What is e-commerce?


What is an Ecommerce business?

Ecommerce is short for electronic commerce. Ecommerce is an online store where people can surf and buy products online without having to go to the physical store.

It is something that has made our lives convenient.

Over the years, electronic business has rapidly grown. It has been projected to hit $4.878 trillion in 2021. E-commerce has become an essential tool for both small and large business firms worldwide.

History of Ecommerce

Physical stores before ecommerce existed

The history of ecommerce goes back to the 1960s. It has been more than a half-century since it was introduced. With the exchange of data through the Electronic Data Interchange(EDI).

The introduction of an online service provider, CompuServe, was made in 1969. The online service provider introduced email and internet connectivity, which influenced the E-commerce websites.

1. The Invention of Teleshopping in 1979

The concept of online shopping was invented in 1979 by Michael Aldrich. He is an inventor and entrepreneur. Aldrich operated the system by connecting the TV with a transaction-processing computer and telephone line, which was called “Teleshopping.”

The system got marketed from 1980. Initially, it was installed in the UK, Ireland, and Spain mainly for business-to-business models.

The invention became the foundation of the modern e-commerce business.

2. The Launch of Ecommerce Companies

An overview of the history of ecommerce highlights the Boston Computer Exchange. The world’s first ecommerce company launched in 1982.

Boston Computer Exchange was an online electronic trading company for selling used computers. The operation was before the internet was widely available.

Tim Berners Lee was the inventor of the web browser called the World Wide Web in 1989. It is a primary tool to interact with billions of people on the Internet.

The Hypertext Project with the Internet led Lee to develop URL, HTML, and HTTP. After that, ecommerce fast-forwarded from the early 1990s.

Charles M. Stack created the first online bookstore called Book Stacks Unlimited in 1992. The functioning format of the company was the dial-up bulletin board. Later, it got replaced by the internet system.

Following the first online bookstore, Jeff Bezos the founder of Amazon. He introduced Amazon as an online bookstore in 1995.

3. The First online purchase

The New York Times report takes you back into the time of Arpanet. Started as a tool to share information, the students of Stanford bought Marijuana from the MIT students in 1972. However, it does not mark the first online order as it didn’t ensure any confirmed exchange of funds and no real shopping experience.

An e-commerce software company, Shopify also mentions the grocery order made by 72-year-old British women. It recorded the absence of electronic money exchange.

The world saw its emergence of online retailing in 1994. The New York Times states the first online secure transaction of purchase of Sting CD, sold by US retailer, NetMarket on 11th August 1994. The payment was made using data encryption software.

4. The rise in Ecommerce

The emergence of the World Wide Web opened the door for many new e-commerce services.

The NSF(National Science Foundation) began charging a fee for registering domain names from September 1995. The number of domain names grew from 120,000 to 2 million in just three years.

In the early 2000s, the internet access in homes outlined effects on e-commerce. It highlighted a 26% increase in online sales in an article in the E-commerce Times.

An online business site, Amazon reported a 28% rise in sales. It has grown to be the largest online retailer in the world.

M-commerce as e-commerce

Mobile commerce in ecommerce

The online business upsurged to a higher level with the use of mobile phones and social media.

The rise of mobile commerce appeared in 2010. In the expanding market of smartphones, almost 1.6 billion people use their mobile devices to shop online. The easy usage of smartphones replaced the desktop.

Social media platform opened new opportunities for its consumers. Social Media Giant like Facebook has 1.47 billion active users.

The m-commerce sector noted a 39.1% increase in sales in 2016.

The advantages and disadvantages of e-commerce

The internet is cheaper and accessible by mass. Online business like e-commerce has become a feasible idea. Nevertheless, like any, it has its share of pros and cons.

Advantages of e-commerce.

The online shop has a lot of benefits for business owners and shoppers. Let’s have a detailed look.

1. Convenience

The online shops offer shipping product to the doorstep. The online store eliminates the effort of physically traveling to the shop for buying stuff.

The most significant advantage is it eliminates the physical restriction. You can shop anything from around the world and have it delivered to you.

If you are a person with a busy schedule, you can shop anytime on any day. It removes the hours’ limitation associated with a traditional brick and mortar store.

