What Is eCommerce? Definition, Examples & Revenue Models

August 17, 2023

What Is eCommerce?

eCommerce (electronic commerce) is the process of selling goods and services on the Internet, like clothing, pet products, or cleaning services. According to Statista, revenue in the eCommerce market will reach US $4.11 trillion in 2023. eCommerce is an online business model that gives sellers access to a global market and makes it easy for customers to discover items they want to buy. Examples of eCommerce revenue models include dropshipping, wholesale, or private labels. 

How Does eCommerce Work?

eCommerce connects consumers with sellers via electronic channels through websites or a CMS (content management system) such as Shopify on devices like laptops, mobile phones, and tablets. According to Statista, over 2.64 billion people shop online in 2023. A CMS or website is where people interact with you and purchase your inventory. It's how sellers influence a potential customer and how likely you are to make a sale. Sellers can choose their customers and define how they target them. And use a payment provider like PayPal or Stripe to facilitate the transactions of buying products or services.

What Are The Types Of eCommerce?

The types of eCommerce depend on the kind of product or service sold and how the company operates and can include:

Business to Consumer: B2C ecommerce is also known as online retail. A B2C transaction involves directly selling goods or services to customers from an online store. A well-known example of a B2C website is Amazon which averages $1.29 billion in retail sales daily.

Business to Business: B2B ecommerce is the sale of products or services between two companies. An example of a B2B platform is Upwork, a freelancer job search site.

Consumer to Consumer: C2C is an online transaction between two consumers through a third-party platform like eBay or Facebook Marketplace.

Business to Government: B2G is an online company that sells products, services, or information to a federal, state, or local government agency—for example, IT services or components for aircrafts. 

Consumer to Business: C2B is a crowdsourcing model where the consumer provides a product or service of value to the business. For example, sites like Shutterstock or Google AdSense leverage people's services to fulfill market demand. 

Consumer to Government: C2G is dealings between citizens and the government. For example, people pay taxes and fund education or healthcare benefits. 

Mobile Commerce: M-commerce is a way to shop online without needing a laptop. It's an easy way for people to make purchases on the go. Data suggests that sales in the M-commerce market will exceed $510 billion in 2023. Examples of mobile commerce include in-app purchases, mobile banking, and digital wallets like Google Pay. 

Facebook Commerce: F-Commerce is buying or selling items on a Facebook page or Facebook shop. According to Sprout Social, it's still the top ecommerce platform for consumers and marketers in 2024

Social Commerce: Social commerce is the selling of goods on social media platforms like Instagram and TikTok. Because e commerce sales are made directly on the site, it's easy for potential customers to shop while they scroll and never leave the platform. Insider Intelligence states that this type of ecommerce is growing by 20% in the next three years. By 2025, social commerce sales will reach $107.17 billion.

What Are The Advantages & Disadvantages Of eCommerce?

E-Commerce Advantages

One of the biggest advantages of e commerce stores is that they’re an online business model that offers low start-up costs compared to starting a physical retail store. 

An advantage of eCommerce is the potential to scale quickly. There are still lots of customers to be had, and if you can find a way to stand out, you can keep growing.

An advantage of the eCommerce model is the ability to process multiple orders at a time and leverage automation tools like Zoho Inventory to streamline processes like inventory management.

E-Commerce Disadvantages

One of the main disadvantages is the level of competition. (There are an estimated 12 million – 24 million e-commerce sites globally in 2023).

Other disadvantages of the business model are slow shipping times and supply chain issues.

A disadvantage of eCommerce is the inability to connect with the individual consumer on a personal level or provide them with a hands-on shopping experience.

What Is An eCommerce Business?

An eCommerce business is the exchange or sale of products and services online. But it's a business, and it's not easy. The model takes work and dedication. As an online business owner, master eCommerce's four pillars: profitability, productivity, payment, and personalization. Then do market research and decide what product or service to sell. For example, 

  • Who do you want to sell your product or service to?
  • Is it unique or hard to find?
  • Does it solve a problem?

Decide where to sell your goods (a website or on ecommerce platforms like a CMS). Then determine your pricing. You want the cost of goods to be low enough to sell products in the market and generate profits without pricing too high or too low. Next, develop a good ecommerce marketing strategy.

How will you drive customers to your online store? For example, you can use paid ads on social media platforms like Facebook and YouTube. Or leverage SEO tactics to rank your website higher in search engines. But you need to attract customers to make sales. The goal is to get a ton of eyeballs on your offers. 

