What is ecommerce?
Definition, advantages and disadvantages of ecommerce websites and ecommerce business

4,900 yen per month (excluding tax) + referral fee

Selling online: What Is Ecommerce?

Internet sales (also known as “ecommerce” or “EC”) are transactions involving goods and services conducted over the Internet. In other words, the familiar bustling city center and physical stores are replaced by zeros and ones on the Internet. It is estimated that 2.14 billion people worldwide will buy goods and services online this year. The number of Prime members shopping at Amazon stores currently exceeds 200 million.

Ecommerce is one of the many ways people buy and sell retail goods. Some companies only sell things online, but for many, ecommerce is one distribution channel in a broader strategy that also includes brick-and-mortar stores and other revenue streams. In any case, ecommerce makes it possible for startups, SMEs, and large enterprises alike to sell at scale and reach buyers around the world.

What is an ecommerce site?

An online store, also called an “ecommerce site,” is a digital store on the Internet. This facilitates transactions between buyers and sellers. It is a virtual space where sellers list products, and online store buyers select those products. The ecommerce site functions as a product shelf, salesperson, and cash register for the online business channel.

With a product business, you can build a brand with a store such as Amazon, build your own ecommerce site with a dedicated domain, or adopt a multi-channel approach.
Amazon trucks get ready for delivery outside of a fulfillment center

What types of ecommerce are there?

Ecommerce takes on diverse forms, just as there are different ways to shop through online channels. Common business models that shape the ecommerce world include:
  • B2C — Businesses selling to individual consumers (end users). This is the most common model, and has many variations.
  • B2B — Businesses selling to other businesses. Often, the buyers resell things to consumers.
  • C2B — Consumers selling to businesses. In C2B business, buyers can sell to other companies.
  • C2C — Consumers selling to other consumers. Businesses build the online marketplaces that connect these consumers.
  • B2G — Businesses selling to governments or government agencies.
  • C2G — Consumers selling to government or government agencies.
  • G2B — Governments or government agencies selling to businesses.
  • G2C — Governments or government agencies selling to consumers.
Customer shopping online stores from the couch

Where and how ecommerce takes place

Online shopping is developing and changing every day. People shop from devices such as personal computers, cell phones, and tablets. While mainly visiting websites, they also access social media pages and participate in lively virtual channels. Here, we will give an overview of each of the three forms of ecommerce being carried out today.

M-commerce (mobile ecommerce)

Selling online through mobile devices is called “mobile ecommerce” or “m-commerce.” Today, consumers around the world possess mobile devices, so it’s no surprise that mobile ecommerce is expected to overtake non-mobile ecommerce in 2021.

Currently, many people use cell phones to research products and make online purchases. This trend is expected to continue, so it is essential to optimize online shops for mobile devices.

Enterprise commerce (enterprise ecommerce)

Enterprise commerce is the buying and selling of goods for large companies and organizations. If a large company that sells different types of goods or has multiple brands migrates to selling online, it is beginning enterprise commerce.

Social commerce (social ecommerce)

Leveraging social media lets you market and deliver your ecommerce store to a wider audience. Just as social media allows you to connect with friends and family, it also has the potential to attract buyers to product businesses. If it goes well, social media marketing can engage customers in a casual way.

Social media lets you do the following:
  • Attract new customers
  • Increase brand awareness
  • Generate online sales
Ecommerce retail seller celebrates an online sale

What are the advantages and disadvantages of ecommerce for a product business?

As a product business grows, most brand owners involved in ecommerce are faced with the following choice: Should we expand our internal operations to find ways to store, manage, and ship more inventory, or should we use shipping services? Here, we will introduce three possible solutions.

Advantages of ecommerce

There are several major advantages to selling online. Among the main advantages, ecommerce has the following characteristics.
  • It is growing rapidly
  • Market coverage can be expanded to global scale
  • Ordering products online is easy
  • Operational expenses are generally low
  • It allows direct access to consumers
All of these points are strong motivations to begin ecommerce. Let's take a closer look at each of them.

Rapid growth in retail ecommerce

In the 12 months up to December 31, 2020, the number of products sold by Japanese SMEs on Amazon.co.jp has risen to over 500 million items. Overall, ecommerce sales surged more than 30% in 2020. Much of the recent increase in online spending is due to the Covid-19 pandemic; however, experts predict this trend will continue.

