What is eCommerce and How can it Benefit Your Business?

Learn how to build an online store that sells

As the world changes, people's means of doing business changes as well. When the internet became publicly available, enterprising business owners seized the opportunities offered by an electronically-connected world. It was a slow start, but today, eCommerce has grown to a multi-billion-dollar business model comprising all types of industries, and eCommerce market statistics demonstrate that it's only getting more popular.

Every business owner should gain an understanding of eCommerce because of the massive benefits it can bring to the table. But the popularity and potential of eCommerce doesn't mean it's simple or straightforward — in fact, it can make running a business even more complicated. It's common for entrepreneurs to feel intimidated at first.

Fortunately, as eCommerce grows, better tools, resources, and shopping cart software have become available to make doing business online easier for everyone. Now, eCommerce isn't something only for big enterprises; it's for every business right down to the single proprietor working from their kitchen counter.

So what's eCommerce exactly, and how can it help your business? Let's go in-depth.

Table of Contents

What is eCommerce?

eCommerce is short for "electronic commerce" in the same way that email is short for "electronic mail." eCommerce involves all types of commercial transactions conducted over the internet, primarily consisting of the buying and selling of products and services. This is extremely broad and covers a huge variety of industries, from digitally-downloaded ebooks, games, and music, to clothing and accessories, to contracting services and more.

In short, eCommerce allows for online purchase and payment for anything that can normally be bought face-to-face by replicating the buying experience on a website. This is made possible by the use of eCommerce software, which simulates a brick-and-mortar store. Visitors can add products to a virtual shopping cart and visit checkout when they're ready. At checkout, the customer enters payment and shipping information to complete the transaction. Payments are processed by payment gateways that integrate with the eCommerce software to allow the customer to pay in various ways, such as by credit card, eCheck, PayPal and other digital wallets, or other methods.

Some eCommerce software also includes additional tools to help the business owner manage and market their online store.

what is ecommerce

History of eCommerce

Just as the internet has been around longer than most people realize (with the creation of ARPANET in
the 1960s), eCommerce was first introduced quite a while earlier than you might guess.

The Beginnings of Ecommerce Online

The first online shopping system was invented in 1979 by English technology innovator Michael Aldrich. He used a phone line to connect an altered television to a computer that could process simultaneous transactions in real time. He called it "teleshopping" and started selling his system to businesses.

Most eCommerce was business-to-business at this time because individual consumers didn't commonly own computers, but there were exceptions. For example, CompuServe launched their Electronic Mall in 1984, which allowed CompuServe subscribers to experience online shopping in a marketplace-style environment. Numerous merchants had a presence on the Electronic Mall that customers could visit to place orders or request information.

The World Wide Web

In 1990, computer scientist Tim Berners-Lee invented a much more accessible way to view data on the internet and named it the World Wide Web. The web is the system of websites, hyperlinks, and browsers that we use today. The development of the web helped popularize the internet among the public, rather than just computer labs and businesses.

The Earliest Online Businesses

The first online stores (as we think of them today) were soon to follow. Book Stacks Unlimited, the world's first online bookstore, opened in 1992. Then 1994 saw the launch of Netscape 1.0 with SSL encryption to keep transactions secure. The next year, Amazon and eBay (then called AuctionWeb) were launched. Shift4Shop was founded in 1997 as a comprehensive eCommerce solution for online storefronts. The next few years saw the release of Google, PayPal, Alibaba, and other internet staples of today.

Continuing Growth

eCommerce shows no sign of slowing down, and each year shows more overall profits than previous years. It's also become much more approachable by the public, with eCommerce solutions like Shift4Shop available to make it possible for anyone to build an online store — not just large companies like in the past. The majority of eCommerce websites are now owned by small businesses rather than the big enterprises that used to dominate the internet.

Types of Ecommerce Business Models

Not every eCommerce store works exactly the same way. There are different types of eCommerce which are defined in a few ways. The business model definition depends on who does the buying and who does the selling, while the eCommerce store type is based on how products are bought and sold.

Business-to-Consumer (B2C)

B2C eCommerce involves a customer purchasing from a business, and is one of the most common eCommerce business models. Any online store where an individual can browse and buy products from a business is using the B2C model.

