What Is Ecommerce? Every Little Detail!

We’ve all bought something online at one time or another… but what’s it like being on the other side of the screen? What’s like running an ecommerce business and serving customers through an online store?

Get ready to find out! I’ve put together a handy guide. It’s super-straightforward, but it’s super-detailed too! Over the next 15 minutes, you’ll discover…

1. What is ecommerce exactly?
2. What’s the story behind this business model?
3. What are the pros and cons of running an ecommerce website?
4. How do you get started and how to make money with ecommerce?
5. Is the business model just a scam?
6. And a whole lot more on top of that!

So let’s get straight into it…

The Basics – Understanding Ecommerce

Let’s start right at the beginning – what is ecommerce exactly?

Well the ‘E’ is for electronic, and the ‘commerce’ is just shopping.

So we’re talking about electronic commerce, online shopping, or buying and selling online.

Different Ecommerce Business Models

The concept may be fairly simple, but once we get beyond the basic definition, ecommerce businesses. You’ve actually got a few different paths open to you…

Traditional Business To Consumer Selling

You’ve might know this model better as B2C. With business to consumer B2C selling, your have a range of products at your property or at your warehouse. Your customer places an order on your online store, and you ship the product out to them.

It’s a bit like having a physical store, online. You’re handling the inventory, shipping, and customer service.

Business To Business Selling

Business to business selling is also known as B2B… and it’s exactly what it sounds like. Rather than selling to an individual customer, you’re selling to other businesses.

You might be selling physical products wholesale on a business to business B2B basis, or you might be offering managed services online.

Consumer To Consumer Selling

This is just casual selling online. You don’t need a business, a brand, a ton of inventory, or anything like that. You just need an item you don’t want anymore.

So you list it on Ebay or Craigslist, or via specialized online auctions platforms. You make a one-off sale, and you forget about it until next time you have something to sell.

Dropshipping

You might’ve heard about this one, but what is dropshipping exactly?

Dropshipping puts you in the middle of the consumer to business C2B relationship. You still have an online store, but you don’t handle any of the products yourself.

Instead, the customer places an order, and you pass this order on to your supplier. The supplier then sends the product direct to the customer. You never even need to see the item. You just focus on managing your ecommerce stores.

Amazon FBA

FBA simply means ‘fulfilled by Amazon”. So how to start Amazon FBA selling?

Well, you find a supplier and place an order for their products. The supplier ships these products to an Amazon fulfillment center.

Then, a customer makes a purchase via your digital storefront, which is usually on the Amazon website. Amazon then ships the product out to your customer.

Print On Demand

Print on demand, or POD, is another term you might have seen already. But what is a print on demand business really?

This is another business model in which you don’t handle or see your products at all. Your customer places an order through your ecommerce website, and you send this order over to your supplier. The supplier then creates the product and ships it to the customer.

How Did We Get Here? The History Of Electronic Commerce

You might be surprised to learn that ecommerce is actually older than the internet itself.

Way back in 1971, students at Stanford University set up their own marketplace using ARPANET, a sort of forerunner to what we now know as the internet. The students were buying and selling things they probably shouldn’t have been, and it didn’t go well for them. But it was a groundbreaking moment in the history of online shopping.

Let’s take a look at what came next…

Ecommerce Advantages – What’s So Good About The Business Model?

Over the last few years, it seems like everyone got on the e-commerce platforms hype or set up their own website.

So what’s all the fuss about? Why are people so excited by this model?

Lower Overheads Than Physical Stores

What’s cheaper… your own ecommerce store, or your own brick and mortar store? It’s gonna be ecommerce websites almost every time.

If they run their businesses well, online retailers can save quite a bit of money. They don’t have to worry about maintaining the building, paying customer-facing staff, or other costs.

A Broader Range Of Potential Customers

Start a business on Main Street, and you’re limited to the customers who stroll by your store every day.

Start a business online, and the whole country is your market… maybe even the whole world.

A Streamlined Business Model

Now, this one doesn’t apply to all e-commerce companies. But if you go down the dropshipping or print on demand route, you can run your ecommerce brands without the inventory woes.