Global market coverage

In the past, the number of customers a product business could reach was limited by the number of people who could physically enter the store. It is now possible to reach customers around the world through ecommerce. The rise in Internet usage and the development of social media have made it easier for ecommerce business owners to reach diverse new purchasing demographics.

Useful information

Sponsored ads can help you increase awareness, reach more shoppers, and boost sales.

Using Amazon Ads can help grow businesses and brands of all sizes and reach the 150 million Amazon Prime members who shop on Amazon.

Ease of ordering products

There are many different types of ecommerce, allowing buyers to browse options and purchase from anywhere with just a few clicks. Amazon makes it easy to categorize and compare products by price or function. Online settlement innovations like Amazon Pay further streamline the settlement process.

Reduced operating costs

Creating and managing an ecommerce site is less expensive than traditional brick-and-mortar operations. You can start a channel for an ecommerce product business without renting retail space, hiring a team of employees, or having a large warehouse.

All of these advantages lower overhead costs. There is no need to worry about rent or building maintenance. In addition, online stores are open 24 hours a day, so there is no need to monitor or allocate staff like a physical store.

You can quickly establish your own ecommerce store using ecommerce website building tools and services. You can also launch a brand on social media or stores such as Amazon without building an ecommerce website. Many product businesses sell through a number of online channels.

Direct consumer access

The Internet lets ecommerce brands build a direct relationship with their target audience. There’s no need to spend money on huge billboards or TV ad campaigns to keep the audience engaged. From special services to personalized product recommendations, you can customize your brand and marketing according to your customers’ wants and needs.
Ecommerce retail seller planning his next move

Challenges of ecommerce

Ecommerce has many advantages, but it also has its drawbacks. Some companies try to avoid ecommerce in some cases due to issues like the following.
  • Limited face-to-face interactions
  • Technical challenges
  • Data security concerns
  • Shipping and fulfilling at scale

Limited face-to-face interactions

Depending on the nature of the business or transaction, face-to-face interaction can be very important. For certain products, services, or sales styles, it can be difficult to show individual offerings at their best online.

There’s no magic solution to this challenge; however, by bringing your brand story to the forefront, you can maintain your reliability online. Actively communicating with the customer by email or phone can also turn this drawback into a major plus.

Technical challenges

Unresolvable technical challenges can have a negative impact on sales. Internet problems and hard drive failures can waste time and money, just as supply chain disruptions can prevent timely delivery of goods.

Remember that most technical problems that occur have solutions and precautions that can be taken. Be sure to back up your data regularly. Stores like Amazon can mitigate these risks by offering an established and reliable technical infrastructure.

Data security concerns

Buyers are increasingly paying attention to how their information is stored and shared. Communicating the details of your privacy policy can help gain buyers' trust. Doing so shows transparency and gives customers peace of mind that their personal information will be protected.

Amazon has been working to build a safe shopping experience for decades. Product businesses that sell on Amazon benefit from the trust of customers cultivated over many years. If you’re hosting an ecommerce store on your own domain, you’ll need to find a secure payment processing service to prevent customer data from being put at risk.

Fulfillment and shipping at scale

When you're just starting out with ecommerce, it might be easy to pack and ship orders from your garage or a vacant room. But as your product business grows, it will take more time to ship orders. If orders increase suddenly, you may struggle to ship them. By using services like Fulfillment by Amazon, you can reduce the burden on your business and increase customer satisfaction.

Learn how to choose the right ecommerce shipping service and grow your product business.

Useful information

Amazon’s automatic protection continuously scans stores and proactively removes suspected counterfeit products.

Amazon Project Zero aims to bring together the power of Amazon and brands to reduce counterfeit products to zero.
An array of tools representing common implements of ecommerce

What is the secret to a successful ecommerce store?

There are several key factors to success with an ecommerce product business. To be successful, focus on the product first and foremost. Also, consider your brand message, your target audience, and the user experience of your store. You should also consider your shipping process to ensure that you deliver goods in a timely manner to maximize customer satisfaction. Let's take a closer look at each of these key elements.

Great products

High-quality and reliable products and services are the core of a successful ecommerce brand. Products must address unmet buyer needs and challenges. At the same time, they should be offered in an attractive price range.

The success or failure of an ecommerce product business rests on product quality and pricing. Conduct market research to understand what types of products your competitors sell and the market value of similar products.

Compelling brand story

Unique brands stand out, but being a great brand requires more than just great products. To capture the customer’s attention, you must communicate the purpose and vision of your business.

