The eCommerce Process — How eCommerce Works and How You Can Do It Too

You experience eCommerce every day. It's everywhere, and it's getting much harder to find someone who has never made a purchase online. If you've identified eCommerce as a (virtual) land of endless opportunity, you're right. But how does eCommerce work and how do you get started?

In this article, we'll introduce you to eCommerce and the different parts that come together to create the successful online stores we've all heard of — and we'll walk you through the basics of getting started to create your own eCommerce website and online business.

What is eCommerce?

Ecommerce is everything that involves buying, selling, and making transactions online. The "e" in "eCommerce" is just like the "e" in "email." It's a prefix meaning "electronic" to represent the internet version of an offline concept. eCommerce transactions are performed through specialized websites that can take payment for products.

In the past couple of decades, eCommerce has seen such exponential growth that it's truly changed the nature of business. Millions of people shop online every day, with a significant portion making purchases more than once a week. This has led to lucrative business opportunities that didn't exist in the pre-internet days. Businesses are no longer limited to customers in their immediate areas — instead, every eCommerce store has the potential to reach millions.

Moreover, eCommerce lets businesses earn while they are offline. Thus, it helps you in maintaining a work-life balance.

The eCommerce Process Flow

The eCommerce process flow describes all the steps and functionality that makes an eCommerce website work. In many ways, eCommerce works similarly to brick-and-mortar stores, except online. There's what the customer sees, and other areas that are only for employees.

Employee-only areas in eCommerce are like the management office and the space behind the registers in a brick-and-mortar store, with the difference being that they exist on a computer instead of a physical space. Likewise, the customer-facing areas are similar to the sales floor, aisles, signage, and other typical retail features, only on a website instead of inside a building.

In software, including the software that runs eCommerce websites, these two areas are described as the backend and the frontend.

The Backend

The backend is the business-facing side of an eCommerce website. You'll often see it referred to as the dashboard, the control panel, or the admin panel, or sometimes just the admin. Some software providers use a specific name for the backend, such as the Shift4Shop Online Store Manager, but the function is the same: this is where you control all the aspects of your eCommerce website.

The backend includes tools for website setup and business management. Users can upload products, organize them into categories, and choose which payment methods to accept. Many eCommerce platforms offer online store templates to make design fast and easy. Other features can include inventory tracking and control, order processing, marketing tools, a coupon and promotion creator, customer records, and more.

The Frontend

The frontend is the consumer side of an eCommerce website, and comprises everything the customer sees when they shop. The frontend is also called the storefront, and generally when people refer to "the website," they're speaking about the frontend. The appearance and functionality of the frontend is a direct result of the options you set up in the backend.

The frontend must be simple to use, and organized well enough that the customer can find what they're looking for with minimal effort. You can make this happen by setting up a sensible category structure for your products and implementing straightforward navigation. You should also include business information, like an "About Us" page, an FAQ (Frequently-Asked Questions), and additional pages to outline your store policies, including returns, shipping, and privacy. These latter pages are considered a requirement for any business, and in any case, the more transparent information you provide, the more the customer will trust your store.

You can enhance the frontend with other features, like product reviews and Q&As, security logos and other trust badges, the ability for customers to view, edit, and save their cart, and more. Your store's checkout should operate smoothly and use a clear layout that helps prevent mistakes. Remember that the quality of your website's frontend has a powerful effect on your conversion rate.

How to Start Your Own eCommerce Business

Breaking into the world of eCommerce isn't anywhere near as difficult as it used to be. In the older days, you needed to make a large initial investment, hire developers to make your website, and much more. It's much better today: anyone can start an eCommerce business as long as they have a computer (or mobile device) and the will to learn and work hard.

Find a Product

Your choice of products to sell should be based on a few factors. You may already know what you want to sell — perhaps you make crafts at home, or maybe you want to use a print-on-demand service to start a line of T-shirts. Or, maybe you have a longstanding interest in a particular industry and you want to start selling products of that type. It's important to have a sincere passion for the industry in which you do business, as this makes your job easier and lends authenticity to your brand.

No matter what, your first step is to identify your niche. What market do you want to serve, and what are the benefits of your products to that market? What problems are your products going to solve, if any? Do you have any special advantages over your competition, like the ability to offer lower prices without losing quality? Whatever niche you choose, market research is essential for testing its validity and determining if it's a space you can do well and compete in.