2. Global outreach

The online store is just a website. A physical store has a minimal reach, your e-shop to has no geographical boundaries. Anyone with internet can access it from anywhere.

It can be browsed globally by anyone. It makes easier for you to reach new customers all over the globe. Creating a global brand is less expensive now.

3. Low Investment and Operation Costs

The physical store has numerous running costs such as inventory management, rent, etc. Starting up a retail store can cost you a leg and an arm.

The financial cost of setting up and running an e-commerce business is quite low comparatively. This is one of the reasons why online stores cheaper prices.

It translates into higher margins, too.

4. No Barrier, Time and Location

A physical store is likely to be open at a specified time and in a particular location. An online shop is open 24×7. You will be making sales even when there is no one to attend to customers.

The feature alone improves your chances of sales and revenue. Your store works while you are sleeping.

5. Easy to Display

The online business depends on the visual presentation. The online websites ease the process of showing your products.

You won’t have to worry about space for storing products.

The quality pictures make buying easy. The product page is an excellent place to tell detail comprehensively.

The disadvantages of e-commerce

1. Delay of Goods

Delay in delivery has been haunting the e-commerce website forever. Business owners conclude this as a great challenge to tackle. It can make customers lose trust.

A variety of strategies mentioned here can help you prevent the delays:

  • Strong communication

Suppliers or customers are likely to prioritize those who have a clear understanding of their needs and expectations. Active communication with suppliers and customers can be a great alternative to avoid delays.

  • Tracking Feature

A tracking system is reliable and real-time data. It offers consumers to know the latest status of their package and estimated delivery date. Adding the tracking feature is an excellent way to deliver your efforts to the best customer service.

  • Order Early

Supply and delivery is a long process. The delay, sometimes, can’t be avoided. A proverb “The early bird catches the worm,” best explains this.

Being the service provider, you need to check, manage and have a plan in advance to be successful. You should have the ability to analyze data and make accurate predictions of demand.

A proactive step, of ordering in advance can stop delays.

2. Lack of Security

The growing number of fraudulent online businesses have created fear among consumer. Some of the unauthorized sites seek to gain by credit card fraud. It is one of the main limitations of E-business.

The lack of security software on a website affects customers’ security and privacy. The countless number of cyber-attacks has created panic.

3. Technology

The server crash is for real. Your website can sometimes be overloaded with lots of traffic and it can get slow or crash. Too much of website crash can harm your ROI.

A slow website will leave a bad taste in your mouth. As your business gets older there may be products you must have stopped selling. You may have taken those pages offline.

You may have lots of 404 pages or broken web pages.

4. Lack of real experience

One of the biggest complaints about the online store has been to not be able to feel the product physically. Products like clothes, shoes, etc are items that most would like to get hands-on experience.

E-commerce experience of such items can be very limiting. A detailed description of the product with high-quality zoom-in pictures and good return policy can help you overcome the issue.

How to keep your e-commerce secure?

Some of the critical security measures every business should take:

1. Two- factor Authentication

Two-step verification is not a new concept. This security process requires your password and username and also additional information.

The two-step verification will require you to add verification code apart from the correct password. The verification is generated via the app or a text message is sent to you to your phone.

Your login is authenticated only if both are correct that is your password and the verification code.

2. Encrypt User Data

Data encryption is the most important and powerful way to keep your data safe.

It involves converting your data into a code only intended recipient can access. It’s also called Digital Locker.

3. Up-to-date

Not just better performance, but also high security is offered when you update. It is easy to steal data and allows hackers to gain control over your computer when your software isn’t updated.
The security benefit of making an update can outweigh the problem.

4. Use Strong Passwords

We use passwords to prove our identity when using websites. The best practice for a password is to have a combination of letters (small and in caps), number and characters.

A strong password can prevent hackers from cracking the code and are very unlikely to be guessed.

It is also recommended to change passwords every 90 days. It can be a hassle but its worth the effort.

5. Lack of Personal Touch

Every consumer has a different preference. The customer should be the top priority.

Online business having the self-service nature, lack delivering customized service. E-commerce can not offer personal selling experience to customers through a device.

However, the growth of AI( Artificial Intelligence) has helped in tackling some part of it.

What is Mobile Commerce?

Mobile commerce is also known as m-commerce. It is performing e-commerce through mobile devices. M-commerce is projected to be the next generation of e-commerce.

