What Is Ecommerce? Ecommerce Defined

Ecommerce is bigger, more complex, and more central to business strategy than ever. Global online retail sales are projected to reach $3.66 trillion in 2025 and $4.96 trillion by 2030. As ecommerce scales, new modalities bring new opportunities: Mobile shopping, AI-driven personalization, and social commerce are reshaping how consumers discover and purchase products. Meanwhile, evolving regulations add new layers of complexity and responsibility for businesses. Whether you’re new to ecommerce or looking to move to the next level, it’s important to stay current on the latest ecommerce terminology, technology, best practices, and trends.

In this guide, we’ll explain what ecommerce is, how it works, its many different forms, nuances of government regulation—and many points in between.

What Is Ecommerce (Electronic Commerce)?

Ecommerce—short for electronic commerce—is the buying and selling of products and services over the internet via computers and mobile devices. It also includes the transfer of money and data to enable transactions.

The seller-buyer relationship comes in a variety of configurations, including between business and consumer (B2C), business and business (B2B), and business and government (B2G). Ecommerce sales range in scope from individual, one-time transactions and ongoing services subscriptions to continuous, automated transactions between business partners, triggered by complex, integrated supply-chain systems.

Key Takeaways

Ecommerce is the buying and selling of products and services online.
Ecommerce connects all types of buyers and sellers, from individual consumers to businesses to the government.
Ecommerce is growing rapidly, serving more industries and more types of products and services.
High-quality mobile experiences are essential to ecommerce given the growing percentage of transactions made through smartphones and other devices.

Ecommerce Explained

Ecommerce is a form of commerce in which sellers engage with buyers of goods and services through online websites and marketplaces as opposed to physical “brick-and-mortar” stores—though many businesses sell through both channels.

It also includes the transmission of data and funds between parties. Ecommerce has become a 24/7 global phenomenon, providing sellers from a multitude of industries with the ability to reach customers anywhere, and providing customers with the ability to find new, innovative vendors and make purchases on their devices of choice, regardless of where the seller is located. Customers may be individual consumers, other businesses, and the government.

Why Should Businesses Consider Investing in Ecommerce?

The bigger risk for many companies isn’t investing in ecommerce—it’s ignoring it. Customers expect to be able to browse, compare, and buy online, and businesses without a digital presence can lose credibility or miss out on entire segments of the market. Competitors that sell online can gain ground faster by reaching more buyers, and they’re more readily adaptable thanks to the real-time data provided by online sales platforms. For instance, companies can spot changes in demand as they happen, rather than waiting for quarterly reports or store-level feedback. Physical-only companies also miss out on the benefits of AI-driven recommendations, which can increase average order value by suggesting relevant add-ons or alternatives. AI-driven automation is another ecommerce benefit, as it helps teams process higher order volumes without proportional manual work.

Examples of Ecommerce

Ecommerce is remarkable for its breadth and diversity. Examples include:

Amazon, which offers a wide selection of physical products—some under its own Amazon Essentials brand—and also hosts thousands of smaller entrepreneurs who use Amazon’s services and facilities for fulfillment.
Chewy, a B2C company that sells pet food and supplies.
Apple Music, a digital-only service offering music and video streaming.
Grainger, a B2B company providing industrial maintenance, repair, and operations supplies.
Mark43, a B2G company that provides a public-safety platform for government agencies.

How Does Ecommerce Work?

Ecommerce transactions proceed in a variety of ways, but one template is to follow the steps of a basic B2C transaction.

