Ecommerce websites are built to connect shoppers to products or services for trading online. On the most basic level, they provide everything we need for online shopping. They work like this:
- A business builds the website and lists the products or services they sell, along with prices.
- A customer finds the website, then decides to buy goods and services. When they’ve decided they’re done online shopping, they move to the checkout phase.
- Following the website’s checkout process, the buyer provides the necessary payment and shipping information.
- The ecommerce website sends the payment information through a payment processor that validates the payment and collects the funds.
- The seller then ships the order to the customer or sends the digital product immediately via email.
As simple as the process seems on the surface, though, there are many moving parts to coordinate. All online stores rely on the same technology to run. That’s what I’ll outline for you here – so that you can set up a high-quality ecommerce website that customers will come to again and again.
If you’re thinking about starting an ecommerce business of your own or just want to learn ecommerce, start here. Once you get the basics out of the way, you can move on to learning about ecommerce business models. From there, you’ll be able to set up your online store. Once it’s up and running, you’re an official ecommerce business owner.
How Does Ecommerce Work?
The ecommerce process is different from a traditional brick-and-mortar store. There are different steps along the way that take the initial contact between you and your consumer through to the money hitting your bank account after the final transaction.
The ecommerce industry is huge. Data shows global ecommerce sales could reach more than $6.5 trillion by 2023, accounting for nearly a quarter of all retail sales worldwide. If you want to get in on the retail industry without investing in brick and mortar stores, commerce websites are the way to do it.
Let’s take a closer look at all the pieces of the puzzle that goes into online stores.
Ecommerce Website Platform – The Basis of Your Online Store
Your ecommerce platform – or ecommerce website – is the first connection point between you and the buyer. This is the place you offer your products or services for sale according to your chosen business model.
Your ecommerce website – or online store – is the place where your content and technology come together to make everything else happen. Attract customers to your ecommerce website through ecommerce marketing efforts. These include:
- Ecommerce search engine optimization (SEO)
- Content marketing
- Influencer marketing
- Email marketing
- Online advertising
- Listing your products in online marketplaces
- Using social media platforms to connect with your target audience
- Other ecommerce marketing methods
The good news is, there are plenty of ecommerce platforms and services online for you to build your ecommerce website. You don’t have to have any experience as a web designer to create online stores. Thanks to ecommerce solutions like Shopify, BigCommerce, Wix, and WooCommerce, you can set up your online store in just a few clicks. You’ll have to pay for these platforms, but they take care of maintaining your web server and other technical tasks.
If you need more tools and support than what the website builders offer, you can enlist the help of an ecommerce development expert to help you.
Depending on the state you operate from, the goods and services you’ll sell, and the suppliers you’ll work with, you may need a business license before you can start your ecommerce business. Talk to your local Chamber of Commerce, your Secretary of State, and conduct some research at the Small Business Administration. You’ll have local, state, and federal laws to comply with for any business you want to operate in the United States. Ecommerce businesses are no different.
I’m not a lawyer, so I can’t give you legal advice, but it’s a good idea to consult with an attorney who specializes in business formation. It’s also wise to talk to an accountant to make sure you keep your finances in order throughout the process. You’ll thank yourself at tax time.
The domain name is what people will use to access your ecommerce website. It needs to be easy to remember and easy to spell. Many companies opt to use their business name as the domain name to keep things simple.
Your domain name may be included for the first year, depending on the solution you choose to build your commerce business with.
Once your website visitor reaches your website, the SSL certificate comes into play. This technology encrypts personal data that exists between your website server and the visitor’s browser.
The SSL certificate enables the secure transmission of credit card numbers via the internet. It helps consumers feel safe making online purchases. It helps protect sellers, too, because they know customer transaction data is secure.
The shopping cart allows customers to add products to a virtual cart. When they’ve finished shopping, it facilities the checkout process. It’s here the customer pays for their order, using their preferred payment method.
Without it, customers would have to call you to provide their credit card information over the phone. This is time-consuming for both you as the business owner and the consumer. The cart also calculates sales taxes, shipping costs and captures the customer’s billing and delivery addresses.