With smartphones been getting popular, there has been a considerable increase in the order of goods via mobile devices than desktops.

While developing an e-commerce website, it is also important to make your store accessible by phones. M-commerce should also cover a wide variety of transactions. The transaction from the telephone includes shopping, payments, and banking.

Some of the benefits of building m-commerce are:

1. Enabling the websites to be accessible through mobile devices can enhance customer experiences. It is a great advantage when users can find whatever they are looking for without switching to a desktop.

2. The mobile commerce application can boost retail sales, with trouble-free access to websites anytime and easy transaction feature.

3. M-commerce also ensures personal touch in its services. The push notification function covers the gap in delivering updates and offers.

M-commerce is a doorway to opportunities. Such as Omni-Channel retail is a modern approach to deliver services both online and offline. It allows selling through different channels.

Different Types of eCommerce Websites.


The Business to Business e-commerce relates to the sales between business entities. This type of commerce transaction involves a manufacturer, wholesaler, and retailer.

It is considered the largest e-commerce model. B2B reduces the cycle time leading to higher productivity at a lowered cost.

This system of marketing aims at approaching new business connections.

Some of the world’s top B2B websites are Alibaba.com, eWorldTrade, and globalsources.com.


Business-to-Consumer is the most common online business. The B2C trade takes place between the company and customers.

It started in the mid-1990s. With the inception of the internet, the B2C method evolved to a great extent. This type of website functions as a medium of informative content for customers. It offers the consumer a variety of choices and a chance to compare.

This kind of online website sets its objective to active customer service with quick delivery.


These types of websites are the third party. They offer an online platform for consumers to sell to other buyers. For instance, you may have known eBay.com and quikr.com for quite a time now. These are the online gateways for reselling. To make you understand better, these are C2B2C (consumer to business to consumer) e-commerce.


The C2B is a type of online business model. Here, the companies are the valuable consumer of the service offered by an individual. It is a flip of the business-to-consumer concept. Individual consumers provide valuable products and services. The C2B in action is all about you and your identity.

Example- a graphic designer, presents several new designs for the company site. The company selects from numerous choices and makes a valid purchase.

Companies like Shutterstock rely on photos updated by users.


The B2A is a deal of online business and public administration. These type of websites offers access to government services round the clock. The B2G(Business-to-government) is another name for this term. It advances users with government services.

Example- E-governance is the application easing the legal processes.

Consumer-to- Administration(C2A)

These types of websites are considered liable. It helps with information regarding legal authorities. It eases the process for the consumer to post queries directly to the government authorities.

How to build your first E-commerce Website Business?

E-commerce, being popular has reduced the barrier to entry into the E-world. To start an e-commerce business website, you need to follow some essential steps. You must go in a logical order to make your e-business grow. Starting up an e-commerce business is a multi-layered process of researching, building, launching and expanding.

1. Determine and source your products

The easiest way to fast grow your e-business is to learn about your customers. Entrepreneurs need to know their marketplace before building an online store. The process of researching may take long but it’s fruitful in the long-run.

An entrepreneur aims at meeting the needs of its consumers. While researching the market, it studies customer behavior, demand, and needs.

The most common and easy way is to check listings on Amazon and eBay.

After several researching and exploring process through the popular online listings. The e-commerce business owners decide on what and how.

Once you determine what products to sell, the question now is how to source your products?

Inventory is the lifeblood of any e-commerce business. As you start-up, there needs to be a continuous flow in the supply. Some of the online supply directories are ThomasNet, Alibaba, and GlobalSources.

To simplify the process, you can make a list of potential suppliers and communicate with them. Talking to someone with first-hand working experience with suppliers also helps, rather than just ideally depending on the online research.

Another alternative is to attend Trade Shows. This type of meet and greet event offers an opportunity to build links and find likely traders.

2. Setting up the Price

After choosing and sourcing your product, the next is to set up a price.

Price is the most important factor affecting the purchase decisions of online shoppers. Many consumers also devote their time, hunting the best deals and offers.

Research work before fixing a price lets you know the competitive pricing others have charged. It can be the hardest aspect to decide on, as you need to keep in mind to offer a fair price.

The pricing element also determines either your consumer would stay or not as the online stores clearly state the prices.