A customer wants to buy a product: Take the common scenario of a person looking to purchase the latest bestseller. First, she either goes straight to a specific, known ecommerce website to buy it or conducts an online search to find a desirable seller. As the customer browses the website, the business’s ecommerce system performs multiple tasks in the background, including displaying appropriate product images, related books by the same author or in the same genre, and up-to-date pricing.
The customer adds the product to a cart: If the book is in stock, the customer can add it to a virtual shopping cart. There she can review her selection, change the quantity—perhaps deciding to buy an additional copy for a friend—or delete the book from the cart.
The customer checks out: Next, the customer clicks through to the payment gateway, or the online equivalent of a point-of-sale (POS) system. For consumers, this is better understood as the “checkout” page. The payment gateway facilitates online transactions the same way a POS system does. However, the payment is processed as a “card-not-present” transaction because the card cannot be verified in person. Instead, the business must rely on billing information entered by the customer. At this stage, the customer also provides contact and delivery information and reviews shipping costs and timelines.
Payment is made: When the customer orders the book, the payment gateway uses Secure Socket Layer (SSL) encryption to safely transmit payment data to the business’s payment processor, which verifies the transaction through real-time communication with the customer’s financial institution. Payment is transmitted from the customer’s account to the business’s merchant account—a holding account that enables businesses to receive credit or debit card payments—and then to the business’s bank account.
The business fulfills the order: Once the book order is placed, the ecommerce system triggers processes to pick the product off a warehouse shelf, arrange for delivery, and create a shipping label. These processes might be handled entirely by the seller or by another firm contracted for logistics. Once shipped, the ecommerce system—tracks the customer’s order until it’s received, either on its own or via integration with other systems.

Advantages of Ecommerce

Early adopters quickly discovered that ecommerce offers several compelling advantages. As traditional retailers and others joined the fray, they learned the same. These advantages include the following:

Greater reach: Companies can sell 24 hours a day, 365 days a year, and potentially reach customers all over the world without staffing locations at all hours or in all the locations where customers live and operate.
Effectively track trends: Using data generated by their ecommerce websites, companies can quickly spot trends, adjust their product mix and merchandising if necessary, and hopefully capitalize on new opportunities ahead of competitors.
Personalization: Data plays a big role here, too. Ecommerce sites can provide personalized experiences that reflect everything known about an individual site visitor. For example, when book buyer from the example above arrives for the first time, the site may already know which digital ad attracted her attention and be able to direct them to a relevant page based on that ad. When an existing customer returns, an ecommerce site might display different merchandise or offers based on what it knows that person purchased before. As companies build online relationships with customers, they can deepen their knowledge and thereby grow sales and loyalty.
Ability to scale: Using ecommerce tools and services, companies can more easily grow their businesses—for example, by adding site features that help a visitor choose a product and answer questions. Companies also have the option of working with third-party fulfillment services, aka 3PLs, to deliver more products and handle returns more effectively.
A (more) level playing field: Small companies can leverage an intimate understanding of their customers and access to data to build ecommerce sites that are laser-focused on market niches that competitors haven’t explicitly targeted and don’t understand as well. By doing so, they can extend their reach worldwide and compete effectively against far larger companies.

Disadvantages of Ecommerce

Every form of business presents its own challenges and trade-offs. Ecommerce is no exception. Businesses that understand—and prepare themselves—are well-positioned to meet these challenges head-on.

High customer expectations: As ecommerce has become more sophisticated, customers’ expectations have grown. Ecommerce sites are expected to work ever more smoothly, efficiently, conveniently, and reliably. Companies will need the talent, tools and resources to meet these expectations, and that infrastructure can be expensive.
High maintenance: Ecommerce sites need frequent upgrades. Even when the core infrastructure is stable, customers may continually expect new functionalities. Companies need to keep product catalogs up-to-date and accurate, add new features that improve user experience, post new content that is relevant to customers, and secure sites from cyber attackers. All this requires effort, skills and resources.
Rising marketing costs: As online markets become more competitive, the costs of online advertising are rising in the race for scarce customer attention. For example, if a business wants to purchase online advertising from a search engine, it may be competing with others for the same keywords, which increases ad spending. Other possible marketing channels include social media, email, affiliates, and online video. While some content can be created in-house, others may need more costly, specialized online marketing skills that require new hires or outside agencies.
Customer resistance: In some industries, customers may still be hesitant to buy online. An example is big-ticket items, like a car. Dealerships are responding with creative applications and technologies, such as online test drives via virtual reality, to help customers “see” themselves in their new cars. They may also offer liberal return policies that reduce risk for the customer.

Ecommerce Business Models

As ecommerce has evolved, multiple business models have emerged based on who is selling, who is buying and the relationships between them. Many of these models are known by their three-letter acronyms—some more familiar than others.