Business-to-Business (B2B)

B2B ecommerce transactions take place between businesses, in which one business sells products or services to another. This includes the relationship between retailers, wholesalers, and manufacturers. Businesses that provide other businesses with supplies (like office materials) are also selling B2B.

Business-to-Administration (B2A)

B2A transactions are similar to B2B except the buyer is not another business; instead, it's a government administration purchasing products or services needed to perform the tasks that administration handles. B2A is also called B2G (Business-to-Government).

Consumer-to-Consumer (C2C)

C2C eCommerce is customers selling to one another, such as through auctions on eBay or classifieds on Craigslist. This is also one of the first and most widely-used business models.

Consumer-to-Business (C2B)

C2B transactions involve a consumer selling products or services to businesses. This can include social media influencers, crowdfunding, affiliate marketing, and online marketplaces in which customers make their own products available to businesses (like writing and editing services or stock photography and video).

Consumer-to-Administration (C2A)

C2A eCommerce is similar to C2B eCommerce except the consumers sell products and services to government administrations.

eCommerce Store Types

There are different eCommerce store setups to accommodate the different business models listed above. For example, we have the typical online retail store, in which a single business sells products to a customer base (B2C). B2B businesses often have a similar eCommerce store setup, with their own dedicated websites for selling to their business clients.

Another store type is the electronic marketplace, in which multiple sellers come together to reach a large group of buyers. Amazon is an example because it offers both B2C sales (from Amazon itself to the customer) and C2C sales (Amazon Sellers selling products on the marketplace). Another prominent example is Etsy.

Online auctions are another type, with eBay being the classic example. Sellers on eBay can also set fixed prices for their products, but the auction system remains the most popular sales model on the site. B2C, C2C, and even C2B transactions can all take place on eBay.

Types of Ecommerce websites

eCommerce Platforms

An eCommerce platform is a type of software that includes the features needed to create an eCommerce website, including a shopping cart and a way to add products to it, and a checkout procedure that can process transactions to receive payment from the customer. The eCommerce software also includes integrated tools for running a business, such as inventory management, marketing and search engine optimization tools, and often a website builder.

The growth of eCommerce has led to the development of multiple eCommerce solutions, many of which are tailored to a specific size or type of business. Other eCommerce platforms like Shift4Shop focus on creating a versatile solution for any business and industry.

Types of eCommerce Platforms

Self-Hosted eCommerce Software

eCommerce Software

This is eCommerce software that is purchased or downloaded from a provider for installation onto a web server. The term "self-hosted" refers to the fact that the business owner needs to supply their own web hosting for their eCommerce site, whether they purchase hosting from a provider or have access to their own data center. Self-hosted eCommerce platforms are often free or open-source, but they tend to be more difficult to use and are not always reliable. Plus, the business owner needs to handle additional expenses like security.

Software as a Service (SaaS) eCommerce Platforms

Software as a Service (SaaS) eCommerce Platforms

SaaS eCommerce software is like a bundle that includes the software, hosting, backups, and usually tech support. The online store owner doesn't need to download or install any software, nor do they have to supply web hosting — SaaS platforms are already hosted on the provider's own servers. Store owners only need an internet-connected computer with a modern browser, and they manage their online store by logging in through a portal.

Shift4Shop is a powerful SaaS eCommerce platform with built-in PCI-compliant security and free 24/7/365 technical support.

Benefits of Ecommerce for Business

As you can imagine, eCommerce has caused great change in the way people do business. But with great change comes fantastic opportunity! Businesses that embrace eCommerce can reap the following benefits and more.

A bigger customer base than ever

Websites can be seen and visited by millions of people, unlike brick-and-mortar storefronts which serve a limited area. An online store is the equivalent of having a location on every block and a billboard on every street, plus, you never have to worry about opening up shop in the wrong neighborhood for your target market.

Increased ability to find a niche

This relates to the problems encountered when you open a store in the wrong neighborhood — your target customers just aren't going to find you! But with an online store, you can specialize into as narrow a niche as you imagine. Niche markets are often difficult to grow simply because they're so obscure, but with access to customers worldwide, you have much more potential to scale up.

Run your business from anywhere

Since all you need is a computer with internet access, you can manage your day-to-day business tasks from anywhere in the world. There's no need to keep strict office hours, either.