Product Sourcing

Product sourcing refers to where and how you get the products you're going to sell on your website. The best method for sourcing depends on the details of your business. You can make products yourself, get them from a wholesale supplier, buy directly from a manufacturer, or even have products manufactured to your own specifications — whichever is right for you.

Dropshipping

Dropshipping is a product sourcing model in which you don't hold any inventory in stock. Instead, you list products for sale and orders are then fulfilled directly by the distributor. Dropshipping is often the easiest way to start selling online, and since you don't need to spend money up front on inventory or pay for warehousing space and packing materials, it's extremely cost-effective. You simply choose the products from a dropshipping supplier, add them to your store with a markup, and keep the difference between your markup and the supplier's price.

Like any other business model, dropshipping works best when you have a solid strategy. You can't just load up your website with tons of random products and wait for profits to roll in. You still need to pick a niche in which you can offer strong value and become an authority.

Build a Website

Once you've laid out the plans for your business and you're ready to get going, it's time to build your website. You can start work on the site at any point in the process as long as it will be ready to launch on time according to the schedule you've set. Before you start, however, it's best if your business is far enough along in development that you have a solid idea of your branding. This will help you with your template choice and other design decisions.

How to Build a Site

As you can imagine, eCommerce websites are extremely complicated. We covered the various frontend and backend functions earlier, such as checkout, inventory management, customer lists, product creation, and much more. That's a lot of features, and it's not even close to the full complexity. It's fair to imagine an eCommerce website as a machine full of moving parts that must all remain perfectly synchronized.

It's difficult to get all these elements working together unless you have the proper tools. The best way to build an eCommerce website is to use software that brings all those tools under one umbrella, ensuring that your finished website will include all the functionality you need and that it will all work together smoothly. This software is called an eCommerce platform, and it's the superior choice when you want to build a website for selling online. Affordably-priced, scalable eCommerce platforms have evened the playing field so that even the smallest business can start a website and successfully sell online, as opposed to earlier days when only the giants could afford the necessary tools.

Choosing an eCommerce Platform

The eCommerce platform you choose determines the capabilities of your website, on both the frontend and backend. There's a wide range of platforms available today, and some have more features than others. Sometimes these limitations are by design, as with platforms intended only for businesses on the smallest end of the scale, such as sole proprietors selling very few items to a relatively tiny customer base. Generally, these types of businesses don't need some of the higher-end features geared toward management of a larger company.

However, smaller-scale platforms quickly become insufficient when your business starts to grow. Scalability is vital to your business's long-term future, so look for a platform that grows with you. Just because you don't need certain features now doesn't mean you won't need them later. If your software lacks features for a larger business, you'll be stuck, and the only choice will be to switch to another platform. This process can be time-consuming and expensive, especially if you lose work while transferring to different software.

Likewise, it's also a mistake to start off with an enterprise-grade eCommerce platform when your business doesn't need it yet. This is just a huge increase in expenses with no immediate benefit. The best choice is always to use a platform that will work equally well for businesses of any size and budget.

Intended business size isn't the only reason a platform can be missing important functionality. Sometimes features are left out simply because the software provider overlooked them, or wrongfully assumed they wouldn't be needed. In the latter case, this can show that the provider failed to anticipate the variety of businesses that would one day use their software. Sometimes these shortcomings can be overcome by installing extra features via the eCommerce platform's app store, but apps come with a price that adds up quickly. It's much better to use a platform that has more features already built in.

Since Shift4Shop was developed specifically to include all the features a business needs, including the ones that are often left out, we'll use it as an example of the abilities your eCommerce platform should have. These include:

• Unlimited products, and unlimited options/variants for those products (like size, color, etc.)
• Full scalability for any business size
• Unlimited bandwidth and disk space for your website, images, and other content
• Inventory management with quantity tracking and low stock alerts
• Flexible coupon and promotion system
• Template code access for total customization
• Strong security, including SSL encryption and PCI compliance (required for accepting credit cards)
• Integration with a variety of shipping carriers, including real-time rates and label printing
• Built-in payment processing and many alternative payment methods
• Advanced reporting and metrics
• Tax rate calculation
• RMA (Return Merchandise Authorization) system for handling returns
• Complete set of SEO tools
• Built-in blog
• 24/7/365 US-based live support
• And much, much more

Your own business may have additional needs, so always check out the full feature list on any eCommerce platform's website (and beware if they don't provide such a list, or are vague about it). Many platforms are missing some of these features, so be careful before you commit to one.