B2B (business-to-business) ecommerce involves sales from one business to another. For example, a business might purchase products or services it needs for employees, such as office supplies. It might purchase components to incorporate into its own products. Or it might act as a wholesaler or distributor, using ecommerce sites to acquire products for resale.
B2C (business-to-consumer) ecommerce refers to sales made directly from a business to a consumer. B2C purchases run the gamut—from books and eyeglasses to streaming audio and software subscriptions.
C2C (consumer-to-consumer) ecommerce represents sales made between consumers, often via auction marketplaces such as eBay, fixed-price marketplaces such as Etsy, or paid or free online classifieds such as Craigslist. C2C providers may earn revenue through a percentage of sales, via advertising or both.
C2B (consumer-to-business) ecommerce occurs when a person sells something of value—often, their influence or creative material like writing or design—to a business. For example, a social media influencer with a large audience might promote a company’s product for a fee or in return for free merchandise or services. Or, an individual might sell website design and copywriting services to a company via a freelance services platform such as Fiverr.
B2G (business to government) ecommerce facilitates sales from businesses to governments at all levels, from local to state and federal. B2A might involve a portal where authorized suppliers can quickly access and respond to new government requests for proposals. B2G ecommerce is also called B2A, or business to administration.
C2G (consumer to government) ecommerce refers to electronic transactions between a consumer and a government administration. Examples of C2G transactions include paying federal taxes or municipal utility bills via an online portal. This ecommerce is sometimes called C2A, or consumer to administration.

Mobile Ecommerce

Extending across all these business models is “m-commerce,” or mobile ecommerce, which describes ecommerce designed for and transactions made on mobile devices, such as smartphones, tablets, even smartwatches and smart home devices. As the roles and ubiquity of mobile devices have grown, more ecommerce is transacted this way: M-commerce is forecast to hit approximately $2.5 trillion in 2025, making up 63% of total retail ecommerce.

Social Selling

Social selling refers to ecommerce conducted directly on social media platforms, such as Instagram, Facebook, and TikTok. Customers discover products through ads, influencers, or peer recommendations, making their purchases without ever leaving the app. A fast-growing subset of ecommerce popular among millennials and Generation Z, the global social commerce market is projected to reach a whopping $17.83 trillion by 2033.

Ecommerce Product Types

Another way to consider ecommerce is by type. Some types are analogous to commerce in the traditional sense, while others are unique to the online world.

Retail: Ecommerce retailers sell products or services online directly to consumers (B2C) and businesses (B2B). They might manufacture, source, fulfill, and ship the products they sell or rely on partners to perform some of these tasks.
Wholesale: The wholesale ecommerce model is based on a business selling products in bulk and at a discount to other businesses that, in turn, sell directly to consumers or other businesses. Wholesale is a form of B2B in which the wholesaler acts as an intermediary.
Dropshipping: In dropshipping, a business sells a product or service that is fulfilled and shipped by the manufacturer or wholesaler of the product sold. The business doesn’t need its own warehouse or logistics operation because the partner handles these tasks. Choosing a reliable partner is paramount.
Crowdfunding: Common among entrepreneurs and small businesses seeking to develop new products, crowdfunding asks individuals to contribute financially upfront so the creator has the resources to bring a product to market. Crowdfunding platforms act as clearinghouses for the funds and handle payment-related administration.
Digital products: Digital products include apps, audio and video, consumer goods, and many other offerings that can be delivered instantaneously over the internet. In most cases, these products are created once and then simply duplicated.
Physical products: A physical product is any tangible piece of merchandise that is manufactured, stored, shipped, and delivered. Examples are books, clothes, and electronic devices.
Services: Services are intangible offerings with value to a customer—for example, technical support or copywriting. Increasingly, many popular services can be facilitated and delivered online. An example is an employment coach who serves clients via videoconference.
Subscriptions: For subscription products and services, including software sold in an as-a-service model, customers purchase the right to use an online service or access new editions of online content for a given period of time. The seller benefits from a generally consistent revenue stream but must deliver services customers are willing to continue paying for every month.

In many cases, ecommerce offerings comprise of more than one type. For example, a paid email newsletter is both a digital product and a subscription service. Or, a company can do business through its own retail ecommerce site while also building a wholesale channel.

