is a company doing exactly that.

Things to Consider When Starting an Online Business:

Governmental Regulation:

Focusing on the U.S., the FTC regulates the use of commercial emails, online advertising, and consumer privacy. E-commerce requires that sellers gather personal information about their buyers, and U.S. regulations aim to protect the privacy of buyers through various federal and state privacy laws. Furthermore, laws regarding copyright and advertising apply especially to online businesses. However, laws vary as sellers do business across state lines or outside of the country, and online businesses must be aware of their legal responsibilities.

E-commerce Software:

E-commerce software ranges anywhere from online shopping carts to a full e-commerce platform that can handle virtually everything related to buying and selling online. E-commerce software not only eases the process of building a website capable of carrying out transactions online, but it provides a smoother customer experience. It is important to consider the size and needs of your online business when choosing e-commerce software. For example, e-commerce platforms differ in their pricing, security offerings, help & support components, and shopping features like being mobile-friendly or handling gift cards.


The security of an online business is of the utmost importance as customers release information such as credit card details and addresses when they engage in e-commerce. When deciding on a software that handles online payments, businesses must be aware that they have to adhere to certain security standards. For example, the Payment Card Industry Data Security Standard is an information security standard for all organizations that accept payment from the major card schemes (Visa, American Express, Discover, etc.). Adhering to this standard will help ensure secure transactions, but online businesses should also use Secure Sockets Layer (SSL) protection, which encrypts the transactions and is necessary for accepting credit card transactions. Additionally, online businesses should be able to protect themselves from fraud and other security issues.

E-commerce Strategy:

E-commerce strategy can vary greatly from the strategy relating to brick and mortar. When engaging in transactions online, businesses must convince their buyers to purchase goods or services that can’t be physically touched or seen, so creating a user-oriented experience that delivers a friendly and personal experience is a necessity. This includes listening to customer feedback and utilizing social media. Incorporating user-oriented approaches in strategy will drive brand loyalty for e-commerce businesses, who struggle to break even when relying on one-time shoppers, according to a study by Bain & Company.

Other good things to consider when developing e-commerce strategy are the growth of mobile and incentivizing the customer. Mobile e-commerce is growing, with 4 in 5 smartphone owners using their device to shop. Smartphones and tablets greatly increase the number of opportunities for customers to engage in online transactions, so businesses must support this specialized form of e-commerce. Furthermore, rewarding the customer pays off, as demonstrated by Amazon Prime and other loyalty programs. Special programs and offerings drive buyers to make a purchase, and these extras can build brands and increase word-of-mouth promotion.

When considering its e-commerce strategy, online businesses should keep in mind that this space is constantly changing. As e-commerce norms change to offer same day delivery or purchasing on social networks, for example, online businesses must continuously reevaluate their strategies to stay competitive.