Market Your Website

Marketing is an essential part of the eCommerce process flow because it's how you raise brand awareness and bring customers to your store. You should have an ecommerce marketing plan in place before you launch your website, as some aspects (like SEO) need to be in place immediately. Either way, marketing is an ongoing effort, but automated eCommerce tools make it much easier.

Search Engine Optimization (SEO)

SEO is listed first because it has the most potential — which makes it the most important. The majority of online shopping starts with a search engine, as customers search for what they need and then compare results across multiple businesses. They will most often search for a product (e.g. "glue remover"), or sometimes for a solution to a problem (e.g. "how to get price sticker residue off book without damage"). Sometimes, they'll search for a specific brand. You want your website to appear in all relevant searches so customers will learn that you can provide the products they want, and SEO is how you accomplish this.

These search terms are called keywords, and include both short-tail and long-tail keywords. Short-tail keywords are only 2 (or rarely, 3) words long and comprise brand names or product types like our first example. Long-tail keywords are a phrase, like our second example. Short-tail keywords can often fit well into page titles, while long-tail keywords are great for page content and blog articles.

SEO also has some more technical aspects, including the URL structure and meta tags of each page, 301 redirects to rescue broken links, and canonical URLs to designate the "real" page within several similar pages (like a multiple-page category). An XML sitemap and control of the robots.txt file will help search engines crawl and index your page properly. If any of these elements are missing or set up incorrectly, your page ranking will suffer, so a good understanding of SEO is essential — as are the tools you have access to for editing these features.

Social Media Marketing

Social media is enormously popular and you're missing out if you don't work it into your marketing strategy. The most obvious example is to connect your store to Facebook. Start by creating a Business Page that will serve as the social media presence of your brand, and link it back to your website. Install the Facebook pixel so any ad campaigns you set up can use Facebook's precise targeting to get your products in front of the people most likely to be interested.

Facebook Business Pages can also have a Shop tab, where you can add products for customers to buy directly from the page. The easiest way to get your products onto your Shop tab is to export them from your online store. The best eCommerce platforms let you manage your Facebook orders and website orders in one place and keep your inventory synchronized between the two.

Having a Facebook Shop is also required for selling on Instagram, via Shoppable Posts. You can place "stickers" onto your Instagram posts to highlight purchasable products that are being shown in the image. This is much more efficient than asking Instagram followers to visit your website by finding the link in your bio, and far better than asking them to copy and paste a product URL from your post description. Both actions take unnecessary time and effort and can cost you sales.

Customer engagement is another important aspect of social media marketing, and it costs you nothing except time. Make regular posts about your business and products, hold special events with follower-only coupon codes, and chat publicly with your customers to show that you're involved. You may find high-quality posts being shared by satisfied customers, resulting in free word-of-mouth advertising.

Shopping Feeds

Shopping feeds are similar to your Facebook store in the sense that they allow you to export your products onto another channel. The best example is Google Shopping, which is essentially a product search engine. This is another way to improve the visibility of your products and earn more awareness of your brand.

Shopping feeds should allow you to quickly add your products while retaining all their attached information, such as pricing, star ratings, images, "in stock" status, and more. For best results they should update automatically to ensure that all the most current information from your website is properly reflected on the other sales channel.

Content Marketing

If you've read any articles about SEO, you've probably seen the phrase "content is king." This means the text content of your website is absolutely crucial to your search engine visibility and to the status of your brand. Since frequent updates help it rank better, content marketing is best done through a blog on which you'll make regular posts containing useful content that people will want to read.

This serves multiple purposes. It provides the type of helpful results that search engines prioritize, it gives you an opportunity to use keywords relating to your products, and it helps establish your brand as a knowledgeable authority in your industry. The better the content you write, the more visitors will appreciate it, whether those visitors are humans or search engine robots.