Ecommerce Statistics and Impacts

Ecommerce has been changing the global economy for decades, but the COVID-19 pandemic accelerated adoption—to the point of cementing its role as a core sales channel. Though growth has slowed from the surge in 2020-2021, ecommerce continues to expand faster than overall retail, making it central to many companies’ business strategies. This shift influences how budgets are allocated, which skills companies target in hiring, and what software and systems they use for operations.

From a cultural standpoint, the rapid evolution of ecommerce also puts a premium on a business’s ability—and openness—to change. For example, companies need to continually learn new ways to attract and retain customers online. They may also need to rethink the role of physical locations, whether that means using them as fulfillment centers, redesigning them, or, in some cases, divesting in real estate.

Ecommerce Statistics

Ecommerce statistics have long indicated continuous growth, a trend that continues into 2025 and beyond. The following facts illustrate the trajectory of ecommerce over recent years:

In Q2 2025, US ecommerce sales totaled $304.2 billion, up 5.3% year over year, accounting for about 16% of total retail sales.
Globally, ecommerce sales are projected to reach $4.96 trillion by 2030.
India, Argentina, and Brazil are three of the fastest growing B2C ecommerce markets in the world.
Over 90% of B2B companies have shifted to a virtual sales model since 2020, thanks to process improvements and better software.
Half of shoppers buy online at least once a week, and 9 in 10 using their mobile phones to shop.
US mobile commerce sales broke records in 2024 and made up more than 75% of holiday ecommerce sales.
70% of global shoppers expect they might shop primarily on social media within the next five years.

But growth isn’t the only story. Consumers have rising expectations and companies are innovating in the following ways to meet those:

Fast shipping is important to many, as is low-cost shipping for standard items. A McKinsey survey found that 90% of consumers are likely to abandon their carts if shipping costs are high. In addition to low-cost or free shipping, shoppers want free returns, faster delivery, and better product descriptions.
Customers spend an average of 62% more on products and services when they have consistently positive shopping experiences.
More than half (53%) of US social shoppers say short-form videos influenced their purchasing decisions.
As of late 2024, nearly 1 in 5 leading companies (those with above-average growth) are making generative AI their top ecommerce priority. Consumers are interested too, with 70% wanting retailers to offer AI-powered shopping features, such as virtual try-on, shopping assistants, and AR shopping experiences.
Nearly 20% of leading companies are planning to spend more than $100 million on ecommerce technology infrastructure to quickly and build at scale.

Global Ecommerce Trends

Advances in mobile, shipping, and marketing continue to shape the way businesses compete and customers shop. Here is a closer look at some notable ecommerce trends.

Mobile Trends

As smartphones have become nearly ubiquitous worldwide, more ecommerce has moved to mobile devices. Ninety percent of shoppers worldwide use their smartphones to shop, a trend fueled by faster, more reliable 4G and 5G networks, mobile wallets, and one-click payments. The rise of augmented reality (AR) and virtual try-ons is also helping to close the gap between physical and digital shopping, while omnichannel behavior continues to grow as consumers shift seamlessly between devices during the buying journey.

Shipping Trends

Expectations for shipping speed and convenience remain high, with free shipping often seen as table stakes. But other sentiments are easing up. Low costs are taking precedence over speed, with 90% of US consumers willing to wait two to three days for deliveries if it means lower shipping costs, and some may be willing to trade off slower delivery speeds for reliability and assurance their packages will be delivered within the promised window. Free, easy returns remain a priority around the world, while sustainability demands continue to grow: For example, 57% of global consumers want to know the environmental impact of their delivery, suggesting businesses to share CO₂ emissions at checkout and offer alternative delivery options that with lower environmental impacts, even if it means longer delivery or return times.

Marketing Trends

As online markets become more competitive, ecommerce sites will need to sharpen their focus on reaching new customers and retaining existing ones. Data-driven personalization is now expected, with AI tools helping retailers tailor offers, content, and recommendations in real time. Social commerce has moved firmly into the mainstream, with platforms like TikTok and Instagram serving as both discovery engines and checkout channels. Meanwhile, omnichannel campaigns that align email, social, web, and in-store touchpoints are increasingly vital for building long-term customer relationships.