Your ecommerce platform has this piece built-in, so it’s not something you have to set up separate from the rest of your ecommerce store.
Chances are, you’ve heard the terms payment gateway and payment processor used interchangeably. The truth is that while they both have a role in your ecommerce site, they aren’t the same thing.
Four parties are part of every single credit card transaction, whether processed in a physical store or online:
- The merchant (your online business)
- The customer
- The bank that issued the customer’s debit or credit card
- The bank that collects the funds from the customer’s bank
The payment processor starts the transaction between you, the issuing bank, and the acquiring bank. It’s the payment processor that generally provides any machines or other equipment you’d use to accept credit card payments in person.
The payment gateway is the tool that transmits the online payment data to the processor so that the transaction may continue. It’s what authorizes payments for “card-not-present” situations like ecommerce. It’s basically the online equivalent of the physical equipment you’d use to take credit cards in person.
The payment processor facilitates the transaction. The payment gateway communicates whether the transaction is approved or declined. Luckily, ecommerce platforms have gateways and processors built-in, so you don’t have to worry about this too much. You simply choose the option that works best for you.
As you may your choice, you’ll want to consider the transaction and payment processing fees involved. You may pay a monthly fee on top of transaction fees. Consider your sales volume as you make your selection.
Thanks to internet commerce automation, after the payment gateway processes the transaction, your ecommerce platform will send an email to the customer. This email indicates that your ecommerce site did receive the order. It often suggests that you will send a second email once the order has been fulfilled. This way, the buyer always has access to their order tracking information.
If the transaction was denied, some systems might not email the customer. Instead, they may display a message on the checkout screen with error details. This way, consumers can correct the error and process the transaction again. Sometimes, it’s a user error – such as mistyping the CVV code on the back of the card or entering the wrong expiration date.
Some systems may opt to send a “problem with your order” type email to let customers know the payment did not go through.
In the case of selling digital products, the transaction email will include links to download the purchased product.
When it comes to order fulfillment, you have a variety of options. You can fulfill it yourself, holding inventory in your home or office. When a customer places an order, you pull the product, pack and ship it, and then send the tracking information.
You can enter the tracking information into your ecommerce platform’s inventory management system and update the status, so the email automatically goes to the customer. This is often a hassle for many small ecommerce websites that are just getting started.
You can use a dropshipping business model, where you order products from a third-party vendor, who ships them directly to your customer as if the order had come from you.
Alternatively, you can use a third-party order fulfillment service like Fulfillment by Amazon, Red Stag, or FedEx Fulfillment. In this scenario, you’ll pack your items, ship them to the warehouse as instructed, and the fulfillment company will handle the packing and shipping of the orders on your behalf.
All online retailers have to use a merchant account. It’s the “in-between” account that holds the money for approved transactions before being transferred into your business bank account. In the past, before electronic commerce became so popular, merchant accounts were expensive to obtain. Now, you don’t have to worry about getting a separate one if you don’t want to. Many ecommerce platforms include a merchant account and their payment gateway with payment processing features, so it’s all together.
You will not have direct access to the funds in your merchant account. Any funds deposited from the customer’s credit or debit card are deposited into the merchant account once the transaction is approved. It will automatically move into your bank account within one to two business days unless you’ve set up a different transfer schedule.
Business Bank Account
Once the money has gone through the gateway and merchant account, it winds up in your hands through your business bank account. For ease of transactions and also to keep track of your sales, it’s best to have a separate business bank account for all the transactions from your ecommerce store.
The electronic commerce process contains many steps, from the point the customer buys from your website to when the money winds up in your hands. On the bright side, the ecommerce process is a quick transaction option to use. This online sales method provides an easy way to reach customers around the globe, sell your goods and services, and get paid for the commerce transaction.
Types of Ecommerce Websites
Common types of ecommerce websites include:
Single Brand Website
This is a website that only sells products or services from a single company or person. For example, Brook’s Running only sells shoes they make.
This is where brands like Best Buy, Macy’s, and Bath and Body Works fit in. They sell multiple products from a variety of brands.