It doesn't matter what industry you're in: as long as you have something to say, you'll have something to write. News and updates about your business or industry are great, and help keep your blog fresh and relevant, but don't focus on them exclusively — once they're out of date, they become less useful and their importance falls.

This is why your blog also needs evergreen content, which means it's always relevant no matter how old the article is. How-to articles, in-depth product breakdowns, and other informative topics will remain useful, allowing them to slowly climb in rank as they accumulate pageviews and backlinks. Make small updates to old articles from time to time and continue to nurture them, and the long-term rewards can position your brand as a leader.

Promotional Events

Since time immemorial, businesses have attracted new customers by throwing a big sale. Customers always feel an element of risk when buying from an unfamiliar business, but reduced sale pricing cuts this risk down somewhat — if they turn out to dislike your product, at least they made a smaller investment to buy it.

Promotions are also likely to earn you repeat customers, especially if they've had their eye on a certain product and are waiting for a sale. You have several options — create discounts on single products or whole categories, or have a sitewide sale event. Or, send coupons out to your customers via email or social media. Hold short-term events like daily deals, and social events like group deals in which a minimum number of purchases must be made to activate the discount. This latter type of sale can help your store go viral, as customers share information about the group deal in the hopes that their friends will participate.

During the holidays, promotional events are pretty much required. Customers expect deep discounts on Black Friday, Cyber Monday, Green Monday, and other important sales dates during that time of the year. Depending on what you sell, you could also benefit from promotions during other holidays, like Valentine's Day.

Email Marketing

Email marketing is one of the most reliable methods available. It involves sending a regularly-timed newsletter to people who have chosen to subscribe, whether or not they've made a purchase from you yet.

The most successful newsletters contain useful information or entertain the reader, rather than pure sales language. They're also a prime opportunity to include coupons to encourage your subscribers to make a purchase. For past customers, you can tailor the newsletters to match the interests they've shown you — for example, the coupon you include could apply to a product that relates to their previous purchase.

Splitting up your newsletter audience is called "segmenting" and allows you to provide personalized content. The most powerful eCommerce platforms make this process nearly automatic by allowing you to use your customer records when setting up your newsletter lists, whether you use a built-in newsletter creator or an outside service like MailChimp. Shift4Shop's Newsletters and Customer Groups tools are great examples of these kinds of features.

Partnerships

Partnerships involve outreach from your business to other businesses or media that may be interested in showcasing your brand or products, or working together in another way. One example is to trade guest blog posts, which will expose both of you to an entirely new audience.

Affiliate marketing is a useful tool that allows others to promote and sell your products in return for a commission. Bloggers, review websites, and other online media are more likely to write about your products if they can earn a commission on any sales of your product that result from their website. This comprises a type of advertising that you don't need to pay for until it becomes successful — rather than paying up front for an ad that may not bring results, you pay the affiliate their commission after the sale has already been made.

eCommerce Processes

In order to serve its purpose, an eCommerce website needs to have several processes in place that enable the eCommerce business model to work. These consist of the necessary features for making a transaction online.

Payment Gateways

One of the hallmarks of eCommerce is the speed and convenience with which a customer can buy something. Part of that process is the ability to enter payment information onto your website, rather than the older methods of mailing in a form or ordering over the phone (although phone orders are still viable for some businesses). Today, the process has become even faster with the advent of one-click checkout, which uses saved customer data to prevent the need to enter it all over again.

Online payment gateways are the technology that makes this possible. A payment gateway authorizes a credit card (or other) transaction near-instantaneously. Other than this basic functionality, no two payment gateways are exactly the same. Pricing, policies, and other factors come into play, so it's important to choose the right payment gateway for your business.

Not all payment gateways simply deal with credit cards, either. One-click checkout and other fast-tracked checkout systems are made possible through digital wallets in which customers store their data for later use. These can also include an extra degree of security and peace of mind.

Always choose your payment gateways based on the needs of your customers and your business. When choosing an eCommerce platform, make sure it integrates with the payment gateways you want to use. Shift4Shop is automatically integrated with Shift4 Payments, so you won't need to hunt for a payment gateway right away to get your business running. Additionally, Shift4Shop integrates with more alternative payment methods than any other eCommerce platform in the industry, giving you more options for taking payment.