You won’t need storage space. You won’t need to worry about shipping your products out to customers. You’ll just need to sell products and keep your online retail empire ticking over.

Ecommerce Risks – What’s Lurking Beneath The Surface?

Ok, so we’ve looked at some of the advantages, but what ecommerce risks do you need to be aware of?

If retail e-commerce sales were a sure-fire ticket to business success, everyone would be killing it in the market. And trust me, they aren’t.

Ecommerce Sales Are Harder Than They Look

Running an e-commerce business isn’t all sunshine and rainbows. In fact, a whole lot of online business owners crash and burn…

As many as 65% of print on demand online stores fail in their first years. For dropshipping, it’s more like 90%. Don’t go counting your e-commerce site chickens before they’ve hatched…

Giving Up Control Means Taking On Risk

I get it… your family doesn’t particularly want 500 boxes of iron boarding covers and a couple of dozen crates of fidget spinners cluttering up your space…

So you turn to dropshipping, FBA, or POD. You get rid of all those inventory headaches by letting your suppliers take care of it. But what happens when those suppliers don’t ship on time? What happens when their products arrive broken or incomplete, or if the quality is just trash?

Your customers blame you, that’s what.

With these e-commerce strategies, there’s just so much that’s beyond their control. And in business, lack of control is never good.

Regulatory Responsibilities And Penalties

E-commerce businesses need to operate responsibly, handling customer data, particularly personal and financial information, in the right way.

Each state has its own legal code when it comes to data protection, and you’ll need to make sure you stay on the right side of these regulations. There are also federal laws and rules you’ll need to be aware of as you run your e-commerce website.

It’s not just data that can really ruin your day. If you run an ecommerce company, you’ll need to stay on top of intellectual property laws too.

Copy someone else’s product, service, design, or anything else, you might end up having a really bad day… even if you didn’t know you were copying in the first place!

Shifting SEO Goalposts

What do all successful e-commerce sites have in common? They are all absolutely killing it in the search engine optimization stakes. They are really nailing that searcher intent, and all their pages are fully dialled in for conversions. Those e-commerce transactions are coming thick and fast.

Until they’re not…

The thing about SEO is that it can change, rapidly. One misstep, and these successful sites can tumble down the search engine rankings in the blink of an eye. Those online retail sales grind to a halt until you can work out what’s gone wrong and how to put it right.

How Do You Make Money With Ecommerce?

I’ve had a ton of people come to me asking me how to be successful ecommerce entrepreneurs. So… just how do you make money with ecommerce?

Here’s a few tips…

Get The Marketing Right

Before you can sell products, you need to make sure your audience knows about these products. This is where ecommerce marketing comes in.

• Ecommerce Social Media Marketing

Building a strong presence across channels like Instagram, TikTok and Facebook can put you right there in the middle of the conversation, and give you a strong community of people who want to buy what you’re selling.

You’ll need to make sure you’re choosing the right channels, though, and creating the right kind of content. This comes from understanding your customers… so stay tuned for that.

• Paid Ads For Your Ecommerce Business

You’ll need paid ads to really push the needle on those online purchases. Typically, this mains pay per click, or PPC. You create an ad, and your audience members click this ad and make a purchase… hopefully!

Remember, you’ll pay for all of those clicks, even if the user doesn’t convert. This is why you need to make sure your ads are the best they can be. If not, you’re just chucking money down the drain.

• Ecommerce SEO

Ecommerce SEO is going to be a big part of your marketing strategy. This gives you free, or almost free, traffic direct to your site. To get the best from ecommerce SEO, you’ll need…

1. Great content, sprinkled naturally with all the right keywords
2. A page that performs well, hitting all of Google’s loading speed, stability, and responsiveness requirements.
3. Natural external links to and from your page… don’t go buying links though, or you’ll get penalized.
4. A well organized page and great experience for your users.
5. Meta descriptions and titles for all of your pages, and a site that’s easy for Google to crawl.

Understand Your Customers

Your customer is more than just someone who buys your products. Your customer is a real person just like you, with a specific need, desire, and objective. So your products need to reflect this…

Get to know who you’re aiming your products at. If you’re selling baby clothes and early learning materials, it’s probably going to be young parents. If you’re selling sports bras and cute workout fits, it’s women who are into fitness.