These websites are built around a product, service, or group of products and services. They include links to other businesses. When website visitors make purchases through one of those links, you’ll earn a commission from the sale.
Aside from major players like Amazon and eBay, platforms like Etsy, Newegg, and Jet can be great for ecommerce businesses in specific niches.
These can be used to sell both goods and services, including digital products like online courses. The one that will work best for your ecommerce store depends on what you’ll be selling and the business model you’ll use.
Main Features of Ecommerce Websites
As you start to learn about ecommerce, you don’t want to get bogged down with too many details on buying and selling. That’s why we created a comprehensive website checklist. However, once you’re more familiar with ecommerce and are ready to set up your online store, there are a few features your ecommerce website should include for ecommerce functionality. Tailor your ecommerce website to include:
When people shop online, they want to quickly and easily find whatever they are looking for. If they can’t, they’re not likely to stick around long – and if they don’t do that, you definitely won’t get them to make a purchase. Ecommerce sites that focus on the user experience (UX) are more successful than those that do not. What should your ecommerce website design include?
Clear navigation menus that make it easy to browse products by category. Place the menus in an easy-to-find place, either on the side of the page or across the top. Keep them consistent across every page.
Product filters so that shoppers can sort through product offerings to find what they want quickly. For example, allow customers to filter by price, size, color, product type, brand, style, etc.
Have you ever found something you were looking for, only to discover later it was out of stock? That’s a frustrating experience for your target audience. Do they purchase something else similar? Visit other online stores to find the particular item? Wait for the item to come back into stock?
To combat this, include product availability information for each of your products in a prominent location on the product page. If any products do go out of stock, have information about when you can expect them to be available again.
Clear Cart and Checkout Buttons
To encourage conversions and higher online transaction volume, make sure your “add to cart”/ “buy now” buttons, and checkout buttons are clear. When a customer clicks to visit their cart, make sure they can see all the essential details such as:
- Item names
- Product quantity
Make it quick and easy to remove items or change the quantity from within the cart page. Most importantly, allow your customers to save their cart and come back to it later.
Multiple Payment Options
The more payment options you offer, the better it is for you and your customer experience. This way, they have the flexibility to use their chosen payment method and can place their order in just a few clicks. Popular options include:
- Google Pay
- Apple Pay
- Amazon Pay
- Shop Pay (Shopify)
Each of these options will accept popular credit and debit cards like Visa and Mastercard. If you also want customers to be able to pay with American Express or Discover, double-check that at least one of the payment options you offer allows for those cards.
Customer Service and Contact Options
Your customers need to be able to reach you with questions and concerns about their orders. If you’re not ready to invest in online support ticketing tools or live chat, you should at the very least have:
- A dedicated email address that’s prominently displayed
- Links to your social media accounts so people can reach you there
- Self-service options to make it easy for customers to initiate a return or exchange request
- Company phone number and address in the footer
Important Website Content
Your potential customers will have questions. Make certain information easy to find.
Order Processing Timeline
How long does it take you to pack and ship an order after it is placed? Give an estimate but allow yourself plenty of time to process the order. Most companies ship orders within 1 to 5 business days from the date of the order.
Do orders placed before a specific time of day get shipped the same day? If so, make sure that time is clearly displayed.
What does your standard shipping look like? Do you offer expedited shipping? What carriers do you use? Do you ship internationally? Do you cover return shipping costs?
Do you accept product returns? If so, what are the terms? 30 days? 60 days? Is money refunded or store credit offered? Spell out these policies to help guide people in their shopping choices.
- Date of birth
- Addresses (Email, physical, and shipping)
- Payment details
- Location (IP address, geolocation, etc.)
Beyond detailing how the company uses the information, it covers how your commerce business will meet its legal obligations and how the people sharing their data can get recourse if you fail to meet your responsibilities.
The European Union (EU) has strict privacy laws, too. If you are selling to customers in the EU, you must comply with the General Data Protection Regulation (GDPR) even if you operate your e-business in the United States.
Terms of Service
The terms and conditions of your website can limit liability if a customer decides to take you to court. Plus, it can help protect your rights to the content on your website.