Shipping

Shipping is the lifeblood of eCommerce. After all, if there were no way to receive products purchased over a website, then shopping online wouldn't be possible except for digital downloads. Shipping features in an eCommerce platform make it much easier for you to get customers' purchases on their way.

Shipping carriers like UPS, FedEx, USPS, and others can be integrated with your online store to provide several benefits. Perhaps most importantly, you can pull the shipping rates directly to your website so the customer can see their shipping costs change in real time as they update their order. This prevents the upsetting surprise at checkout when a customer is unaware of shipping charges until they appear in the order total. This unexpected increase in the price of an order is the number 1 reason for cart abandonment.

As your business grows and you make more sales, you'll find every time-saving measure to be valuable. Shipping integrations can also include the ability to print pre-filled labels directly from your dashboard, which saves you the trouble of writing it out and almost eliminates the chance for errors when adding the customer's address to a package. Along with labels, you can also obtain tracking numbers to provide to the customer to ease their minds as they wait for their purchase to arrive.

Shipping status notifications are also greatly appreciated by customers, especially the "Out for Delivery" and "Delivered" notifications. The former tells the customer that their package is now on the last leg of its journey, on the truck that will make the final delivery. When they receive the "Delivered" notification, they know to look for their package immediately.

The "Delivered" notification also helps protect you in customer disputes in which the buyer claims they never received the package. Credit card and other payment providers will often dismiss a chargeback claim if the business can prove delivery.

Sales Tax Collection

It's crucial to charge your customers the right amount of sales tax on every purchase. You'll need to remit all your sales tax every year, so if you haven't been collecting it, you'll find yourself needing to make a (potentially very large) payment right out of your pocket. This is a nasty surprise at best, and at worst, can present a setback that some small businesses can't recover from.

To help prevent this problem and ensure businesses collect the proper sales tax on customer purchases, some eCommerce platforms have automatic tax calculation that lets you set up rates to be applied based on the customer's location. Tax can also be shown in the cart to help prevent another surprise price increase at checkout, similar to the shipping charges.

Security

Security is essential for websites, whether or not they collect any user information. Even the most basic website should be protected from hacking and malware contamination, but in eCommerce, you need to take it a step further. Whenever credit card numbers, customer addresses, or other personal data is being transferred over the internet, it's the website owner's responsibility to ensure that all this data will remain safe.

The most basic level of security is SSL technology. SSL (Secure Sockets Layer) encrypts all the data that passes between the website's server and the visitors' browsers to protect it from interception by a third party. For eCommerce, you also need PCI compliance, which is a process that ensures your business can protect customer data from breaches and protect your website from hackers. The PCI compliance process is quite intensive, but fortunately, some of the best payment providers and eCommerce platforms have it built in.

Fraud Protection

Fraud protection is part of online store security, but consists of a different set of features outside the typical security measures outlined above. Generally, eCommerce fraud protection relies on a combination of automatic analysis and actions by the store owner. Orders with characteristics common to fraudulent transactions can be blocked completely or flagged for review.

Integrations

We briefly mentioned integrations in regards to shipping carriers, but your online store can also integrate with other types of business software to make your operations easier. Google Analytics is a common integration that allows you to view Google's powerful metrics as they apply to your store, so you can gain priceless information about where your customers are coming from, what browser they're using, and more.

Other integrations include promotional newsletter tools like MailChimp and AWeber, inventory management software like TradeGecko, shipping software like ShippingEasy, tax software like Avalara AvaTax, and much more. In some cases, integrations can replace or complement built-in features provided with the eCommerce platform. Integrations also ensure that online store owners can use their favorite business software seamlessly with their eCommerce software.

Summary

Shopping online is meant to be smooth and easy, but behind the scenes, things get a lot more complex. These eCommerce processes are all essential parts of every online store, no matter how big or small, and you can't run a successful business without them. Fortunately, eCommerce platforms make it much easier to get all the features you need without being a programmer (or hiring one), but your choice of platform is crucial.

Shift4Shop is an all-in-one eCommerce solution that includes all the features we covered in this article, and is optimized from top to bottom for growing your brand and making sales. If you're looking for a smart, cost-effective method to jump into eCommerce and get your business off the ground, Shift4Shop has everything you need. We invite you to check out our free eBook below and learn more about building an online store.