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FundamentalsReviewed September 5, 2026

What is Ecommerce?

Electronic Commerce

Ecommerce, short for electronic commerce, is buying and selling products or services over the internet, from online stores and marketplaces to subscriptions and digital downloads.

The main types

Business-to-consumer (B2C) is the most familiar, like a brand selling directly to shoppers. Business-to-business (B2B) covers companies buying from each other online. Marketplaces like Amazon and Etsy let many sellers reach buyers in one place.

How an online store works

A store needs product pages, a cart and checkout, payment processing, shipping or delivery and a way to handle returns. Platforms like Shopify, WooCommerce and BigCommerce bundle many of these pieces together.

What drives sales

Traffic matters, but so does what happens on the site. Fast pages, clear photos, honest product details, simple checkout and good reviews often decide whether a visitor buys. Repeat customers usually make the difference to profit.

Why Ecommerce matters

Ecommerce lets businesses reach customers far beyond their local area and sell around the clock. It also means competing with many other stores, so the details of the shopping experience and marketing matter a lot.

From local shop to online orders

A specialty coffee roaster sold only in its café until it launched a simple online store with subscriptions. Regular customers started ordering beans by mail, and the store reached buyers in other states who found it through search and social media.

Common mistakes

  • Launching without a traffic plan

    A store with no marketing gets few visitors. Plan SEO, ads, email and social before you launch.

  • Clunky checkout

    Surprise shipping costs, forced account creation and long forms make shoppers leave. Keep checkout short and transparent.

  • Ignoring repeat buyers

    Winning a first sale often costs more than it earns. Email, subscriptions and good service bring people back.

Where we work on this

Related terms

Full glossary
Unit Economics

AOV

AOV is total revenue divided by total number of orders over a given period: the average amount a customer spends per transaction.

Fundamentals

Conversion Rate

Conversion rate is the percentage of visitors or users who complete a specific desired action (a purchase, a form fill, a sign-up), divided by total visitors, multiplied by 100.

Retention

Repeat Purchase Rate

Repeat purchase rate is the percentage of customers who have placed more than one order, measured over a defined window.

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CMS

A CMS, or content management system, is software that lets you create, edit and publish website content through an easy dashboard, without writing code for every change.

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Dropshipping

Dropshipping is a way of selling products online where the store never stocks the items. When a customer orders, the store passes the order to a supplier, who ships the product directly to the customer.

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SKU

A SKU, or stock keeping unit, is a code a business creates to identify and track each distinct product it sells, including each size, color or other variation, so it can manage inventory and sales accurately.

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DTC

DTC, or direct to consumer, is a business model where a brand sells its products straight to customers, usually through its own website or app, instead of selling through retailers, distributors or marketplaces.

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Payment Gateway

A payment gateway is the technology that securely takes a customer's card or digital wallet details at checkout and passes them to the banks and card networks that approve or decline the payment.

Paid Media

Google Merchant Center

Google Merchant Center is a free Google tool where online stores upload and manage product information, like titles, prices, images and availability, so their products can appear in Google Shopping ads and free product listings.

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WooCommerce

WooCommerce is a free, open-source plugin that adds an online store to a WordPress website. It handles products, carts, checkout, orders and inventory, while you keep full control of the site and its hosting.

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Online Marketplace

An online marketplace is a website or app where many independent sellers list products or services, and the platform brings in the shoppers and handles much of the checkout. Amazon, eBay, Etsy and Walmart Marketplace are well-known examples.

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Print on Demand

Print on demand, or POD, is a way of selling custom-designed products like t-shirts, mugs, posters and phone cases, where each item is printed only after a customer orders it, usually by a third-party printing partner who also ships it.

Applied, not theoretical

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