An e-commerce website is one that allows people to buy and sell physical goods, services, and digital products over the internet rather than at a brick-and-mortar location. Through an e-commerce website, a business can process orders, accept payments, manage shipping and logistics, and provide customer service.
It’s tough to imagine daily life without e-commerce. We order food, clothes, and furniture; we register for classes and other online services; we download books, music, and movies; and so much more. E-commerce has taken root and is here to stay.
The term “e-commerce” simply means the sale of goods or services on the internet. In its most basic form, e-commerce involves electronically transferring funds and data between 2 or more parties. This form of business has evolved quite a bit since its beginnings in the electronic data interchange of the 1960s and the inception of online shopping in the 1990s.
In recent years, e-commerce has enjoyed a massive boost from the rise of smartphones, which allow consumers to shop from nearly anywhere.
What is an e-commerce website?
Much like a traditional physical retail store, e-commerce websites allow consumers and businesses to buy and sell to one another on a designated platform. The main difference between e-commerce and physical commerce, however, is that e-commerce transactions occur entirely over the internet rather than at a brick-and-mortar location.
Types of e-commerce sites
The scope of e-commerce is vast, but the types of sites that host electronic transactions can be broken down according to the parties involved.
- Business-to-consumer (B2C): Probably the most familiar to the average person, a B2C site enables an exchange of goods or services between a business and a consumer, such as buying a T-shirt from your favorite online shop.
- Business-to-business (B2B): A B2B platform facilitates electronic transactions between two businesses. If you own a company that sells T-shirts, for example, you might buy those shirts from an online wholesaler.
- Business-to-administration (B2A): A B2A site facilitates electronic exchanges between an organization and a public institution, like the website of a company that designed your city’s web portal, for instance.
- Consumer-to-consumer (C2C): A C2C site, often known as a marketplace, hosts an exchange of goods between 2 or more consumers. Examples include websites like Etsy and eBay.
- Consumer-to-business (C2B): On a C2B site, individuals offer goods or services to businesses. This could be a freelance SEO expert who works with companies in a certain industry or an influencer paid to promote a company’s products.
- Consumer-to-administration (C2A): Similar to B2A, this type of site allows a consumer to provide information, goods, or services to public administration and governmental organizations—think paying a parking ticket on your city’s web portal.
Types of products sold via e-commerce
The digital component of e-commerce allows sellers to offer a wide range of products, some of which wouldn’t be possible to sell in a physical location.
Items such as clothing, furniture, food, or supplies are tangible products that can be stored in a warehouse. Sellers display goods on their e-commerce website, where consumers can like, save, or purchase them. Upon purchase, the business ships the item to the customer.
E-commerce sites are also a popular way to sell services, like consultations, maintenance, tutoring, lessons, and more. Whether you want to learn to code a website or you’re looking for an experienced trainer to help fix your dog’s troublesome barking habit, there’s no shortage of assistance available online.
Digital products—like online courses, software, podcasts, music, and e-books—are becoming increasingly popular on e-commerce sites as well. The rise of digital products has opened up a new way to learn skills on demand.
What should your e-commerce site do?
When it comes to selling goods and services online, there are a few basic functions every e-commerce site should include.
If you’re running a business that sells a product, your e-commerce site must be able to accept orders from your customers. This process can be more complex than you might expect. For each order, your site will need to:
- Record customer information (name, address, etc.)
- Collect customers’ acceptance of your terms of service
- Calculate any applicable taxes
- Apply coupons or discounts
- Generate order and tracking numbers
- Share delivery details
- Process billing information
- Provide access to a payment gateway
There should be a seamless transition from your website to a payment gateway. Typically, payment gateways allow customers to:
- Select a payment option
- Provide details such as credit card numbers and CVVs
- Use multi-step authentication for secure payments
Handle shipping and logistics
Once your site has handled the order and payment process for a customer, the next step is delivery.
As a seller, your goal is to ensure that customers receive the right product on time and in perfect condition. To help this process along, you can either handle shipping and logistics yourself or use a third-party provider. No matter which method you choose, your website should be able to initiate the process accurately and consistently.
Your site will also need to have a process in place for accepting returned items. Also known as reverse logistics, this process is just as important as shipping outbound goods.
Provide customer service
Inevitably, your customers will need to communicate with you about their order or experience. They may need to correct their personal information, make an exchange, or return a faulty product. Your website is where these customers will turn to get in touch with you. The easier you make it for customers to connect—with a contact form or chat service, for example—the easier it will be to solve their problems quickly.
What metrics should you track?
Tracking e-commerce metrics can help you measure success, showing you what’s working for your customers and what might need some improvement. Most e-commerce platforms have some built-in data tracking, but for truly robust metrics, you’ll want to connect your website to an analytics platform, such as Google Analytics.