Growth Trends

As markets mature, growth rates often decline because they are calculated from a larger customer base. In contrast, ecommerce growth rates have remained strong. Estimates vary, but Digital Commerce 360 reports that US online spending grew 44% year-over-year to $861.12 billion in 2020, accounting for 21.3% of all retail sales—up from 15.8% in 2019 and 14.3% in 2018.

Globally, ecommerce growth rates have remained high in most places, though they tend to vary by nation and demographic. For example, retail ecommerce grew by 19.4% in Latin America during 2020. Meanwhile the number of online grocery shoppers over 55 in the United Kingdom tripled, according to UK grocery chain Waitrose and Partners.

Similarly, B2B and B2C buyers have become increasingly comfortable with purchasing online. In 2020, 70% of global B2B decision-makers (opens in new tab) said they would consider making new, fully self-service or remote purchases over $50,000 online, while 27% would consider purchases of $500,000 or more. In addition, more than three-quarters of B2B buyers and sellers say they prefer digital self-serve and remote human engagement over face-to-face interactions.

Government Regulations for Ecommerce

Companies that compete online already face significant regulatory scrutiny. As ecommerce becomes even more central to life, governments will likely increase focus on issues ranging from privacy and security to antitrust and unfair business practices.

Within the United States, the Federal Trade Commission (FTC) regulates several aspects of ecommerce. For example, the FTC requires companies to ship items when they promise or within 30 days if they haven’t promised a specific date. The FTC also establishes rules for commercial email and online advertising and enforces the Children’s Online Privacy Protection Act (COPPA), which restricts how ecommerce and other websites can handle information about children.

The State of California has passed stricter privacy laws that impact ecommerce providers nationwide if they do business with California residents. It gives Californians certain additional rights to know about the personal information a business collects about them, to delete it, opt out of its sale, and not be discriminated against if they choose to exercise these rights.

Globally, different countries and regions have different ecommerce regulations. For instance, 82% of countries (opens in new tab) have laws specifically related to electronic transactions, 56% have relevant consumer protection laws, 66% have privacy laws and 80% have cybercrime laws. One important example is the General Data Protection Regulation (GDPR), which regulates how companies protect their customers’ personal data and privacy and restricts how and where they can send or store that information. GDPR is in effect throughout the European Union and the European Economic Area.

Governments aren’t the only organizations that regulate ecommerce providers. For example, if a business accepts credit cards, it’ll need to follow rigorous security standards, such as obtaining Payment Card Industry Data Security Standard (PCI DSS) compliance certifications that aim to maintain network security and secure customer payment information.

How Do You Get Started in Ecommerce?

For businesses new to the world of ecommerce, the following steps can help build an ecommerce strategy and get started.

Clarify your company’s strategies and goals by considering the following questions: What types of products or services do you intend to offer online? Who are your customers? What does your competition use? If you’re already a brick-and-mortar business, ask some customers what they would like from your ecommerce presence.
If you’re a new business, choose a business name and a legal structure. Next, get an employer identification number, open a business bank account and obtain any necessary business permits and licenses. If you’re already a business owner, proceed to step 3.
Build an ecommerce website or use an ecommerce platform. Speak to experts, partners, and companies that offer ecommerce platforms before making a selection. If you choose a partner to help build your site, work together to create a plan and timetable for launch. In addition, choose a payment gateway so you can transfer customer payments into a dedicated merchant account, then into your business bank account. You’ll also need a payment processor.
Launch and market your ecommerce business. Identify the products and services you can launch with and fulfill quickly. Begin promoting your business, making sure to reach out to your existing customers and contacts. Build your free social media presence, and start creating content that can attract search traffic. Implement basic analytics to understand traffic sources and ways to grow inbound traffic.

What Is an Ecommerce Platform?

An ecommerce platform is software that provides the infrastructure a business needs to launch and operate an online store. Rather than spending time on building a site from the ground up, businesses use these platforms to centralize core functions like product listings, checkout, payments, inventory management, and order fulfillment—all in one place.

