Definition and benefits of E-commerce

Ecommerce: Definition, benefits, and examples

If there’s one business model that has witnessed significant growth in recent times, it is eCommerce. Ecommerce has become a major part of the retail framework, accounting for as high as 4.2 trillion dollars in e-retail sales in 2020. 

In this article, we’ll be exploring what eCommerce is all about, from the benefits of eCommerce to how you can start your own eCommerce business today. 

Ecommerce meaning 

Ecommerce is a digital form of commerce. It involves buying and selling goods and services through the internet. Now, due to the advancement in technology, eCommerce has penetrated almost every aspect of the market. 

Hence, there’s almost no product or service that cannot be purchased online. From bags and shoes to groceries, and even technological gadgets.

Now, we have eCommerce giants like Shopify, Amazon, and so on. 

Ecommerce is also responsible for the birth of “zero capital businesses.” Many entrepreneurs have been able to start, grow and scale their businesses with little or no starting capital, thanks to the power of eCommerce. 

Since eCommerce eliminates the need for a physical store or contact between the seller or company and customer, it’s easy to operate from anywhere in the world. 

Benefits of Ecommerce

The world of eCommerce has several advantages for both the buyer and the seller. Some of these benefits include:

Access to a broader range of goods and services

Sellers are no longer restricted by their business location, as goods can be shipped from one end of the earth to the other. Also with retail Giants like Amazon offering free shipping, buyers have more incentive to go international with their shopping needs.

Increased convenience with shopping

Previously, you’ll need to visit a store which is more time consuming and physically exerting. Now, you can just lay on your bed and browse through sites and product catalogs, make your choice, pay, and wait for goods to get to you. Plus, with Augmented Reality(AR) and Virtual Reality(VR) creating a more personalized virtual shopping experience, online shopping just got better.

Little or no cost to set up

Apart from the costs of registering with eCommerce companies and payment merchants, you can launch your eCommerce business without any capital. It eliminates the need to pay for a physical space for your store. 

No time restrictions

A distinct feature of eCommerce is that it cuts across time zones. Online businesses can now run 24/7 nonstop. There is no need for store opening and closing times or fixed times to talk to customer care. 

As long as the seller sets up automation for their business, customers can get a prompt response to their questions and shop at any time. 

Examples of Ecommerce

  • Retail: This is simply selling goods in small quantities directly to the consumer
  • Dropshipping: It’s a common eCommerce business that involves the selling of goods through a third party. 
  • Digital products: This involves information products like templates and courses that can be downloaded. Also, software falls under digital products.
  • Wholesale: This is the purchase of goods in bulk to be resold. This is the direct opposite of retailing mentioned above.
  • Services: This involves individual experts offering their services to brands for a fee. This has grown tremendously in recent times with the rise of freelancers.
  • Subscription: This allows businesses to make money recurrently on a timely schedule on the services or products they offer. Customers are charged periodically in exchange for regular use of a product or service. Most times, it goes together with digital products.

Types of Ecommerce

Here are four traditional types of eCommerce:

Business to Consumer (B2C)

This refers to eCommerce activities with a corporate entity of business as the seller and individuals as the buyer. Thus the manufacturer chain starts from the company and ends in the hands of the final user. 

We find products with a simple function and lower pricing in this category like clothing items, jewelry, beauty products, etc. 

Business to Business (B2B)

As implied by the name, this eCommerce model is done between two or more businesses. Here, the end-user is another business and not an individual. For example, a large percentage of IT products operate under the B2B model. 

Consumer to Consumer (C2C)

Here, the transaction is between two individuals. However, for the sake of transparency, there is usually a third party involved. This is why platforms like eBay and other thrift sites exist. 

Whether repeatedly or just once, the individuals who operate as sellers have to sign up on the platform as registered users and provide their data for verification. The same applies to the buyers too. 

Examples of products with a C2C audience are similar to what we get with B2C, like clothing, food, etc.

Consumer to Businesses (C2B)

When we think of eCommerce types, we might often think of them starting from the point of the business. However, today, we have consumer-oriented models like the C2B.  

With this model, the demand is usually for services. Think of a service consultant or a freelancer. For example, a business may reach out to a freelance digital marketer to offer their digital marketing skills to grow their business. 

How to start an eCommerce business

So you may ask “how can I start an eCommerce business?”. In this section, you find out a few simple and practical steps to take when it comes to starting your eCommerce business.

Start with research

Start by researching your desired market. Depending on your niche, you should find out the best kind of products for your consumers, their profitability, and the cost for setting it up. Most times, the profitability of a product says a lot about the interest of the consumers. 

Here are a few tips on how to go about your research:

  • Find out the end user’s problem
  • What product or service will serve as a solution?
  • Does the product fit the market? 
  • Look out for gaps your product can fill
  • Look out for trends in your desired niche
  • Carry out a SWOT analysis for your business

No matter how grand the ideas you have, you should still carry out research. Start with what exists in the market and is already working and get innovative.

Choose a product 

When it comes to choosing a product, the first step is to brainstorm products to sell. You may choose to sell a product that solves a general problem, or you might want to narrow it down to a specific niche. Look out for trends and fads. Carry out social listening. Check for product reviews and keywords. You want to choose products that have a moderate to high demand in the market. Some profitable eCommerce business ideas include Fashion and jewelry, Home accessories, Smart devices, Digital marketing services, Baby products, etc. 

Choose your eCommerce business model 

How do you intend to sell your products? You will need to determine what type of business model you want to operate on. An eCommerce business model ensures that you deliver value to your customers consistently, allowing continuity in business. There are several business models you can consider. From wholesaling to dropshipping and manufacturing. 

Set up your eCommerce business 

Next, you will need to decide your business name, get your business license, and other legal documents. You may choose to join an eCommerce platform like Amazon or Shopify or you may want to set up your own eCommerce store. 

You can use online management systems like Opencart for your eCommerce website design. 


There is no doubt that eCommerce is dominating the retail market. With an eCommerce store, you can start, grow and scale your business anywhere in the world. You can check out this article to ground yourself on strategies to grow your business in this post-pandemic era.