Electronic Commerce (E‑commerce)

What is e‑commerce?

E‑commerce (electronic commerce) is the buying and selling of goods and services over the internet using computers, tablets, smartphones, and other connected devices. It ranges from individual sellers on marketplaces to multinational online retailers and includes both physical products and digital services.

Key takeaways:
* E‑commerce lowers barriers to entry and expands market reach.
* It can replace or complement brick‑and‑mortar stores.
* Major segments include B2C, B2B, C2C and other relationship types.
* Common revenue models include dropshipping, private/white labeling, wholesaling, and subscriptions.

How e‑commerce works

Beyond a buyer and seller, e‑commerce relies on payment systems, logistics and fulfillment, web platforms, marketplaces, customer service channels, and data analytics. Businesses may operate entirely online or use an omnichannel approach (both physical and digital presences). Marketplaces like eBay and Etsy, storefront platforms like Shopify, and direct company sites are common ways sellers reach customers.

Brief history

E‑commerce evolved from early electronic document exchanges (such as EDI in the 1960s) to online storefronts in the 1990s. The industry accelerated with consumer adoption of the web, search and recommendation engines, digital payment options, and improvements in shipping and logistics. Large platforms and marketplaces have helped standardize online retail and scale cross‑border trade.

Advantages and disadvantages

Advantages
* Convenience: 24/7 access for buyers and sellers.
* Greater selection: online catalogs often exceed physical inventory limits.
* Lower overhead: no storefront rent required for many online businesses.
* Global reach: ability to sell to customers in many countries.
* Data insights: behavior and sales data support personalization and optimization.

Disadvantages
* Limited in‑person customer service and product inspection.
* Delivery wait times (though faster shipping options reduce this).
* Dependence on technology—downtime or outages interrupt sales.
* High competition due to low entry barriers.
* Possible returns and customer dissatisfaction when products don’t match expectations.

Types of e‑commerce

• Business‑to‑Consumer (B2C): Companies sell directly to end customers (most common).
• Business‑to‑Business (B2B): Companies sell in bulk or on contract to other businesses.
• Business‑to‑Government (B2G): Suppliers sell goods or services to government agencies, often through procurement processes.
• Consumer‑to‑Consumer (C2C): Individuals sell to each other via platforms or personal sites.
• Consumer‑to‑Business (C2B): Individuals offer services or products to businesses (e.g., freelancers on platforms).
• Consumer‑to‑Government (C2G): Individuals interact with government online for filings, payments, and information exchange.

Retail e‑commerce represents a meaningful share of overall retail sales and continues to grow as consumers shift purchasing online.

Common revenue models

• Dropshipping: Seller lists products and forwards orders to a supplier who stores, packs, and ships items.
• White labeling: Reselling generic products under a seller’s brand with minimal product changes.
• Private labeling: Seller commissions or customizes products from a manufacturer, offering more control over specs and branding.
• Wholesaling: Selling large quantities to retailers or many smaller buyers; typically capital‑intensive.
• Subscription: Recurring deliveries or services on a cadence (monthly boxes, consumables, software subscriptions).

Example: Amazon

Amazon began as an online bookstore and expanded into the world’s largest online retailer, offering everything from consumer goods to cloud and logistics services. It illustrates how scale, logistics, platform services, and diversified revenue streams can transform a retailer into a global e‑commerce ecosystem.

Real‑world applications

E‑commerce enables entrepreneurs to solve niche problems and reach customers without heavy upfront costs. Platforms such as Shopify, Etsy, and marketplace storefronts let founders validate ideas and scale. One example: a student who built an online grocery platform to serve an underserved community and grew it into a large business—showing how small solutions can become scalable ventures.

How to start an e‑commerce business

1. Identify products or services and research market demand, competition, and costs.
2. Choose a business name and legal structure; obtain necessary permits and tax IDs.
3. Decide on a sales channel: own website, marketplace, or both.
4. Build and test a simple, user‑friendly site or storefront.
5. Set up payment processing, shipping/logistics, and return policies.
6. Launch with focused marketing (social, search, email) and iterate based on customer feedback.
7. Start small, measure results, and scale or pivot as needed.

Short FAQs

What is an e‑commerce website?
Any website that enables buying and selling online—examples range from large marketplaces to single‑vendor stores.

What’s the difference between e‑commerce and e‑business?
E‑commerce refers specifically to online buying and selling. E‑business encompasses all online business operations (marketing, customer service, logistics, HR, etc.).

What is a subscription e‑commerce example?
Dollar Shave Club offers grooming products on a recurring subscription basis—one of many consumer subscription models.

Conclusion

E‑commerce has reshaped retail and opened opportunities for businesses of all sizes to reach broader markets. Success depends on identifying a clear value proposition, choosing the right model and channels, and using data and customer feedback to refine offerings. Starting small, validating demand, and scaling responsibly are practical steps for anyone considering an online business.