What Is an Ecommerce Website? A Complete Guide for 2024

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What Is an Ecommerce Website? A Complete Guide for 2024

What Is an Ecommerce Website?

An ecommerce website is any site that facilitates the buying and selling of products and services.

Digital marketplaces, online retail stores, and auction sites are considered ecommerce sites because they enable consumers to buy goods. 

Any business owner with a product or service to sell can benefit from an ecommerce site, including the following: 

  • A small business trying to get local customers
  • A freelancer selling their services
  • A large corporation showcasing its products

What Is Ecommerce?

Ecommerce, which stands for “electronic commerce,” is the buying and selling of products and services over the internet. This includes all types of industries, such as retail, electronics, grocery, education, entertainment, delivery, and more.

According to Statista, revenue in the U.S. ecommerce market is predicted to grow 43.58% between 2024 and 2028. This increase in growth is forecasted to be worth $462.7 billion U.S. dollars. 

How Does Ecommerce Work?

Ecommerce works in multiple ways: Merchants can create their own ecommerce site, set up an online store on an ecommerce platform like Shopify or Magento, or create a storefront on a marketplace like Amazon or eBay.

Regardless of the method, all stores must have secure payment gateways to facilitate payments and comply with Payment Card Industry (PCI) Data Security Standards.

Here’s a look at the process: 

  • Shoppers visit an online store or website and browse products using a variety of devices, such as smartphones, laptops, desktops, tablets, and smart TVs and watches. 
  • Customers typically add the products they want to buy to a virtual shopping cart. The shopping cart keeps track of selected items, quantities, and total costs. 
  • When customers are ready to purchase, they proceed to the checkout page. They provide shipping information, select a payment method, and review their order before finalizing the purchase.
  • The seller receives a notification of the order
  • The vendor then prepares the products for shipping to the customer

An excellent example of an ecommerce website is the eBay marketplace. Shoppers search for specific products using the search bar or relevant product categories on the main menu.

eBay marketplace categories

What Should an Ecommerce Site Do?

A great ecommerce site can do a variety of things, from helping you sell your products to providing an excellent user experience (UX) for customers. 

Here’s a look at what ecommerce sites should have in order to successfully meet website owners’ (and users’) needs:

  • User-friendly interface: Ensure intuitive navigation and easy access to products and services
  • Secure payment gateway: Implement SSL certificates and PCI compliance for safe transactions
  • Product catalog: Organize products into categories with detailed descriptions and high-quality images
  • Shopping cart: Allow users to add, remove, and modify items before checkout
  • Mobile responsiveness: Optimize the site for seamless viewing and functionality across various devices
  • Search functionality: Enable users to quickly find specific products or categories
  • Customer reviews and ratings: Provide social proof and aid in decision-making for potential buyers
  • Order management system: Track orders, manage inventory, and process shipments efficiently
  • Customer support: Offer multiple channels for assistance, such as live chat, email, and phone support
  • Analytics and reporting: Monitor site performance, track user behavior, and gain insights for optimization
  • Legal compliance: Ensure adherence to data protection laws, terms of service, and privacy policies
  • SEO optimization: Optimize content and metadata to improve search engine rankings and visibility
  • Mobile optimization: Google recommends that content on mobile pages should load in under 3 seconds.
Google's average speed best practices

Image Source: Think with Google

If business owners don’t have the budget or time to invest in creating a high-quality ecommerce site, established online marketplaces or online stores that provide these features can be a great alternative. 

Further reading: UX and SEO: The Best Strategy for Getting Results

Types of Ecommerce Businesses Explained

Ecommerce comes in many forms. Here’s a quick rundown of the major ecommerce business types.

Business-to-Consumer (B2C)

A B2C business is an online business that sells goods or services directly to individual consumers. 

A B2C website example is Alfred, an online coffee shop that sells coffee products. Customers can buy coffee online from this site and even set up subscriptions at their preferred frequency. 

A section of Alfred's homepage

Business-to-Business (B2B)

B2B ecommerce is when a business sells goods or services to another business over the internet. 

B2B transactions are primarily between a wholesaler and a retailer, or a manufacturer and a wholesaler. 

Alibaba is a B2B marketplace that sells clothes, machinery, and consumer electronics to business owners.

Business-to-Government (B2G)

B2G is an ecommerce model where a business sells products to the government (local, county, state, or federal).

Companies place bids to win government contracts.

For example, pharmaceutical and biotechnology giant Pfizer won a billion-dollar deal to supply the U.S. government with COVID-19 vaccines in 2022.

Pfizer's landing page celebrating 175 years of existence

Consumer-to-Consumer (C2C)

C2C is a business model in which consumers sell goods or services to other consumers. 

Online marketplaces provide a platform for consumers to interact and transact in a secure environment.