In other words, ecommerce platforms do far more than just power a website. A good platform should facilitate seamless operations across departments. For example, marketing teams can launch promotions without heavy IT involvement while finance teams can access accurate, real-time sales data. In addition, operations teams can track inventory, manage returns, and connect online sales with in-store activity. Some platforms also integrate with ERP, CRM, or shipping solutions to further boost operational efficiency while reducing the manual work and errors that often come with a patchwork of disconnected tools. What’s more, platforms built on a SaaS model and delivered through the cloud make scalability comparatively easy, while boasting benefits like regular feature updates and stronger security.

For many businesses, the benefits are clear. Compared to a DIY approach, ecommerce platforms generally yield a faster time to market and lower development and maintenance costs. They can also provide a more consistent customer experience by unifying branding, processes, and data across all channels. Companies can, in turn, focus less on the “plumbing” of the technology and more on strategy, customer engagement, and growth.

Choosing the Best Ecommerce Platform

Choosing an ecommerce platform will be one of the most important decisions a business makes as it plans its ecommerce strategy. Increasingly, the best ecommerce platforms help companies integrate multiple channels to give customers the best and most consistent experience possible. They also unify and expedite everything from order management and inventory to customer service and financial management.

As you evaluate platforms, consider the following questions:

Will this platform align with my strategy and help me grow in the ways I hope to grow? Will it scale? Does it offer capabilities I may want to implement next year or the year after?
Does this platform help me provide an omnichannel experience that serves all my customers, whether they prefer to interact in a store or online?
What will be my total cost of ownership—both to launch and in various realistic growth scenarios?
How does the platform integrate with my existing infrastructure?
How does the platform support mobile ecommerce?
What can I automate with the platform? How does it help me control my costs?
How will this platform provide or support the analytics I need to make better decisions about marketing, merchandising and pricing?
How quickly can I launch? If I already have an ecommerce site, what will the transition involve?
How easy is the platform to use? Can I find the staff and third-party help I’ll need?
How does the platform support international business and drive regional compliance?
Is the platform secure, and does it help me protect my data, payments, and my customers’ personal information?
Who can I consult with to solve ecommerce challenges similar to mine?

A Flexible Ecommerce Platform Helps You Sell More

Ecommerce is central to many business strategies, and NetSuite SuiteCommerce gives companies the flexibility to meet customer expectations across channels. By unifying product, order, and customer data in one system, SuiteCommerce can help companies reduce errors, automate fulfillment, and create more personalized interactions—all of which can improve customer satisfaction and repeat sales. And because it natively integrates with NetSuite ERP, companies can access real-time visibility into sales and inventory—all while managing orders—on a platform that scales as needs evolve.

A sustained, long-term shift to ecommerce has reshaped how companies reach customers and how customers expect to buy. More shoppers than ever prefer online transactions, and more industries and regional economies have overcome traditional obstacles to engage more fully in ecommerce. For many companies, ecommerce has become central to their business strategy—making it all the more important to understand the ins and outs of digital marketplaces.

Ecommerce FAQs

What exactly is ecommerce?

Ecommerce—short for electronic commerce—is the buying and selling of digital and physical products and services over the internet via computers and mobile devices. It also includes the transfer of money and data to enable transactions.

What are the 3 types of ecommerce?

There are many ways to categorize ecommerce. It can be classified by the types of goods, namely physical, digital or service. Ecommerce may also be classified by the relationship between buyer and seller, including B2C (business-to-consumer), B2B (business-to-business), and B2G (business-to-government), such as a defense contractor.

Is Amazon an ecommerce provider?

Amazon is a quintessential example of an ecommerce provider: It has built an enormous business selling products online directly to consumers. It has also established its website as a marketplace where other ecommerce providers can reach and sell to customers. In addition, Amazon also offers services to help businesses fulfill and ship their orders.

What is the future of ecommerce?

Ecommerce will likely continue to grow in both scale and complexity. Shoppers expect more affordable delivery, easier returns, and highly personalized experiences, pushing companies to invest in automation, AI, and advanced analytics tools that support decision-making. Mobile and social commerce are on pace to capture an even larger share of transactions, while sustainability and trust are becoming key consumer considerations.