Your website traffic is a straightforward measurement of visitors to your site and the number of people who buy something while they’re there. Traffic often paints a clear picture of the effectiveness of your latest e-commerce marketing efforts.
Your bounce rate is the percentage of visitors who leave your site after viewing only one page or interacting with just one area of your site. If you see a high bounce rate, consumers probably aren’t making many purchases, so it’s important to figure out why they’re leaving. The problem may come down to marketing, pricing, the layout of your site, or a host of other factors.
Visitor conversion rate
The visitor conversion rate captures the percentage of website visitors who become paying customers. Conversion rates are important because they show how effectively you’re able to persuade folks to make a purchase. When you have a low conversion rate, customers are letting you know that something is missing from your business or your marketing.
Cart abandonment rate
Just like in a physical store, an abandoned cart in e-commerce is one that has been filled and deserted by the shopper. While abandoned carts can be frustrating as a seller, they’re not always a bad sign. Many shoppers use their carts as a wishlist or placeholder as they look around for the right product.
Regardless, you want customers to re-engage and buy those items in their cart. You can encourage them to complete their purchase by offering a discount or nudging them with a promotional email.
Email subscriber engagement
It’s easy to track how many people are reading your emails—and how many are becoming customers. Monitoring your email subscriber engagement can help you determine which aspects of your email marketing are effective and what might still need some work.
Mobile e-commerce has become so prevalent that it’s even earned its own name—m-commerce. This makes it even more critical for you to track the number of mobile visitors to your site. It’s also helpful to pay attention to how many of your mobile visitors eventually become customers.
Looking at the time customers spend on your site can give you valuable insight into their behavior. Are your visitors browsing but not buying? Maybe your website is appealing, but your price point is too high. Are visitors bouncing almost immediately? Maybe your site is difficult to navigate.
Pages per visit
Another metric that can help unpack customer behavior is pages-per-visit. This measures how many individual pages on your site customers are visiting and can help you measure the effectiveness of your online store.
Building your e-commerce business
Here are steps to follow when you’re ready to move your venture forward.
Step #1: Choose your product
Before you get started, make sure you have a clear idea of your niche. Even better, it helps to consider what you want to contribute to the market and begin with a vision of the items you hope to sell.
Once you’ve landed on a specific product or service, take your time and do some research. Start by looking into other businesses in your industry. Pay attention to what they’re doing well and what you think you could improve on. Carefully examine their business model, marketing techniques, and the functionality of their website. These observations can help shape your own plan.
Make sure you also consider the potential for market saturation, the ease (or difficulty) of entry into the market, and what unique needs your product may be able to fill.
Step #2: Find your target audience
Once you know what you want to sell, it’s time to identify your target customer. Consider who your ideal buyer is and what qualities they have. It can be helpful to develop a customer persona during this part of the process.
A customer or buyer persona is a fictionalized version of your ideal customer. This persona can help you predict customer behavior and understand your future clients more deeply. Factors you might want to consider when developing a persona are age, location, income level, and personal goals or values. Whether you build detailed personas or not, keeping these qualities in mind can help you predict your real customers’ online presence and marketing preferences.
Step #3: Validate your product
Even with a vision of your product and a clear picture of your target audience, you still have some significant hurdles to clear before you can launch your brand. First, you need to determine whether your idea will be viable in the actual marketplace. You’ll want to consider both market-based criteria like market size, competitors, and industry trends and product-based criteria like price point, markups, sales tactics, and regulations.
When validating your product, you should come away with a firm understanding of the costs you’ll face as a business owner. For e-commerce sellers, you often have more flexibility in your pricing since you won’t have the cost of a storefront or, in the case of digital products, warehouse and manufacturing expenses.
Step #4: Shape your business
If your business is centered around a physical product, you’ll need to establish a model for obtaining, packaging, and shipping your orders. Some of your options include:
- Making the product yourself and handling the cost of shipping
- Having your product manufactured by another company
- Reselling wholesale items at a markup
- Dropshipping items by working with a third-party inventory handler
- Offering a digital product that eliminates the need for production or shipping
Once you’ve determined how you’ll move your product, it’s time to write a business plan. This plan will be essential to refining your goals and guiding your next steps. Think about the type of business you’re starting, your product, your ideal customer, your source of income, your staffing needs, and your operations model.
An effective business plan is often between 15 and 20 pages and includes:
- An executive summary
- Your company overview
- Market analysis
- Definitions of your product or services
- An actionable marketing plan
- A plan for logistics
- A well-developed financial plan
Step #5: Pick a name
If you don’t already have one in mind, your e-commerce store will need a memorable name. A great business name is compelling, descriptive, and one of a kind. Check to make sure your business name is available on your secretary of state’s website and the U.S. Patent and Trademark Office website. After you’ve made a decision, you’ll want to:
- Claim your domain name.