What Is An eCommerce Website?

An eCommerce website is a digital storefront connecting an online shopper to online products or services. E-commerce websites are like physical retail stores on the Internet. But they adhere to a system that includes the following:

  • First, a business owner creates a website on an e commerce platform like Shopify or Woo Commerce. Then they add the products or services they want to sell with corresponding prices.
  • Sellers can then advertise their online store on Google or social media platforms to attract buyers or use SEO to rank in the SERPs.
  • Customers find eCommerce websites that sell what they're looking for and buy what they want.
  • The customer then provides the required payment and shipping information. 
  • Next, the eCommerce website sends the payment via a payment processor like PayPal or Stripe, which validates and collects the money.
  • Finally, the seller ships the order to the customer.

Make your website stand out. The key is to think like a customer and provide the best customer experience possible. Develop a simple and easy-to-use website. Include high-quality images and on-point branding. Add social proof and have a clear call to action. Then provide a checkout system that makes the consumer's online shopping journey quick and easy. You can also take an eCommerce course like Create a Profitable Online Store

What Kind Of Budget Do You Need To Start An eCommerce Business?

Have a budget of at least $2000-$10,000 to start an eCommerce business. eCommerce is more cost-effective than owning a physical store, but it's not free. You need money to cover the costs of expenses like:

  • Website build: $1500-$15000+ (depending on customization & plugins)
  • Domain & hosting: $100-$350/year
  • Branding & packaging: $5000-$20,000+
  • Products: 6-25 options + costs
  • Advertising & marketing: $100/product

eCommerce is about being good at one thing. Or about having a better product than everybody else. Leverage your skills or products so you can charge your prices. Get it right, and you can make a ton of money. 

But, of course, there are more cost-effective e-commerce business models. For example, retail arbitrage, using sites like Craigslist or eBay where you buy low and then resell high on platforms like Facebook Marketplace. 

How To Start An eCommerce Business

Decide on your niche

Pick a niche with an active online audience that offers multiple products you can sell. Choose one with enough search volume but that doesn't have a ton of competition. Then consider things like, Can you create a unique marketing angle? How will you reach your target audience? Use tools like Google Trends and Facebook Audience to see what people are buying right now. 

Research & identify barriers to entry

Check out the top competitor sites. What are they selling? Can you offer a better product or service? Will you need to invest in paid ads to get customers? Who is your ideal buyer? Where do they spend their time online? The more you know about your market and ideal client avatar, the better prepared you are to tap into pain points. Then you can provide solutions people are searching for on the world wide web.

Choose a name & business structure

Decide on a name that's easy to remember. Then choose what legal format you want to set up. For example, an LLC or Sole Proprietorship. Get the necessary legal documents (taxpayer numbers, EIN, licenses, permits, etc.). So you're sure you and your business are protected.

Select where to build your online shop

Will you create your own website or use a content management system like Shopify or Magento? Do you have the skills, or do you need to outsource? What payment processor will you use? Then create social media profiles on platforms like Facebook, Instagram, and TikTok so you can share your link and get more eyes on your e-commerce store.

Establish how & where to source inventory

Determine what you want to sell and then decide how and where to source inventory. For example, Will you make your own goods, or do you plan to offer a service? Is your product digital, or will you need help with order fulfillment? What revenue model will you adopt to sell your goods or services? 

Market & advertise your online store

Leverage multi-channel marketing and promote your products on as many channels as possible. Develop a marketing strategy focusing on where your ideal customer hangs out online. For example, if they consume videos, then publish content on YouTube. If they spend their time on Facebook, consider running Facebook ads. Another option is to leverage email marketing. Start your email list right from the beginning.

Then share customized and segmented emails using tools like MailChimp or Klavyio. Send emails that educate and inform. Don't overwhelm. Instead, focus on nurturing relationships to build trust with your audience and drive sales. Of course, you can use paid ads to get a few quick wins. But you need a budget. The price of advertising is rising by 20% in 2023. So keep a close eye on your campaigns. Track customer data to make sure you're getting the best ROIs for your ad spend. 

10 Tips To Make Your eCommerce Store Successful In 2024

1. Get serious about specific targeting & retargeting:

According to Think With Google, 53% of shoppers say they always do research before they buy to ensure they are making the best possible choice. But most people don't buy the first time they check out your online store.

BI Intelligence reports that 97% of first-time visitors exit the website without making a purchase. So learn as much as you can about your target audience and adopt retargeting methods like Facebook or Google Shopping Ads. Then you can increase conversions by 43%.