For instance, consumers can buy and sell baby care products, furniture, mobile phones, and more on Facebook Marketplace.

"Today's picks" section of Facebook Marketplace

Consumer-to-Business (C2B)

The C2B model is when an individual sells physical products or services to a company. 

For example, an independent freelance writer can advertise their services (write ebooks, blog posts, or social media content) to businesses on a site like Upwork. Businesses and individuals can then buy these services on the platform. 

"Content Creation" results on Upwork

Consumer-to-Government (C2G)

C2G ecommerce refers to transactions between a consumer and various government entities.

In the C2G model, consumers interact with government agencies directly and gain access to government services through an online platform.

For example, company owners can register their businesses online on the official U.S. Small Business Administration website. 

"Register your business" page on U.S. Small Business Administration website

Further reading: 9 Profitable Ecommerce Business Ideas for Your Next Venture

The Benefits of Ecommerce Businesses

Buying and selling goods online has many benefits for both buyers and sellers. 

The Challenges of Ecommerce Businesses 

While ecommerce offers many benefits to business owners, it also comes with challenges. 

How to Start a Successful Ecommerce Business 

Starting an ecommerce business consists of a series of steps to set up your online store, source or create your products, and promote your website.

Here’s a step-by-step guide to help you launch your ecommerce venture. 

1. Conduct Market Research

Before you can even think about products or selling, conduct market research on your business idea. Here’s how:

Identify Your Target Market and Niche

Find out who your ideal customers are using tools like Google Analytics and Facebook Audience Insights. These tools can help you discover the size, demographics, interests, and behaviors of your potential market and niche.

Analyze Competitors

To learn from your competitors’ strengths and weaknesses, use our Competitive Research Toolkit. 

The toolkit allows you to compare your website to competitors in key areas like traffic, keywords, pages, backlinks, and social media. 

Find opportunities your competitors are missing using the Keyword Gap tool. To see which keywords your competitors are ranking for so you can outrank them. 

Registering a business isn’t mandatory for all types of businesses, but it has many benefits that can help new entrepreneurs. 

For example, registering a business can help you:

Generally, sole proprietorships and partnerships do not need to register their business unless they want to use a trade name or a fictitious name for their business

On the other hand, corporations and limited liability companies (LLCs) must register their business in the state where they operate. These types of businesses have a separate legal entity from their owners and offer more protection and flexibility.

You can register your business online and learn more about the process on the official U.S. Small Business Administration (SBA) website. 

The cost of registering a business varies from state to state, but according to the SBA, it’s typically less than $300. 

You’ll need the following information to register your business: 

The documents you’ll need vary according to your business type and state. 

3. Buy a Domain Name

Buying a domain name is a crucial step in building your brand and business. It’s how your customers will find and remember you.

Some recommendations for choosing a domain name are:

Use a business name generator, like Namelix and Looka, to help you create a business name if you’re having trouble. 

To buy a domain name, follow these steps:

4. Decide on Your Ecommerce Platform 

An ecommerce platform is a software application that allows you to create, manage, and run your online store. 

It provides the essential features and functionalities for your ecommerce website, such as a product catalog, shopping cart, checkout, payment processing, order management, and more.

There are many ecommerce platforms to choose from, depending on your budget, preferences, and technical skills. 

Some of the most popular ones are:

Deciding on the best ecommerce platform for your business depends on several factors. 

Here’s what you should consider: 

5. Source or Create Products

Will you source your products or make them yourself? The method you choose will significantly impact your initial costs and long-term business operations.

Consider the three primary sourcing methods: 

6. Add Products to Your Ecommerce Site

Once you have your ecommerce platform and product sourcing ready, add your products to your online store. 

To optimize your product pages, pay attention to the following elements:

Product details page for a water bottle with product description highlighted

7. Optimize Your Ecommerce Site

Keyword Research

On-Page SEO

Site Speed and Performance

Technical SEO

8. Create Processes for Inventory, Fulfillment, and Shipping

Shipping and logistics are crucial aspects of running an ecommerce business. 

Here are some tips on creating a process to manage these tasks:

9. Deliver Great Customer Service

Good customer support can also help you generate positive reviews, which are a powerful form of social proof that can influence other shoppers’ decisions. 

Here are some actionable steps to improve your customer service:

10. Scale

Once your site is up and running, think about growth. Here are some ideas to help scale your ecommerce business:

Here are various ways to effectively promote your ecommerce website:

Content Marketing

A blog is a webpage that’s regularly updated with content relevant to your target customers’ needs, interests, and problems.

By creating blog posts that provide valuable information, tips, advice, or solutions, you can attract and engage your potential customers, build trust and authority, and increase conversions.

Each blog post should target a specific, relevant keyword. By targeting keywords, you can optimize your content for search engines and help your customers find your site.