Let this knowledge shape your content, your branding, and your marketing in general.

Build Amazing Relationships

To succeed, you need great suppliers and partners. In fact, for some ecommerce models like print on demand and dropshipping, you’re totally reliant on these partners… if they’re providing substandard products, or they are shipping slow and late, this reflects really badly on you.

Remember to keep your profit margins in check too. It’s not just total retail sales that dictate the success of your business… it’s how much you’re making per sale. So you need a supplier who can give you fantastic products at amazing prices.

Build Your Revenue Channels

Ecommerce revenue can come from a number of different sources.

• Most entrepreneurs make their money directly from retail sales.
• You can also make money by selling subscriptions for services online.
• You can charge a fee for processing online banking transactions, covering your costs and then some, depending on how much you charge.
• You might decide to sell advertising on your e-commerce sites.

Scale Sustainably

There’s no point saying “I want a million bucks by next month”… even if you’re e-commerce capabilities are the best in the world, it’s not happening.

Instead, do a bit more market research…

1. What products are selling online?
2. How much are they going for?
3. How many new customers can you bring in each month?

Use this information to create a step by step plan as you hit your goals.

Keep things small at first. Sell in digital marketplaces or on e-commerce platform sites like Amazon and Shopify.

Once you’ve built your brand and some momentum, then you can look beyond online marketplaces and set up your own ecommerce site.

Top Ecommerce Trends – What’s Hot In The Online Shopping World?

What are the latest trends shaking up the online sales market this year? Mobile commerce is certainly a big one, as is the use of AI. Online transactions conducted directly across social media platforms are another hot trend.

Let’s take a look in a bit more detail…

How To Start An Ecommerce Business?

So let’s say you want to get into this market, and take advantage of a few of these trends. How do you go about it? How to start an ecommerce business?

Is Running An Online Store Actually Worth It?

Now, after weighing up all the pluses and minuses, you’re probably wondering… is Ecommerce worth it?

The answer to this really depends on you. You’ve probably heard a bunch of success stories from people who change their lives with business models like these… going from a mind-numbing 9-to-5 to the jet-set lifestyle after a couple of months selling ponchos for dogs online.

But to be honest, there aren’t many of these around…

Maybe a better question is “is ecommerce worth it for most people?” Here’s a few things to keep in mind…

Remember That Most Entrepreneurs Don’t Succeed

If 90% of entreprenuers fail in their first year, but what about those other 10%? They must be swimming in a big pile of money like Scrooge McDuck, right?

Wrong. The average ecommerce conversion rate is currently between 2.5% and 3%. So if you’re only getting 200 visits a month, you’re getting 6 conversions max. And if you’re making $8 off each sale… well, you’re not exactly raking it in.

There is money to be made here, but there’s a reason why so many people treat this as a side hustle rather than a full-time job.

Factor In All The Costs

Maybe you don’t have to worry about rent and maintenance on physical stores and things like that, but there are still ecommerce costs to be aware of.

• E-commerce platform fees and charges

You’ll have to pay to use your e-commerce platform. Traditional platforms like Etsy charge a per-listing and per-transaction fee, although you can pay a monthly subscription if you prefer.

Ecommerce giants like Amazon charge a whole bunch of fees, including…

1. Storage costs
2. Shipping costs
3. Aged inventory costs
4. Disposal costs
5. And a whole lot more besides…

• Payment processing charges

Depending on what payment processing service you use, you’re probably going to have to pay a fee for online transactions.

You can charge extra to cover this if you want. But if you charge your customers too much, it’ll make it hard to actually sell products.

• On-demand costs

If you’re going down the print on demand route, you’ll need to juggle a few different costs. You’ve got the unit supply cost for the generic items, and your supplier might charge you extra for more unusual products.

Then there’s the cost of printing on demand, which is going to make each item a lot more expensive than wholesale.

• Inventory and warehousing costs

If you’re sending stuff to Amazon as part of an FBA strategy, you’re going to have to pay for the privilege of keeping your stock there.

