The Ultimate Guide to Ecommerce: What Is It and How Does It Work?

written by Carlos Alvarez
11 · 27 · 21

Ecommerce is a profitable model to leverage for businesses all over the world. Companies that embrace it can sell their products or services to global audiences. And with more product options, many customers want to shop online. 

Ecommerce is the way to go for both new and pro businesses. Digital marketing creates a level playing field for all businesses. Both small and large companies can access it to grow their audiences. 

But do you know what ecommerce is and how it works? This guide will help you understand it. You’ll also learn how to start an eCommerce business and the benefits.

What Is an Ecommerce Business?

Ecommerce is the buying and selling of goods and services online. In ecommerce, business owners use online stores to display and sell their products. 

All transactions in eCommerce happen online without face-to-face meetings between buyer and seller. It’s a cost-saving option for sellers. They can avoid the cost of renting. 

Ecommerce businesses have become models of convenience to customers. If you’re selling your products online, your customers can buy anytime and from anywhere. They can shop and receive their products without leaving their home. 

Stats show there are 1.82 million ecommerce businesses in North America. More online stores are coming up as people embrace shopping online. Around 8 out of 10 Americans are online shoppers which is a clear sign that it’s a great time to start an eCommerce business. 

How an Ecommerce Business Works

Ecommerce functions differently from a traditional store. As a seller, you need an online storefront or marketplace to display your products. Your customers can self-serve themselves.

Customers can choose products, add to their shopping cart, click order, and pay. After that, you can process and deliver their product based on their order details. The last step, which is sometimes tricky, is ensuring order fulfillment through shipping. 

You have to figure out the right logistic components to please your customers. Take into account shipping costs and speeds to maintain positive customer reviews. 

Ecommerce stores are an effective way to reach more customers and sell more products. With the proper planning, implementation, and marketing strategy, you can boost revenues. 

How to Start an Ecommerce Business

Getting into eCommerce is way more simple than most think. There are a few steps you want to take in advance though. This will help increase chances for long-term success.

Keep reading to find out how to start an ecommerce business.

Learn About Ecommerce 

Take an ecommerce class and attend workshops to learn the ropes of ecommerce. You’ll get to pool ecommerce tips from real ecommerce experts and entrepreneurs. 

Wizardsofecom has valuable resources and classes to keep you updated about everything eCommerce. Get to learn from industry experts at your convenience in person or offline. 

Choose Your Business Model

Ecommerce is one vast industry with several different models. And there isn’t a magic formula for choosing a perfect structure. You have to research and select a suitable model for your business. Here are a few different models to consider.

Dropshipping Business Model

A dropshipping business model is where you sell products without holding inventory. Instead, you look for product suppliers to supply complete orders. Your suppliers are in charge of order fulfillment. 

Service-Based Business

Service-based businesses involve selling services like content creation, video editing, or graphic design. As a service provider, you may have to build a portfolio website that helps you attract clients. 

Amazon FBA

Amazon FBA is one way to start an ecommerce business without a website. With FBA, you sell your products from Amazon’s fulfillment centers. Amazon then processes and fulfills all orders on your behalf at a cost. Learn how to save money using Amazon FBA if you choose this model. 

Digital Product Sales

Digital product business involves selling digital products online. Examples of digital products may include software, video games, apps, ebooks, music, etc. 

You don’t need a website as a digital products entrepreneur. You can self-promote your products on social media. Or you can list them on online marketplaces. 

Physical Products Online Store

Online store selling of physical products is one of the most common eCommerce models. It’s the best model when you want to build a big physical products brand. 


Print on demand is one of the most straightforward ecommerce business models. To start, learn some graphic design, choose a niche, join a print-on-demand site, and launch. With print-on-demand, you can design and sell anything from t-shirts to mugs. 

Research to Find a Good Ecommerce Niche

You might have a harder time seeing expected results if you fill your online store with hundreds of different products and categories. Building a successful online store takes real focus. Choosing a niche is the secret to giving your business a perfect head start.

Think about meeting the needs of a specific target audience. A health and wellness ebook writer may target work-at-home mums looking for indoor fitness ideas. 