Use the Keyword Magic Tool to decide which keywords are worth targeting.

Here’s how.

"smart home" entered into the Keyword Magic Tool search bar

Enter your target keyword, select your country, and click the green “Search” button. In this example, we’ll use “smart home.”

Now, you’ll see a detailed report of your target keyword. 

Keyword Magic Tool results for "smart home"

The tool generates a list of keyword suggestions based on the keyword entered. In our instance, we have over 75,000 suggestions.

Filter the results by “Keyword Difficulty,” which sorts keywords based on how hard they are to rank for.

"Keyword Difficulty" filter and metric in Keyword Magic Tool

Check the box to the left of the keywords you want to target to add them to a list.

Select keywords from the Keyword Magic Tool list

Click “Add to keyword list” to save to an existing list or create a new one by clicking on the text box. Click the checkmark to save. 

"Add to keyword list" drop-down menu in Keyword Magic Tool

Now, build a content strategy around your niche and the target keywords you want to rank for.

Targeting low-competition keywords makes it more likely your content will rank, which can help you establish visibility and authority in your industry.

Social Media Marketing

Social media platforms like Facebook, Instagram, and Pinterest provide powerful opportunities to engage your target audience, build brand awareness, and promote your ecommerce site. 

Take advantage of native social selling features, which are tools that allow users to buy products directly from social media platforms without leaving the app or website.

For example, Instagram has a feature called Instagram Shopping, which lets users browse and purchase products from their favorite brands and creators. 

Pinterest has buyable pins that make it easy for users to buy products on the app or website. These pins have a blue price tag and an “Add to Bag” button. You can pay with a credit card or Apple Pay, and the seller will get your order details to fulfill it.

Buyable pins shown on Pinterest site

Image Source: eCommerce Insiders

Facebook and Instagram also have shoppable posts and videos, which let users buy products in the images or videos. Marked with a shopping bag icon, they have a “View Products” or “Shop Now” button. Users can tap on products to see details and purchase on the seller’s website or in the app.

Shoppable posts on Facebook and Instagram

Image Source: TechCrunch

Instagram has another feature called “Instagram Shop.” This allows ecommerce businesses to create a digital storefront on their Instagram profile. Users can browse and buy products directly from the Instagram app without leaving the platform. 

For example, Beardbrand, a men’s grooming company, showcases products in its Instagram Shop.

Beardbrand's Instagram Shop

Use relevant hashtags in your social media content. Ideal hashtags not only enable you to target the right people, but also reach more potential customers. 

Use local hashtags to reach local customers. For instance, if you sell handmade jewelry in New York, use hashtags such as #handmadejewelry, #jewelryoftheday, #newyorkstyle, #nycjewelry, and #shoplocalnyc.

Further reading: A 6-Step Guide to Social Media for Small Businesses

Email Marketing

Email marketing is one of the most effective ways to promote your online store and increase sales. 

To get started with email marketing, here are a few best practices:

Build an Email List 

Collect addresses of potential and current customers using a lead capture form on your website. Offer incentives like free shipping, discounts, or lead magnets like ebooks to entice visitors to sign up for your email list. 

For example, coffee brand Alfred offers a discount to those who sign up for its email newsletter. 

Alfred's discount offer for signing up to email newsletter

Segment Your Email List

Segmentation allows you to send personalized offers to subscribers based on their interests, preferences, and purchase history. To increase conversions and customer loyalty.

Send a Welcome Series 

A welcome series can make new subscribers feel special. Include exclusive offers for new customers and discount coupons. Introduce your brand, showcase your products, and provide value to your customers.

Recover Lost Sales

Don’t just accept abandoned carts. Send an abandoned cart email sequence to shoppers who didn’t complete their purchase. Remind them of the items they left behind, offer a limited-time discount, or provide social proof to persuade them to buy.

Further reading: How to Build an Engaging Ecommerce Email Marketing Strategy

Pay-Per-Click (PPC) Advertising

Pay-per-click (PPC) advertising is a form of online marketing where you pay a fee each time someone clicks on your ad. 

Facebook and Pinterest are great for beginners. These platforms allow you to create and display ads based on user demographics, interests, and behaviors. 

To create and run a successful PPC campaign, follow these steps:

Partnerships and Collaborations 

Collaborate with other businesses to benefit from ‌shared marketing efforts.

Use these ecommerce partnership tactics:

Here’s an example of Purina UK & Ireland teaming up with an Instagram influencer to promote their cat food: 

Influencer @ellenbrockygirl's post on Instagram promoting Purina's cat food

How to Track Ecommerce Website Success 

Here are key metrics and methods to track and measure the success of your ecommerce website.

Website Traffic

These are the top website traffic metrics you’ll want to track: 

These metrics are fundamental to understanding the overall performance of your website.