- Consult with an attorney to legally register your business as an LLC, corporation, partnership, or proprietorship.
- Apply for your employer identification number (EIN) through the IRS.
- Apply for any necessary business permits or licenses, including sales tax permits, health and safety permits, and more.
Step #6: Build your website
After you’ve created your new business, it’s finally time to build your e-commerce website. Your goal should be to create a polished website that reflects your new brand’s values and aesthetics. The basic steps of website-building include:
- Purchasing a domain. If you haven’t already, you can buy a custom domain with Mailchimp. This makes it easier for customers to find you and lends credibility to your new site.
- Choosing a website builder. Mailchimp makes it easy to design and build the website you’re envisioning for your brand. The all-in-one platform simplifies the process of creating and promoting your website.
- Mapping out your site. Once you’ve taken the time to explore the website builder and its capabilities, it’s helpful to create a site map. Focus on making your site easy to navigate and fun to explore.
- Designing your aesthetic. Take your time establishing a visual package that represents your brand’s values and culture. Mailchimp’s flexible tools make it simple to elevate your website design with professional formats and appealing branding.
- Building out your pages. Each page on your website should meet the needs of your target audience. Remember that all roads should lead to creating new customers.
- Connecting your payment processor. Make sure your website can accept payments before you launch.
- Optimizing your SEO. Search engine optimization (SEO) is the key to gaining visibility online. Make sure you’re using keywords wisely so you can connect with as many customers as possible.
- Launching your e-commerce store. Double-check your e-commerce launch checklist before going live with your new online store.
Step #7: Develop a marketing strategy
Marketing is essential to your store, both before and after you launch, so you’ll want to make sure you develop a compelling marketing strategy to get the word out.
When it comes to marketing, it’s often beneficial to use multiple channels to reach your customers. For example, you could:
- Promote your blog on your social media channels—and vice versa.
- Post on multiple social media channels and see which platform garners the most engagement from your audience.
- Partner with influencers or affiliate marketers and provide them with links to shoppable landing pages they can share.
Tweak your SEO strategies
Search engine optimization is an ongoing process. To maintain visibility, focus on developing your site’s SEO with effective copy, product descriptions, and up-to-date blog posts. Keep in mind that your entire site should align with current SEO standards to maximize your exposure.
Invest in CRM
Customer relationship management, or CRM, is a game-changer for online businesses. A CRM platform can support or handle your e-commerce marketing ventures by gathering important data about demographics and behaviors. In other words, investing in CRM can help you optimize your marketing choices and boost sales.
Make the most of email
Email plays a significant role in any marketing efforts because it allows you to connect with people who’ve already shown interest in your product. Email marketing campaigns are a great way to share exclusive offers, promotions, company updates, and product launch details. You could even add surveys to your email to collect customer feedback and help shape the future of your brand.
Get ready to launch your e-commerce website
The journey to launching your online store isn’t always easy, but the key is to keep your goals in mind and take the process one step at a time. And with Mailchimp’s comprehensive tools at your fingertips, you’ll have everything you need to build—and grow—your new business.
Frequently asked questions
How do e-commerce websites work?
E-commerce sites are similar to other types of websites in that they provide visitors with information. However, e-commerce websites allow users to make purchases online using payment processors and payment gateways.
E-commerce websites list products, features, pricing, and CTAs that help users navigate the sales process. These websites connect to a product database containing information about the products available, including content and images.
Many e-commerce websites, including B2B and B2C, facilitate transactions from consumers to businesses. Ultimately, e-commerce websites allow customers to purchase products and services online.
How do I create a free e-commerce website?
You can create a free e-commerce website using Mailchimp’s website builder. The website builder helps you easily design, customize, and promote free websites for e-commerce businesses. The best part is that you don’t need design or development experience to create a stunning website to showcase products, attract buyers, and finalize transactions. Instead, you can use various web design tips and landing page templates to build a mobile-optimized website quickly and start selling products immediately.
With Mailchimp, you’ll also get access to several marketing tools. Through our platform, you can purchase a domain for your e-commerce site, create landing pages, set up an online store, build out your social media pages, and more. In addition, with built-in forms, behavioral targeting, and analytics, you can begin tracking the performance of your website and digital marketing strategies as customers move through their journeys.
How can I start an e-commerce business?
Starting an e-commerce business may be more cost-effective than starting another type of company. However, it requires research and proper planning.
First, you must choose your product or service. Once you know what products or services you want to sell, you must identify your target audience. Your target audience consists of the customers who are looking for your product as a solution to their problems. Next, you’ll need a business plan that explains how you’ll make your business succeed through product sourcing, marketing, pricing, and goal setting. From there, you can make a website, source products, and start selling your products online.