Increased convenience for customers

Online shoppers know they can get what they need without having to leave their homes, drive through traffic, or stand in line. eCommerce trends show that more customers each year turn into regular internet shoppers, which demonstrates a clear preference for buying online.

No closing times

Websites are online 24/7, every day of the year. Customers can shop whenever they want, which means far more opportunities for you to makes sales. For the customer, this ties into the increased convenience mentioned above.

Lower operating costs

Since an online store owner doesn't need to own a brick-and-mortar location, there's a reduced need for sales staff, property expenses, in-store display supplies, and other costs associated with running a business. The primary expense for online store owners is product stock and warehousing space, and even those can be avoided if the business sells via dropshipping.

Inventory management and automation

The use of computers means much of the ordering, payment, fulfillment, and restocking processes can be automated within the eCommerce software. This cuts down on human error, labor costs, and time investment.

High potential for targeting

Computer-automated systems also mean vast amounts of data can be collected. You can learn almost anything about your customers, their purchase habits, your best sales months, days, and weekdays, your most popular products, and much more. The best eCommerce software provides this deep level of data collection and reporting, and also gives you the tools to take advantage of it.

Customer personalization

Advanced data collection and reporting helps you understand who your customers are and what they want, but this is good for more than just selling to them — it also means you can provide personalized customer service that makes them feel valuable to you. Some eCommerce platforms include or integrate with CRM software (Customer Relationship Management), which provides the additional advantage of recording all your customer interactions to help build up a rich customer service history.

Features of eCommerce

The very basics of eCommerce include product listings, shopping carts, and payment processing, but most platforms today go far beyond these basics. While not all eCommerce platforms are created equal, and some do provide a superior user experience and toolset than others, features of an eCommerce platform often include:

Product Pages

Each product gets its own dedicated page on your website, with images and descriptive text.


Shift4Shop hosts its merchants' online stores on fast, powerful servers and sets no limits on space. You can create all the pages you need and upload as many images as your products require.

A Shopping Cart

The shopping cart lets customers gather items together for a purchase, add or remove them as desired, and then proceed through a payment process. When an order is received, the business owner receives a notification so they can process and fulfill the order.

Inventory and Order Management Tools

Inventory counts decrease automatically when customers buy a product, and quick reordering tools are available as well. Customer orders can be processed and categorized in an organized manner.

PCI-compliant Security

PCI DSS (Payment Card Industry Data Security Standard) compliance is necessary to take credit and debit card payments online. The best eCommerce platforms, including Shift4Shop, have PCI compliance built in to save you from having to seek compliance on your own (an expensive and maintenance-heavy process). SSL encryption is included within PCI standards.

A Website Builder or Content Management System

These tools make it easier to, design, brand and build an online store, including all parts of your website like the front page, product pages, extra content pages (policies, "About Us," etc.) and more. Most eCommerce platforms include online store templates to help you get started.

Blogging, SEO, and Marketing Tools

Send email newsletters to customers, post products to your Facebook Store, write blogs to attract visitors and increase your authority in your industry, and rank highly on search engines with tools that make it easy to apply SEO best practices.

A Promotion and Coupon System

Create flexible discounts for your customers through coupon codes or limited-time sales.

Product reviews

Customers love to read product reviews to help them decide on their purchase. For the best effect, these reviews are usually shown right on the product page.

Reporting and Analytics

See what products sell the most, which promotions pulled in the most customers, and more. This information is used to take advantage of strengths and identify areas for improvement.

What Other eCommerce Tools Are There?

Many eCommerce platforms integrate with popular business software for accounting, email newsletters, shipping, and more. Most also have an app store where a business owner can add extra features to their online store, often for a price. But some platforms take the initiative to add powerful extra features right into their core software.

Shift4Shop has more of the most-needed eCommerce features built-in than any other platform at similar price points.

Ecommerce tools

How to Get Started with eCommerce

Starting an eCommerce business begins the same way you'd start any business — with an idea and a unique value proposition. An outline of the whole process is as follows:


Come up with and develop a profitable idea

Your business needs to start out with a solid foundation, so put some serious thought into the beginning steps. Find a profitable market and narrow down the niche of your company so you can excel through specialization. Identify your ideal customer and define your unique value proposition — the special element that makes your company stand out from the competition.