Choose a competitive but not over-crowded niche. Avoid niches dominated by the top companies and brands. Use a keyword research tool to pick out the right long-tail keywords for your business. 

Define Your Target Market and Validate Product Ideas

After you choose your niche, go ahead and figure out what your ideal customer looks like. Your buyer personas affect what products you will sell and your marketing approach.

Think about the values or the image you want for your brand. Then try to picture out the kind of buyer who may relate well with your brand image. Drill down to detailed demographics and human traits. 

Create Your Brand Visuals and Register Your Ecommerce Business

Your brand name, logo, and color schemes will play a key role in reinforcing your brand. People don’t readily recall the fine details in your message but distinct brand visuals. 

Make sure your buyer persona can resonate with your brand name and visuals. For example, go with bold, earthy colors to sell a green product to corporate entrepreneurs. 

Decide Whether You’ll Operate With or Without a Website

Running an ecommerce business doesn’t necessarily mean you have to build a website. You have options like launching your business on social media or online marketplaces.

If you want a robust online presence, consider a multi-channel approach. Top brands have websites, a social media presence, and use different marketplaces. Maximize all options to make your products accessible on different platforms. 

Consider volumes, platform fees, and operating hours when deciding whether to build a website. A website is essential for building a scalable business. 

Figure Out Logistics and Choose Payment Mechanisms

Figuring out logistics is a crucial step to avoiding some of the selling pitfalls that even seasoned eCommerce entrepreneurs make. Your customers want to receive their products as quickly as promised. In the event of returns, they want to be sure you’ll keep your word to offer replacements or refund them. 

If you’re selling digital products, fulfillment is simpler. Clients will receive their products on the spot. A print-on-demand business relies on the effectiveness of your provider. 

The challenge with eCommerce is handling inventory and shipping by yourself. Amazon fulfillment centers are a more effective way of managing inventory. Or invest in top-notch inventory management software to keep things organized. 

Create an Ecommerce Marketing Strategy

An effective marketing strategy is a key to building a successful online business. Regardless of your business model, customers won’t come or buy miraculously. 

A marketing strategy starts with figuring out your target audience. Then find out how to attract your audience to your business. Choose those strategies that are likely to give you a higher audience reach. 

The best digital marketing plan for your business may depend on your structures. For example, SEO for Shopify stores may differ slightly from SEO for self-built stores. 

Launch Your Ecommerce Business

Launch when your online store is in tip-top shape and you have a fluid logistics plan. Make sure your store loads fast and customers can easily find products. Also, before launching, do some market hype to attract attention to your business.

You could use micro-influencers to create some social proof for your business. Keep your messaging genuine and honest. If you want long-term success think about attracting and keeping customers.

Also, make sure your product offers value to your customers. And maintain good customer service by delivering the right product at the right time. 

What Are the Benefits of an Ecommerce Business? 

An ecommerce business model allows you to save operational costs and maximize profits. You can operate without a physical store and with lesser staff. 

Ecommerce also comes with retargeting options that allow you to reach qualified leads. With targeted ads, you can reach only those people who hold an interest in your products. 

Ecommerce is an easy business model to scale up. You can increase your product line without boosting your marketing budget. If you want to reach a larger audience, you don’t have to build or rent a new outlet.

Besides, with some models, you don’t need any inventory to start. A dropshipping business model means you only need to budget for marketing. And there are many more benefits of creating an ecommerce business. 

Get Golden Ecommerce Tips for Your Success

Ecommerce is for you if you want a cost-effective, highly scalable business model. Do your research and find a market gap that you can quickly solve with an online business. 

Once you start your business, continue networking and learning from ecommerce experts. You have to keep track of ecommerce trends to stay relevant and ahead of the competition. If you want to learn how to start your ecommerce business journey, check out our classes today.

Carlos Alvarez

Alvarez sums up his mission to help online sellers with a quote he heard early on in his career. New sellers constantly compare their Chapter 1 to another seller’s Chapter 20. They see what other veteran sellers are doing and they judge their success and failures by this benchmark. His goal is to show sellers a realistic path to success, and how they can enjoy every chapter of their own, unique journey.

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