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ECommerce Definitions: A Complete Overview of the Basics

Amazon, eBay, QVC, Wayfair-do these names sound familiar? If so, it's because they all have one thing in common.

They're part of the largest online retailers in the U.S to date.

You see them on the news and in big publications making headlines daily. Online sales are on the rise and you want a piece of the pie. You want to be right where they are.

Tired of working a regular 9 to 5 job, you're thinking of starting your own ecommerce business. But there's one thing: you don't know the basics.

In order to be the best, you have to know the ins and outs. And that starts with knowing ecommerce definitions.

Don't fret, keep reading to get a complete understanding of all the terminology you'll need to know to get your business started.

What Is ECommerce?

For starters, let's get straight into the definition of ecommerce. It's a shortened version of electronic commerce, also known as internet commerce.

When you think of ecommerce, you normally think of physical products being bought online. While it does refer to tangible products, digital products can also be purchased through the internet.

Anyone that uses the internet as a place for their store is considered an ecommerce business.

Kinds of ECommerce Merchants

Since we went over the definition of ecommerce, it only makes sense to define the types of merchants commonly seen throughout the internet. Take a look at our list so you can decide which type you want to open.

Physical Goods

Tangible items like apparel, home décor, and groceries are just some of the items available online. Small and well-known businesses offer physical goods that customers can then add to their virtual carts. Once bought, the store will ship them.

Big retailers are even going to the length where you can purchase items from the comfort of your home then either the same or next day, go to a physical store location to pick up the order. This is often called "in-store pickup." It saves the customer shipping and handling fees by making a trip to the store instead.

Digital Goods

Ebooks, software, and courses are only a handful of "e-goods" commonly found online. You can purchase stock photos, graphics, and music from sites like iTunes, Shutterstock, and Canva.

Anything that isn't tangible and won't be shipped to a physical address is a digital good. You'll get your item(s) via email, download or the business' website.

Serviced-Based

Whether you need a logo created, a website designed or a consultation, you can find it online. You're hiring people (such as freelancers) or an online-based agency to complete services that can be done over the internet.

These types of businesses either charge per project or by the hour. Normally, services won't be completed or started until payment is processed.

Dropshipping

This type of merchant is for future business owners who don't want to have a physical inventory. Dropshipping consists of a customer by a product through your site but that product is then shipped by a third party.

This way, you don't have to keep track of product nor crowd your home with inventory. You'll cut a share of the profits with the third party, however.

Subscription

Sites like Netflix and Hulu are great examples of subscription-based businesses. This is a recurring purchase either monthly or yearly (even weekly, depending on the company) for a product or service.

Boxes filled with various items (think FabFitFun) are often subscription-based. Services, on the other hand, would include Amazon Prime and Hello Fresh.

ECommerce Models

In order to find what works for you, you need to pick a type of model. Do you want to sell directly to businesses or the average consumer?

Those aren't the only two options available, though. Take a look to see the different kinds of ecommerce models.

Business to Business

Abbreviated as B2B, this is when a business sells to another business. Think software or consultants.

From there, you'd have to decide whether you want to target small businesses or larger corporations. Each come with their own set of benefits and disadvantages. Small businesses may not have a large budget while larger corporations may not be willing to replace their current product/service with yours.

Business to Consumer

Otherwise known as B2C, is when you sell directly to consumers. You'll need to have an understanding of the type of customers you'll sell to. Without that knowledge, you'll have a hard time gaining sales.

Consumer to Business

This may sound odd but this type of model really does exist. Think of it as an influencer collaborating with a business to expose them to their audience.

Consumer to Consumer

eBay, Etsy, and Amazon are good examples of this type of model. They allow consumers to offer their products (or services) on their marketplaces. Other consumers can then purchase them.

It's different from a small business because that consumer might only sell one item at a time. Not only that but the items might be used.

M-commerce

Short for mobile commerce, this is where businesses are strictly accessed from mobile devices. It's technically a subsection of B2C.

Some examples would include buying plane tickets and concert tickets. Rather than have a paper version you'd need to print out, that information would be on your phone or tablet, ready to be scanned.

Your Guide to ECommerce Definitions

Educating yourself with ecommerce definitions is a step in the right direction. After all, you'll need to know the ins and outs if you want to compete in the big leagues.

Know that you don't have to do it alone. We offer services that'll help you launch the best ecommerce business you could imagine.

Ready to get started? Contact us today!

And don't forget to bookmark this page so you can always refer back to it, should you forget some definitions.


Zach Aufort Zach Aufort Owner and Founder at Puget Tech READ MORE