Conduct market research

You should start researching while your idea is still in development. Look into your competition and their pricing strategy, identify possible challenges, and don't be afraid to alter your initial concept to work better with the information you find.


Decide where to source your products

Depending on what you want to sell, you have different options available for supplying your business with inventory. Will you make your products, buy them from wholesalers, or dropship them directly to customers from the supplier?


Name and brand your business

Your business name should reflect your unique value proposition and your products, and should also work well as a domain name (the internet address where your website will be located). Create a logo and come up with some design standards, including a color scheme and company voice.


Create your eCommerce website

Choose an eCommerce platform by comparing the pricing, feature sets, and ease of use of different platforms. When one looks good, look for a free trial to test out the software — or better yet, see if there's an unlimited free plan like the one offered by Shift4Shop. Once you've chosen, get started building your online store.

Shift4Shop includes everything you need to sell online

eCommerce FAQs

What features should be included on an eCommerce platform?

When evaluating an eCommerce platform as a possible solution for your business, always look for the following:

  • All the essential business management features, like robust inventory control, integrations with shipping carriers for real-time rates and label printing, strong marketing and SEO tools, flexible promotions and coupons, organized order and customer management, high security and anti-fraud tools, product reviews, and more. The fewer apps you have to spend money on, the better.

  • Essential customer-facing features, like mobile-friendly site design and checkout, convenient navigation, multiple available payment methods, and other features that will allow you to deliver an overall positive user experience.

  • Ease of use and a low learning curve, so you can get started quickly without needing too much technical knowledge.

  • Pricing plans with a good balance of cost versus included features. Remember that if you're considering a free eCommerce platform, you'll almost always still need to pay for hosting, security, and design - and you'll spend more in the long run. Shift4Shop is the only exception as it offers a completely unlimited free plan that includes hosting and security, along with a huge selection of ready-to-use templates.

  • Free, high-quality technical support, especially outside office hours.

What's the best eCommerce SaaS platform?

The best Software-as-a-Service ecommerce platforms include Shift4Shop, Shopify and Bigcommerce.

What is dropshipping?

Dropshipping is a business model in which you don't keep inventory in stock or purchase it ahead of time. You still do all the work to sell it, but once you receive an order, you forward it to the dropshipping supplier. The supplier then ships the customer's order directly to them. You keep the difference between your cost of the product and the markup you apply to it on your website. Since no money needs to be spent on warehousing or inventory, dropshipping allows a new business to start with very little up-front investment.

If I have my own online store can I still sell on other sites like eBay?

Yes! In fact, Shift4Shop is integrated with eBay, Amazon, and Google Shopping, as well as Facebook so you can sell from your Facebook Shop tab. Shift4Shop is set up so you can sell on all the popular marketplaces and manage all your orders and inventory from a single dashboard.

Do I really need my own eCommerce website?

Yes, every business needs a website these days. eCommerce is so popular that businesses without their own website and online store are at a disadvantage, even if they already sell on big marketplaces. A website serves as your business's presence on the internet and is as important as a business card.

Can I sell B2C, B2B, etc. at the same time?

Yes, and Shift4Shop makes this easy. You can run a single eCommerce website and set up Customer Groups to differentiate your consumer and business customers. You can also set up bulk pricing and create membership tiers if you desire. By using these tools, you can offer different pricing and options to individuals and businesses.

Can I make a subscription-based store?

Yes, with Shift4Shop's Autoship module you can set up a customizable subscription service with automatic reordering for your customers.

Can I sell digital downloads like ebooks, music, or games?

Yes, depending on your platform. Shift4Shop has a built-in feature for setting up digital downloads complete with copy protection to prevent unauthorized duplication of your products.

What does eCommerce fulfillment mean?

Fulfillment is the process of shipping a physical item to a customer. It includes picking (choosing the right products for the order), packing (preparing and boxing the products for shipment), and shipping. You can fulfill orders yourself, use a dropshipper, or use a fulfillment service to handle your inventory for you.

Where can I learn more about eCommerce?

Among many great resources on the internet, Shift4Shop constantly releases eCommerce information, strategies, and tips on the Shift4Shop blog. You can also visit eCommerce University for complete courses on all different aspects of eCommerce.