The other pricing factors such as the cost of product and supplies, shipping costs, marketing, and advertising costs, taxes and web hosting also affect the price of the product.

However, considering some of the pricing strategies can help you in setting up the price.

  •  Cost-based pricing

The Cost-based pricing approach is the simplest of all. Here you add the cost of your product with the profit margin. The cost of your product includes all the prices linked to the product like production, promotion costs. Though this strategy is simple as you can set up the price without in-depth research, there is a possibility that it can stop your business to gain profit. There can also be chances to set the price either too high or low, which could be a downside for your business.

  • Market-oriented pricing

The market-oriented pricing approach relies on research work on market conditions and competitors. With around 12 million e-commerce companies(https://blog.lemonstand.com/just-how-big-is-the-ecommerce-market-youll-never-guess/), you can easily compare the prices with similar products on the market. Price tracking tools, like Prisync, helps you collect data on competitors’ pricing. Knowing your competitors before determining the pricing is a good idea, it also results in higher conversion rates. A market-oriented strategy can be challenging as it needs thorough research and can be time-consuming.

  • Consumer-oriented pricing

The consumer-oriented strategy works well only if you know your customers well. This approach is based on setting-up the price on the estimated value of the product to the consumers. A value-based pricing strategy is beneficial in the long-run. This strategy of pricing enhances the profit of the business and build brand recognition. Although, this approach takes time to study and understand consumer behavior.

3. Building your e-commerce website

Done with deciding on what and how?

It’s now to understand how your products and services will reach the market.

E-business is highly an online deal. You can either choose from a marketplace that already exists like Amazon or have a website.

A significant way to make it simpler for consumers to know and find you is to build a platform. While you are developing a website, certain things need to be kept in mind.

(i) Hosting and domain registration

The domain names are recommended to be short and easier to find. The name should be simple and should clearly describe the product it offers. The domain naming tools such as NameStation, DomainTyper, and LeanDomainSearch, helps you in selecting a domain name.

For example, MyVaporStore.com tells the retailer of the electronic cigarette.

After the selection process of the domain name, you need to register a domain by paying fees. Registering a domain name secures the specific internet address. It helps from protecting your domain name from being taken. Some of the well-known registrars are Bluehost, HostGator, and GoDaddy.

(ii) Choose the Right E-commerce platform

The e-commerce website highly depends on choosing the right platform. Web hosting is the physical location of your site on the internet. It is essential to make your website accessible via the World Wide Web and also to function it correctly.

There are two categories of e-commerce platforms, and each of them has its unique features.

Self-Hosted Platform

This type of e-commerce platform includes an open-source application that needs to host, implemented and maintained. The advantage of the self-hosted platform is, it enables you to customize and implement new features.

Self-hosting platforms are complicated to set up and run if you don’t have any technical understanding.

Some of the open-source e-commerce platforms are:

– Magento: A leading e-commerce platform. The flexible features allow you to control the look, content, and function of your website.

-OpenCart: OpenCart is a complete e-commerce solution. OpenCart is simple to learn with a friendly interface.

-WooCommerce: It is an e-commerce platform for WordPress. It operates over 37% of online stores. It helps in product management, order processing, and a shopping cart function.

Hosted Platform

The hosted e-commerce platform is mostly for ones who have no technical skills. This type of platform is limited with personal choices; its specific theme dictates the looks, features, and capabilities of the site.

Some of the hosted e-commerce platforms are:

Shopify: The most popular hosted e-commerce platform to set up an online store. It handles all the security issues and customizes functions.

Bigcommerce: This hosted platform works both for small and large businesses. It helps your online store in creating, managing and growing. Companies like Toyota build their online site on the BigCommerce platform.

Volusion: This online store builder offers services with web designing, marketing and many more. It is an excellent solution for you to launch your online store effectively.

Some of the factors that you need to consider while choosing the right platform are:

(a) Hosting– You must know the advantages and disadvantages of both the e-commerce platform. If you are skilled with coding, you may want to save up and plan on self-hosting. It also offers you flexibility in modifying designs and features. On the other hand, the hosted e-commerce platform is the more reliable choice if you have no technical skills and wish to build your website faster.