In fact, anywhere you keep your stock, you’ll need to pay a fee. Just because the products aren’t cluttering up your home doesn’t mean they’re not annoying.

Don’t Forget The Work Life Balance

Making a success of your ecommerce store takes work… especially these days. There may have been a time when achieving a ton of highly profitable e-commerce transactions was simple, and didn’t take up much time. But those days, if they ever existed, are gone…

If you start dropshipping now, you’re playing catchup. This means you’re working extra hard to make up ground, and you might find yourself pulling more than a few all-nighters.

Is Ecommerce Legit?

I know the drill… you see a course or program online, you check out their intro video, and they promise you the world. But are they for real? Is ecommerce legit?

Ecommerce is as legit as most other online business models out there. People have made big money from this, and the industry heavyweights still are. But it’s always wise to be cautious. If something seems to good to be true… there might be a reason for this!

If someone tells you the ecommerce business is easy, ask yourself what their motivation is. They might be trying to sell you a course that hacks the industry and puts you in the money… in other words, a fantasy course.

Now here’s the thing… most of these dropshipping gurus and ecommerce moguls are telling the truth. They have made millions in this business. It is possible.

What they might not tell you is that they made their millions years ago, back in those Wild West days of the internet when anyone with a WooCommerce plugin and an Alibaba hookup could basically print money out here.

Nowadays, the market is saturated, and customers have wised-up…

The top gurus and the best ecommerce courses are going to be upfront about this. They’ll recognize how hard it can be, and they’ll have a good, logical system to help you out.

It’s not stranger danger, and I’m not saying ‘don’t trust anyone’. Just be critical about those big promises from gurus…

Top Ecommerce Alternatives

Maybe you’re not fully convinced that ecommerce really is a legit way to make money… or perhaps you just want to keep your options open.

Either way… it’s nice to have a few ecommerce alternatives to explore.

Affiliate Marketing

Affiliate marketing is all about sending traffic to your partner’s website. You run ads, write content, and make videos and other media, and you link through to your affiliate partner.

When someone buys a product or service via your link, you get paid. Like dropshipping though, this market has got saturated in recent years.

Local Lead Generation

Local lead generation is a real up and coming business model. It’s exactly like it sounds… you generate leads, and your local business partner converts them. Then you get a tidy profit in return.

Buuuuut… as with everything else, you need to make sure you’re going about it in the right way.

Multi-Level Marketing

Multi-level marketing gets a really bad press and… yeah, I get why. If you really want to try this route…

1. Make sure you’re getting in early in the chain
2. Research the products you’re selling fully, and make sure they are legit.
3. Research the organization too… if there’s even the hint of a scam, run a mile!

Tread, very, very carefully here!

Self-Publishing

A relative newcomer to the ‘making money online’ world, self-publishing involves creating ebooks and audiobooks to sell online.

Low content publishing is designed to streamline the entire process, but you still need to make sure you’re putting out things people actually want to read.

Market Trading

Market traders either buy and sell stocks and shares, or they speculate on which way their price is going to move.

Cryptocurrency, forex, and commodities markets have all helped people make money in the past… although all are risky.

Real Estate Investment

Even if you don’t have the money to buy a property the traditional, you can still get in on the real estate investment market.

Methods like short-term rental arbitrage and distressed sales can reduce the amount of cash you’d need upfront.

High Ticket Closing

This is essentially closing business transactions on super expensive purchases. Your business partner has something really high value to sell… like a yacht, or a diamond encrusted Rolex. And it’s you that nurtures the customer and makes the sale.

You won’t sell many items here, but the commission rates might just make it worth your while!

My Ecommerce Guide – The Conclusion

Thanks so much for sticking with me on this one! There’s just so much to say on ecommerce, and I didn’t want to leave anything out.

If I had to sum up the whole thing in just a few points, it would go a little something like this…

• There is still money to be made with an e-commerce business, but you’ll have to work really hard to get it!
• Remember to weigh up all of the different costs involved before you start… don’t wind up getting caught out and losing money on your transactions.
• Be very, very wary of any guru who makes it look easy… the truth is, it’s not!

So what’s next on your journey? Maybe you’d like to check out another one of my guides, or my reviews on the best ecommerce courses out there…

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