2. Leverage SEO:

Use SEO tactics like an optimized website, keyword research, and fast load speeds to rank higher in search engines. The goal of SEO is to make your website more visible. SEO helps get your site in front of the right people. Buyers who are looking for solutions online that your products or services can provide. Use tools like Keywords Everywhere or Ahrefs to access top keywords and variations. Then include them in your site's title, product descriptions, and headings to improve your ranking in the search engines. 

3. Provide a stellar customer journey:

Create a customer-centric experience for your shoppers with things like:

  • Fast load speeds
  • Multiple payment options 
  • One-of-a-kind unboxing experience

Develop your brand's unique selling proposition personalized for your target buyer. For example, add size charts, or leverage social commerce. Then you let your customers shop directly on the platform of their choice. Build a community to better connect with your shoppers, be active on social media and stay ahead of trends. Again, the goal is to give your customers a better shopping journey than the competition. 

4. Cultivate a loyal customer base:

Data suggests that 80% of profits come from 20% repeat customers. So the more you engage with your buyers and personalize that connection, the more they will buy from your online store. Develop a content marketing strategy that tells your story. For example, Why did you develop this product? How does it give them value in their daily life? Then engage on social media and reward loyalty with perks like:

  • Free shipping & discounts
  • A customer loyalty program & personalized product recommendations
  • Referral incentives & memberships

Know your customer and let them get to know you. Be personable and relatable. Actively listen to what they want and provide the best solution.

5. Evaluate your value proposition: 

Explain the benefits of your product, not the features. Focus on the perceived value of the customer. Write your product descriptions or ad copy in the voice of your customer. For example, how would they describe it?

The idea is to be clear and relevant. Develop a scroll-stopping hook and a compelling angle. Target the primary pain points of your ideal customer and get them to take action. Tap into emotion or impulse buys. Then highlight reasons why your offer is better than what the competition is selling. 

6. Take advantage of UGC (user-generated content)

UGC is word-of-mouth marketing in 2024, and it works. According to Sprout Social, 62% of consumers are more likely to click on ads, social posts, emails, or websites that feature real customers rather than images solely created for advertising by the brand. By leveraging UGC, you authenticate your brand and build customer trust.

People trust other people and their real-life experiences more than business content. Use videos or showcase reviews. The more UGC you share, the more you will increase customer engagement. Then you give your customers what they want to see and will make more sales. 

7. Offer multiple shipping options:

Slow shipping times and added costs are one of the fastest ways to lose a customer to the competition. However, Amazon offers the same and next-day options, so people expect fast shipping, and they want it for free.

Marketing Land states that 90% of consumers would shop online more often if given the option of free shipping. So offer alternatives like a discount instead of free shipping. Or include the shipping cost in the price of your product or service. But data suggests that adding the free shipping option can help increase your store's conversion rate by as much as 20%.

8. Take advantage of real-time engagement:

Empower your customers with things like self-checkouts with an interactive step-by-step process and chatbots. Offer an e-commerce live chat option. Share promotional videos and live streams on your site and social media.

Respond to reviews-the good and the bad. According to LocaliQ, people spend 50% more with businesses that regularly respond to reviews. Demonstrate empathy and provide solutions to show potential customers you stand behind your product. The more transparent your store is, the more people trust what you're selling. 

9. Draw on a consumer's fear of missing out (FOMO): 

Create a sense of urgency and make more sales. Offer marketing angles like:

  • Limited time offers
  • Free shipping on orders over $X
  • Gift with purchase
  • Timer or product countdown on your website 
  • Flash sales and member frequent shopper discounts

People like saving money. So take advantage of this concept to boost sales and increase revenue for your e-commerce store. 

10. Reduce the risk:

Make your e-commerce store safe for your shoppers. Statista suggests that by 2025, e-commerce fraud detection and prevention will be an estimated $69 billion issue. To mitigate the risks, have a secure and up-to-date website and only store the customer data you need.

Then offer additional authentication factors and a simple refund and return policy. Finally, don't make your customers create an account. According to Forbes, 24% of online shoppers abandon their cart because the site wants them to create an account. So let them check out as a guest.

What Is The Difference Between eCommerce & eBusiness?

The difference between eCommerce and eBusiness is that the ecommerce business model sells things on the Internet. But that's only one aspect of an eBusiness. Instead, an eBusiness incorporates online technology to increase sales or revenue. For example, a company that uses paid ads on social media to attract more customers.