(b) Pricing– The prices vary depending on the type of e-commerce platform( self-hosted and fully-hosted). There are also other aspects such as business size, features that affect the price.

(c) Add-ons– E-commerce software helps in managing inventory, add or remove products, calculate taxes, altogether manage a website. It is important to see if the preferred programs work or not before choosing on these platforms.

4. Get a Payment Gateway

According to the research – online sales share continue to grow. In 2017, it was around 13%, and it is to grow by up to 17% by 2022.

Online shopping means that you can purchase anything online. Payment is an integral part of e-commerce. A payment gateway integrated with your business website offers your customers to complete the purchase efficiently.

Customers expect a variety of payment options and the retailer must offer preferred methods.

A payment gateway is a merchant service. It is a software application connecting a website with the bank. These gateways verify each customer’s billing information. It authorizes the transfer of funds.

By 2022, transaction values for digital commerce are set to reach US$5,411,354.(https://www.statista.com/outlook/296/100/digital-payments/worldwide)

Here are some gateways to choose from:

Choosing the right payment gateway can influence buying decisions. It is an important step.

Selecting the right payment gateway

Application Process & Timeframes

The application process is the time that payment gateways can take to install and in the payment process. It is essential to choose the right gateway that offers fast cash flow. The gateways also impose time frames for a contract. The speed factor for the payment process, yearly agreement and easy cancellation on dissatisfaction can ensure the right payment gateway.

Example- MyGate payment gateway is known for its speed.

Supported Currencies

As online business is a global market, you can have international consumers. The supported currencies allow you to charge customers in their local currency. The gateways supporting various currencies can be an option to choose the right payment for your online business. The easy payment policy that supports their currency can encourage them on their orders.

Payment Method

The payment method is the way the buyer chooses to make payments to the online store. Consumers are likely to use credit cards, bank transfers, Ewallet and many more. Research work before selecting what gateway supports different payment types is also beneficial.


The search for the right payment gateway also depends on its compatibility with your website. The different e-commerce websites may have some unique needs or requests, like linking payment gateway with billing software. The compatibility of payment gateways with as many technological systems as possible can maximize their user bases.


Each service provider has different fees. Some have fixed costs per transaction, and some others have variable fees. While choosing the right payment gateway, you should ask all the values you could encounter while using the service.

In some cases, a payment gateway can charge you based monthly, location, or location of your customer.

The transaction fees charged can also be a factor in choosing the right payment gateway.

Fraud Detection

Many payment gateways offer prevention tools for Fraud like CVV and AVS.

Card Verification Value (CVV): The CVV is 3 or 4 digit code of a credit card. If the CVV code does not match in the payment process, the payment gateway can decline the transaction.

Address Verification Service (AVS): The AVS checks, if the billing address matches the address issued in the bank file. The payment gateway can also ask for user verification with the bank.

Payment gateways like CyberSource are to detect fraud. Some of the payment gateways also provide protection tools.

5. Market your eCommerce business

After developing and launching an e-commerce website, it is essential to promote your business. There are some ways which can help you drag traffics in your website:


SEO(Search Engine Optimization) is the best way is to get your website on the first page of the search engine. This strategy helps in increasing your site rank in Google search results.

The SEO strategy helps in optimizing your website according to the search terms and attract traffic. The research phase in SEO includes keyword research and competitor search.

Keyword research helps you incorporate the list of keywords that your competitors have been using.

For example- SEMrush is a tool, to help you find profitable keywords, to write a successful blog.

It is an easy way is to optimize your website with unique content. The SEO techniques help you build an engaging copy with adequate information than the sites that already have a high rank. The speed of the website is also another factor ensures a smooth browsing experience.

The quality of the websites and the content also ensures the website to gain backlinks. The higher the number of positive backlinks, the higher is the chances for your online business to rank up. Building links through outreach and guest post writing also ensure link building.

Content Marketing

Another way to increase your traffic is the content marketing strategy. The high-quality content boosts your SEO rankings. A piece of information that addresses the questions and concerns encourage others to link to your site. The in-depth guides and rich resources promote your site as reliable.

Social Media Campaigns

The social media sites are considered the easiest way to market your e-commerce business. Everyone in the present world mostly uses Social networks. It offers a great chance for e-business owners to promote and connect with the audience. Social platforms like Facebook, Instagram, Twitter, and Pinterest can bring fantastic success to your business.


