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Understanding Ecommerce - A Beginners Guide

Updated on August 24, 2017

Ecommerce

Understanding the basics of Ecommerce, online shopping, at the beginning level is necessity in today's online shopping world. Let's face it - online shopping is here to stay. Most of us have used it, and many of us have learned to trust our online experience. We don't necessarily understand how it all works but through the years we've come to really enjoy the convenience, simplicity and economic savings we often find. Some of us have also explored and used our own online stores to sell our products or services with real success.

So how does it all work? What do these terms mean? How can I learn more?

Here is what we are going to cover in this article:

  1. What is ecommerce
  2. The two basic types of online business websites
  3. Common terms defined
  4. The importance of trust and customer service

What is Ecommerce

Wikipedia.com defines ecommerce:
"Electronic commerce, commonly known as e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks."

(source http://en.wikipedia.org/wiki/Electronic_commerce)

Sounds simple enough right? Let me fill in the cracks a little more for us.

The brick and mortar shopping experience, or the traditional physical shopping experience, carries with it an experience that shopping online will never be able to duplicate. But traditional shopping also has some disadvantages.

With the rise of online consumerism its important to see some of the differences and why more and more customers are switching their consumer needs to include online stores and services.

The lists could be exhaustive so let me just outline some of the main reasons. You can add your own I'm sure after reading mine.

The main pro's to a physical location experience are:

  • The shopper has the ability to talk to a knowledgeable sales person (sometimes)
  • Ability to try out or try on the product
  • Physically look at and hold the item and examine it for quality etc.
  • Walk away with the purchase in hand.

The main pro's for an online experience are:

  • 24/7 convenience
  • Comparative shopping at a click
  • As many choices and stores to choose from in the comfort of home
  • No lines

The main cons of a physical location experience are:

  • Crowds and lines
  • What to do with the kids
  • Inconvenience
  • Time

The main cons of an online experience are:

  • Limited to the speed of your computer or internet connection and screen size
  • Sometimes the sites are down or customer service is nonexistent
  • Returns are more difficult
  • Shopaholics are at risk of over shopping

With that foundation laid, let's continue to look at the basics of ecommerce

Online shopping website types

There are two basic types of Ecommerce websites

1) Type one: This site doesn't need to complete online transactions. Ecommerce is functional on these types of sites and they host a very simple website store. All that's needed to have this type of online shopping store is:

  • A website to list the products or services.
  • Some type of order form, and information where customers make payment (such as PayPal).

This type of website is very common and is used by many small businesses, temporary sites or nonprofits. The main success of this type of websites is that the trust level of their online paying policy is high due to the established security by online financial organizations like PayPal. By using an external payment facility they have taken out the initial question of "is this site safe".

2) Type two: This type of site needs to complete online transactions in real time. This website incorporates many more complex features in order to make the online experience happen. Not only do they have varying complexities of their product catalogs, and ordering features but also their payment methods vary. These sites are fully equipped to take your order, your payment, and ship or download the product.

To learn more read these useful articles:

Ecommerce resources

Common terms defined

Website
A website to host the business is the foundation to ecommerce. I know you know what a website is, but it all starts from there.This can a website of the companies own creation or an organization they partner with.

Marketing
A company sets up their business or service and just like traditional business they tell people about it by marketing it. Because its an online business this is done online.

Sales
In order for the business to make sales the customer needs to be able to view and pick out the items/services they desire online, usually from a website.

The customer has a need, searches and researches for it online, makes a decision based on that information, makes a purchase, receives product by download or delivery.

Basic layers of ecommerce

  • Promote the web site - this is basic but the word needs to get out somehow.
  • An online store, catalog, or list of services - the customer needs to be able to view, understand, compare and make an informed decision about the product or service. Trust is first established by the ease of the site and how readily available the product placement is.
  • Purchasing from the site - the purchase needs to be made (see above two basic types of online store).
  • Delivery - the product or service is delivered either via download or delivery.
  • Customer Service - support after the sale is vital for return customers. Many online stores/businesses fall short in this area.

The importance of trust

Customer service takes on a whole new life in the world of Ecommerce. You become an unseen face to the customer. Your relationship with most customers begins with a click of the mouse, a scroll through on an online store, an addition to a virtual shopping cart and then the money transaction. Trust begins with the website layout and trust is established by the ease the customer feels on the site.

The trust can be lost during the purchase of an item even before a face or voice is seen and heard. The importance of an easy to use website can not be over stressed.

After the purchase is made in order to keep the customer happy their has to be an avenue in place for the customer to voice complaints or get help. This simple step is overlooked by small new businesses but needs to be a part of the over all planning of the business.

Getting a customer to buy once can be as simple as having a rock bottom price, but gaining the trust and loyalty of a customer in most cases still takes the human touch. Make sure you set this in place before launching your ecommerce store or business.

"Communications is at the heart of e-commerce and community." Meg Whitman

Ecommerce resources

Here are some informative articles on ecommerce from the perspective of being the store owner. I highly recommend you start here with your learning on ecommerce. The authors are very knowledgeable and in most cases with answer questions you have about what they write.

Online shopping

Conclusion

Shopping online isn't going anywhere. In fact statistics show that shopping online will just continue to increase in the coming years. It's nothing to be overwhelmed with. The average shopper doesn't need to know everything about online shopping or ecommerce but knowing the basics will help with either your shopping experience or with creating your own online store.

As you step out into the world of ecommerce as a shopper enjoy all the rich features it will bring into your life.

As you step out into the world of ecommerce as a business owner take the time to establish the basic steps in this article to secure your success. The time invested will be well worth it.

"And it's interesting, when you look at the predictions made during the peak of the boom in the 1990s, about e-commerce, or internet traffic, or broadband adoption, or internet advertising, they were all right - they were just wrong in time."
Chris Anderson


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Source: Pew Research Nielson Forrester
Source: Pew Research Nielson Forrester | Source

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    • profile image

      andrea allred 2 years ago

      I am a senior selling on eBay. I need more now, but I am confused about who needs a website? the reasons for it as opposed to doing say Volution or Shopify. Ebay's fees are really high and we have no control over things like returns (I can't sell a $20 blouse and pay shipping both ways just to see IF they like it etc.

      If I try to do everything - a website, a store on ebay and say Shopify or Volution, it will take FT just to manage them. will this book explain all this?

    • profile image

      S Reddy 3 years ago

      nice article

    • JessicaLeo profile image

      JessicaLeo 5 years ago from US

      Informative articles of eCommerce website..I liked images too :) waiting for your next hub. Nice to read about The importance of trust & eCommerce resource..

    • saintodd profile image
      Author

      saintodd 6 years ago from Suffolk, VA

      @izetti - thanks for the post. I'm elated it helped you. This is a topic I'll be writing much more about in the future. Glad to connect with you. I love what you write about. saintodd

    • izettl profile image

      Lizett 6 years ago from The Great Northwest

      This was extremely useful. I've been reading a book that had one chapter on this, but what you wrote here is more comperhensive than the whole chapter I read. great job!