What Are Examples Of eCommerce Revenue Models?

eCommerce is competitive. You're going toe to toe against the big name and established brands. Amazon is an example of an e commerce brand and the largest in the world. Influencer Hub says Amazon accounts for 37.8% of all online retail sales. So to be successful, you need to sell a product that people want to buy, like commoditized goods that set themselves apart or niche products in high demand. But there are cost-effective ways to test the market. Then when you have a proven concept, you can brand and package it under your own label. A few examples of revenue models include:


The wholesale model allows a buyer to purchase products in bulk and take advantage of a lower per-unit cost from suppliers. Then the wholesaler can resell the items via an online marketplace like Amazon FBA for a higher price. Initial investment costs average $4000-$10,000 with profit margins of around 10%-50%. As a result, the average ecommerce brands earn around $5000+ in monthly revenue.

Private Label

Another example of an e-commerce revenue model is private label. The private label model makes money by purchasing generic goods in bulk. Then sellers can rebrand them with their label and packaging to resell the products as their own brand. Sell as an Amazon FBA seller and make $500-$10,000/month. Private label is one of the more profitable models and boasts a chance to earn passive income.

White Label

The white-label e-commerce revenue model is a more cost-effective and less risk-intensive option if you want to make money from an e commerce sale. White label refers to companies who rebrand an existing product to make it look like they made it themselves. Then they sell it under their brand.


The dropshipping model is an order fulfillment e commerce business. It offers low start-up costs and minimal risk, and dropshipping isn't as hard to start if you don't have a lot of capital to invest. Dropshippers don't own products or house inventory. Instead, a third-party supplier manages the transaction and handles all the order fulfillment, including packaging and delivery to the client.


The subscription model delivers products on a regular basis. For example, pet suppliers ship items to their customers every week or month. Again, a popular revenue model, and people enjoy its convenience. As a result, the e-commerce business owner has a recurring stream of income.

Create a unique angle or distinct selling strategy to stand out. Then be the better marketer. For example, tap into customer psychology and pain points and focus on the customer experience. E-commerce takes hard work, and it's not a passive income. But if you have a proven concept and a unique marketing angle to get sales, you can make a ton of money with the business model in 2024.

Is eCommerce Risky?

Ecommerce is risky, much like any other investment or business venture. There is always the risk that you might fail, lose money, or waste time. Of course, there are risks associated only with an online business like e-commerce, such as:

  • Security breaches & intellectual property violations
  • Cyber attacks & hackers
  • Unrealistic client expectations & high levels of competition
  • Poor customer service & flawed authentication methods

But an ecommerce business is less expensive than starting a small business. And it gives you access to a broader target market. It's also the way of the future. According to Nasdaq, 95% of all shopping will be done online by 2040. So the rewards outweigh the risks if you're prepared to do the hard work. Find a product people want to buy. Then develop a strategy to drive online traffic to your offers and get commerce sales.

Is eCommerce Still Worth It? 

eCommerce is still worth it if you have a product or service that people want to buy and can develop a profitable brand. First, use tools like Google Trends and Search Console to see what's selling well right now. Then leverage third-party software like Ecomhunt or SaleSource to check out competitor ecommerce sales. Is there a gap in the market? Do you have a product or service that solves a problem or makes a person's life easier? 

Forbes reports that 20.8% of retail purchases will be made online in 2023, and e-commerce sales will continue to increase. People like to shop from home, and they love to shop on their mobile phones. Make sure your website is mobile responsive, has fast load times, and offers quick checkout options. Be better than the competition, and e-commerce is not just worth it. It's a way to make real money online in 2024.

Why Local Lead Generation Is A More Viable Business Model To Start In 2024

The local lead generation business model captures organic traffic and produces leads for local business owners. The concept is simple. Build and rank micro websites in the right place and offer the right service. Then use local SEO methods to get those sites to the top of Google. Your websites produce leads that you then sell for profit margins between 85%-90%. Each lead generation website only costs about $500 to build and rank. But because the focus is local, your sites get to the top of the SERPs in as little as six weeks.

Of course, lead generation is a learned skill set. But this barrier to entry means that you don't have the level of competition like e-commerce. Plus, once you understand the concepts, you can create more than one website at a time and scale fast. At the top, your sites don't need a ton of work. You can build as many as you want. In any city, anywhere in the world. Rent your digital assets, and earn passive income. 

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Ippei Kanehara

$52K per month providing lead generation services to small businesses

Ippei.com is for digital hustlers, industry leaders and online business owners.

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