Facebook is a versatile app, followed by a new option of a Facebook Business page for growing business. It is an excellent source of advertising. The three main marketing tools on Facebook are pages, ads, and groups.

The Facebook Business page is similar to profiles. It displays the company’s information, photos, ads and more. The pages are free and easy to set up with the call to action terms like”Call now” and “Shop now.” Access to the Facebook page also enables you to have an actual conversation with your customers. It is simple to engage users through automatic instant messaging via Facebook Messenger.

For example- Sephora uses chatbot, to take a quiz to understand your needs, give tips, product recommendations and more.

Facebook Ads offers an excellent option to target your advertisement for specific age groups, areas and more. These ads help you build audiences similar to your customers.

The Facebook Group functions as discussion forums. These forums are useful in creating high engagement.


Instagram is highly visual. This marketing strategy is an excellent platform to showcase your products. Instagram posts engage and increase your followers. Another great way is to publish stories on Instagram. These stories are cherry on the top. It shows your activeness in your profile. The strong presence of this visual network can get you a lot of value.


Twitter has 313 million active users. This marketing tool lets you show updates about specials, discounts, offers across the web. Twitter revolves around conversational tweets. This tweeting strategy can help you address customer concerns.

For Example, Amazon used Twitter Polls in #CES2016 to display their innovations based on their voters.

E-mail Outreach

E-Mail marketing is a good idea to own your audiences. It is an effective mode of communication and promotion. The first step is to make an email list. Some of the e-mail marketing companies are MailChimp, Constant Contact, ActiveCampaign, and more. These platforms enable you to find email marketing lists through sign-up forms. This approach drives a better return on investment.

6. Calculate business performance

After all the above steps, it is essential to evaluate the performance of the e-commerce website. An online site needs to keep updating. The changes in variation to trends guide your business to grow much faster. Here are some of the top metrics –

1. Website Traffic

The website visitors play an important role when it comes to your site success. The higher the number of visitors, the higher is the quality of a website. Many questions arise when you are calculating your site traffic. To understand what to invest in, you need to know where your visitors are from, what are their needs, and how long do they surf through your page?.

These aspects aid in knowing your visitors to make better decisions.

For example- if your visitors are discovering your site through Facebook, it may be worth investing in a social network.

2. Average order value(AOV)

The AOV shows the number of the order placed on a website. This metric helps you evaluate your online marketing efforts and pricing strategies. It’s a must to observe the average customer purchase and the average value of their cart.

Here are some successful strategies to increase your AOV:
– Cross-selling: Displaying product suggestions based on the selected items. (recommendation of a tripod as you are buying a Camera)
– Up-selling: Encouraging the purchase of a more upgraded version. (displaying an iPhone of 64gb storage, when you selected an iPhone of 16gb)
– Volume Discounts: Attracting the consumer to buy in larger quantities to get an offer. (Save up to 50% on the purchase of 50 copies)
– Free shipping: The seller grants free delivery for some products within a specified area, and period.
– Coupons: It is a voucher that offers a reduction in price if used for a particular product. (Discount code of “GGAJ99”, offers you 20% off)

3. CAC

The CAC (Customer Acquisition Cost) is the cost spent on acquiring more customers. It includes production, researching, and marketing costs. It is essential to have a positive CAC for the business to succeed. The CAC measures the effectiveness of marketing and sales campaigns. The calculation of CAC helps in improving your business performance by reducing the expenses and boosting the value of each transaction.

4. Conversion rate

The conversion rate means the percentage of visitors completing the purchasing process, out of the total visitors. The high or low conversion rate determines the success of your website. The ease of making an order for visitors and attractive offers maximize the conversion rate.

The optimization tool, like Mouseflow, is a session replay; it shows visitors click, scroll, browses through the page. This tool helps in determining the rate of conversion.

5. Repeat Customers

The repeat customers are said to be responsible for generating 40% of a store’s revenue. They are the lifeblood of the most successful business. This type of customer helps you in promoting your business. When the customer purchases from you the second time, it makes the business owners know buyer behaviors.

These calculations help you know what works and what does not for your online business.

A follow-up through these steps will benefit you in a successful e-commerce business. You can make a check-list, as you begin.