E-COMMERCE SITES: HOW DOES IT WORKS

Business Fashion

What is e-commerce?

E-commerce is a blend word for “Electronic Commerce,” which in and of itself seems oddly vague.

It seems the word e-commerce was always meant to be a broad term used to refer to virtually any commercial transactions that take place on the Internet.

What is an e-commerce website?

E-commerce websites are the digital portals (i.e. virtual storefronts) that facilitate e-commerce. Remember, e-commerce is a blanket term that includes virtually any transaction that takes place on the internet.

Any website equipped with e-commerce functionality and allows customers to purchase a good or service is an e-commerce website.

Historically, the earliest e-commerce transactions took place via email and phone calls.

Even at the earliest stages of development, effective e-commerce websites must be designed to:

  • Facilitate Revenue via:
    • Maximizing the aggregate quantity of transactions.
    • Maximizing “average order value.”
    • Steering shoppers to the most profitable products and categories.
    • Encouraging brand loyalty, repeat customers, audience engagement.
    • Streamlining checkout and other critical conversion funnels.

E-commerce websites range from template driven plug-and-play shopping carts to complex e-commerce websites that cost millions of dollars to develop and maintain.

E-commerce Websites Typically Work like This: 

  1. A potential customer navigates to an e-commerce website, whether via search engines, paid advertisements, referral traffic, etc. 
  2. The e-commerce website connects to its database, which contains tons of data about the website’s categories, products, product dimensions and weight, articles and content, images, etc. The website requests this data to dynamically render any requested web pages.  
  3. After browsing the e-commerce website, a potential customer adds a product or service to their virtual shopping cart and decides to check out.
  4. The shopper completes the checkout process and finalizes the transaction.
  5. The shopper’s credit card information is encrypted and sent to a Payment Gateway (PayPal, for example) to handle the credit card processing securely and remotely.
  6. Once the order is complete, and the payment has gone through, the website typically provides an estimated shipping time, a unique transaction number, postal tracking number, etc. Most of these processes are automated and part of a good e-commerce website’s core functionality.
  7. As transactions take place, orders are stored in the website admin and sent to an order fulfillment team. Order fulfillment can be done in-house or by a third-party company/drop shipper. 

Pros of e-commerce Websites:

  • Increased market reach (global customer base).
  • Reduced costs for goods, services, shipping, etc.
  • Secure & encrypted transactions.
  • Shortened distribution chain.
  • Faster order fulfillment.
  • Better, more precise data for future sales forecasting.
  • Targeted markets can be razor-focused, based on age, demographics, interests, etc.
  • The potential for anonymity.

Cons of e-commerce Websites:

The disadvantages of e-commerce websites are few and far between, and if you work with a reputable e-commerce website development company, are easily mitigated. Disadvantages of e-commerce sites include:

  • Customers can’t always see and touch the product in real life before purchasing.
  • Potential customers must be somewhat tech-savvy, potentially limiting market reach.
  • Less ‘personal’ shopping experiences.
  • Potential for fraud, data privacy issues, etc.