Use web analytics tools like Google Analytics to track website traffic. Monitor trends over time and identify traffic sources (organic, paid, social, etc.).

Conversion Rate

Conversion rate is the percentage of website visitors who complete a desired action like making a purchase. This metric is critical for any ecommerce business because it measures how well your website turns visitors into customers.

Calculate conversion rate bydividing the number of conversions (e.g., purchases) by the total number of website visitors and multiplying by 100. 

There are a lot of conversion rate optimization (CRO) tactics that can increase conversions, like improving page load speed and tailoring messaging to your audience. 

An infographic showing the number of visitors to a page (left) and the number of visitors who converted (right)

Average Order Value (AOV)

The average order value (AOV) is the average amount spent by a customer in a single transaction. 

In other words, how much your customers typically spend when they make a purchase. It can provide insights into your pricing strategy and customer buying behavior.

To calculate, divide the total revenue by the number of orders. Monitor changes in AOV over time. Use a Google spreadsheet with the following formula to keep track of this metric.

Average order value (AOV) formula

Customer Acquisition Cost (CAC)

Customer acquisition cost (CAC) is the cost associated with acquiring a new customer.It’s a key metric that informs how much you are spending to attract each new customer. It helps determine the efficiency of your marketing efforts.

To measure it, divide your total marketing expenses by the number of new customers acquired during a specific period. 

Customer acquisition cost (CAC) formula

Cart Abandonment Rate

Cart abandonment rate is the percentage of users who add products to their cart but do not complete the purchase. This metric indicates how often potential purchases are not completed, which can highlight issues with the checkout process or pricing

To calculate it, divide the number of completed transactions by the number of initiated transactions and subtract one. Multiply by 100 for the abandonment rate. 

Shopping cart abandonment rate formula

Here’s the full formula: 

Shopping Cart Abandonment Rate (%) = [1 − Number of Completed Purchases / Shopping Carts Created] × 100

For example, imagine we have 400 shopping carts created and 120 completed purchases, using our formula, the calculation will look like this: 

Shopping Cart Abandonment Rate (%) = [1 − 120 / 400] × 100

= [1−0.3] ×100

= 0.7×100

= 70%

Our shopping cart abandonment rate for this instance is 70%. 

Customer Lifetime Value (CLV)

Customer lifetime value (CLV) is the predicted net profit attributed to the entire future relationship with a customer. It helps you understand the value of keeping your customers over the long term. It can guide your customer retention strategies and marketing spend.

Calculate CLV by multiplying the average purchase value by the average purchase frequency and then multiplying by the average customer lifespan. The basic formula looks like this: 

Customer Lifetime Value = Customer Value x Average Customer Lifespan

As you can see, you must know your customer value and the average customer lifespan before you can calculate your CLV. Here’s how the full CLV formula looks:

An infographic showing how a full customer lifetime value formula looks like

Image Source: Delighted

Website Engagement

Website engagement metrics, such as bounce rate, time on site, and click-through rate should be checked regularly. These metrics provide insights into how users interact with your website. High engagement is typically a sign of good user experience and relevant content.

Monitor the above metrics in your Google Analytics dashboard to assess the effectiveness of your website design, content, and user experience.

Google Analytics dashboard

Further reading: Google Analytics for Beginners: Getting Started with GA4

Frequently Asked Questions 

What is a multi-vendor ecommerce website?

A multi-vendor ecommerce website is an online platform where many sellers can sell their products or services. 

What is ecommerce website design?

Ecommerce website design refers to the process of creating and structuring an online platform specifically for selling products or services over the internet. It involves the integration of various elements such as layout, user interface, navigation, visual aesthetics, functionality, and security features to create a seamless and enjoyable shopping experience for users.

What is ecommerce website development?

Ecommerce website development refers to the process of creating, designing, and implementing an online platform that enables businesses to sell their products or services over the internet. It involves various stages from conceptualization to launch, including planning, design, development, testing, and deployment.

What is needed to build an ecommerce website?

To build an ecommerce website, you need reliable web hosting for accessibility, a memorable domain name reflecting your brand, and an ecommerce platform equipped with key features such as product listings, shopping cart functionality, payment processing, and order management. 

Optimal user experience is achieved through user-friendly website design, either by hiring a web designer or using optimized templates. 

Integration with secure payment gateways accommodating various payment methods is essential, alongside the implementation of security measures like SSL certificates for data encryption. 

Effective marketing strategies, including SEO, email campaigns, social media engagement, and online advertising, are crucial for driving traffic and increasing sales.

Get Started With Ecommerce 

Now that you have a solid grasp of what an ecommerce website is, take advantage of tools to track and grow your ecommerce business. 

Start by using Keyword Magic Tool to research terms for metadata and on-page optimization and Site Audit to track your site’s health. These tools can help you improve your rankings and provide a great user experience. 

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