If you ever find yourself in a legal battle, the court will look at your terms and conditions to determine the contract between you and the customer. If you want it to hold up in court, you may want to have a legal team handle this too.
Do not copy the terms and conditions of another site. You can use sites similar to yours to help guide you.
Frequently Asked Questions
Always include a frequently asked questions page where customers can find the answers they’re looking for. If you find that your customer service team (even if that’s only you) is constantly having to answer the same question over and over, it’s time to add it to your FAQ section. If the information is already on your ecommerce website, consider adjusting its location to make it easier to find.
Examples to include:
- Do you offer free shipping?
- How fast can I expect to receive my order?
- What do I do if I need to return or exchange my order?
- What if I have a question about my order?
More than half of all website traffic comes from mobile users. As such, you shouldn’t count on your customer being on a desktop computer when they’re navigating your website. Build your ecommerce website with responsive design to be sure you cover your mobile commerce bases. This ensures that no matter what mobile devices a customer uses to complete online transactions, they can do so easily.
A responsive design automatically adjusts your website’s core features – navigation, images, buttons, etc. so that it fits comfortably on a smartphone or tablet screen. Failure to account for this will hurt your ecommerce website since Google considers this a ranking factor. If it’s not mobile optimized, your website won’t rank as high in the search engine, no matter how well you’re doing with your other marketing efforts.
A picture is worth a thousand words, and you want your ecommerce website to echo this sentiment. Successful ecommerce stores use high-quality photos to display their products. High-resolution images are great, but their large file size can dramatically slow down your website speed. That’s why you should start with a web-optimized version and allow your customers to click to see the full image.
Brick and mortar stores have lots of visual aids throughout the store. And they have the added advantage of allowing customers to touch and feel the products. To compete, your online storefront has to have more than a single photo of each product you offer.
Whenever possible, use video to demonstrate your products. This is helpful for products that people want to see and feel before they buy. If a photo is worth 1,000 words, imagine the impact of video.
User Ratings and Reviews
Add user ratings and reviews to as many of your products as you can. User-generated reviews are read and appreciated by online shoppers. When you provide a setup for user reviews to be submitted and displayed to website visitors, you’ll provide helpful information for other customers. And they’ll thank you for it.
Photo credit: Trustpilot
Your ecommerce website, especially when it is new, needs to have plenty of trust symbols. Until customers become familiar with your brand, these symbols will help foster a connection. Trust badges legitimize your website. Research shows that 98% of consumers surveyed found at least one type of trust signal that increased their purchase likelihood.
Add symbols like:
Guaranteed Safe and Secure Checkout
This helps reinforce your website’s security to help customers know their payment information is safe.
Free Shipping and Free Returns
Of course, you should only use this badge if you offer both free shipping and free returns. If not, it will be false advertising and upset your customers.
Accepted Payment Badges
This is a quick and easy way to show all the payment methods you accept. These trusted brand names will help you establish trust with your audience.
If you have any third-party endorsements, such as a Better Business Bureau accreditation or Google Reviews, add these to your website.
Coupons and Special Offers
Customers adore special offers. Use email marketing and social media to provide exclusive coupons and special offers to those already engaged with your brand. Offer a percent discount, free shipping at a certain threshold, or another limited-time offer.
Upselling and Cross-Selling
To increase sales, offer customers the option to get a better price when they buy more. Upselling happens when you raise a customer’s order value by offering additional services or encouraging them to purchase an upgraded product or service.
Alternatively, you can use cross-selling, which is when you add offers of items that either supplement or complement your customer’s purchase. For instance, if a customer purchases a phone case, you can cross-sell screen protectors, chargers, and other accessories.
If you have a lot of products, consider adding a wish list function to your site. This will allow your customers to make a list of things they’d like to order from you. Plus, they can share that list with friends and loved ones to make gift-giving easier.
Set Your Ecommerce Stores Up for Success
Whether you end up building your own ecommerce business selling business to business (B2B ecommerce), consumer to consumer, consumer to business, or business to consumer (B2C), it’s critical to understand these core principles. Being aware of how online selling works at this level will make it easier to operate your commerce business.