Ask yourself why your product business exists. How will your products enrich the lives of customers? Your branding should convey the answers to questions like this.

Set aside time to think about your brand’s image. Dig deep to find a simple yet powerful way to communicate the starting point and mission of your business.

Useful information

Product descriptions (A+ content) lets businesses create their own branded shopping experiences within the Amazon store.

By creating A+ content, you can use rich text and images to showcase your brand story and product features on Amazon product detail pages. This can improve conversions, which can lead to increased traffic and sales.

Target audience

Clearly identifying a target audience lets you attract loyal and enthusiastic buyers. What kind of people do you want to use your products? Target your marketing at those people.

Once your product business is on track, think about what kind of people will sympathize with the brand story in order to sustain that momentum. Instead of chasing customers who don’t need your product, focus on audiences that appreciate your brand.

Smooth online experience

An online store must be user-friendly. A well-designed online experience at your store will make buying easier. If the customer has to go through too many complicated steps, they will abandon the cart before completing the transaction, and sales will drop.

Successful ecommerce stores keep their products in the spotlight by streamlining their payment processes. Increase customer satisfaction by eliminating unnecessary steps and providing an intuitive and straightforward user experience.

Useful information

Amazon’s pioneering one-click purchasing lets you sell products faster.

Amazon’s pioneering one-click purchasing simplifies the online shopping experience and makes it easier for customers to buy products. Amazon securely stores customers’ credit card information and shipping settings. This process minimizes the number of decisions a buyer must make before settling.

Timely order shipment

Buyers demand speed and efficiency, especially when shopping online. Regardless of what they buy, customers want their purchases to be delivered intact and on time.

Shipping includes every step of the customer journey, from pressing the “Buy” button to opening the product. Successful ecommerce shops pay close attention to the shipping process and prepare enough products to meet orders even during busy periods.

How New Republic grew an ecommerce product business on Amazon

Dee Murthy, co-founder of fashion brand New Republic, built his success by partnering with one of the best sites for selling. That site was Amazon. Dee created a new Amazon store imbued with the brand’s image and story.

“When we started selling on Amazon, I expected that Amazon would be about 10% to 20% of our total business. But, within the first six months, it was 50% of the total,” says Dee. “The growth was explosive. These results totally changed the way I thought about the future of the business.”

The team also received support from an Amazon account manager. “Without our Amazon team, I don’t think we could have come so far so quickly,” says Dee.

Ecommerce trends and statistics

Ecommerce growth

There are no signs that online retail sales in recent years will decline going forward. Sales are predicted to grow to 6.54 trillion dollars in 2022.

Holiday sales

Amazon stats

  • More than 17 million desktop users and 38 million mobile users (unique users) visit Amazon.co.jp every month. (Nielsen, March 2019)
  • Amazon Prime members has more than 200 million members worldwide.
  • In 2020, Japanese SMEs sold over 500 million products on Amazon.co.jp.

Prime Day

Amazon planned Prime Day 2020 to provide significant discounts to customers, help SMEs connect with more customers, and increase sales.

Covid-19 drives ecommerce growth

The Covid-19 pandemic has disrupted our daily lives and changed the way we shop. More people are buying things online than ever. Ecommerce surged 30% in 2020, and the impact of this shift to online purchases is likely to be long-lasting.
Do you have an ecommerce idea? From considering online stores to launching a brand on Amazon, we'll show you how to make it happen. You’ll have access to more than 300 million buyers worldwide, including 150 million Amazon Prime members who prefer to shop on Amazon.

Frequently Asked Questions about Ecommerce

What is ecommerce marketing?
Ecommerce marketing is a series of strategies to direct buyers to online stores. Examples of effective ecommerce marketing include incorporating social media into your business and personalizing the buyer's experience.
When are online shoppers most active?
Online purchases are busiest on early Monday and on Thursday from 8:00 p.m. to 9:00 p.m..
How many purchases are made online per year?
It is estimated that 1.92 billion people purchased goods and services online in 2019.
Is ecommerce still growing?
Yes. It is estimated that more than 2.14 billion people around the world will buy goods and services online this year. This is almost a 30% increase from the equivalent figure in 2016, which was 1.66 billion.

Start selling today

¥4,900 a month (excluding tax) + selling fees
Amazon logo
© 2023, Amazon Services LLC.
LINE logo
Twitter logo
YouTube logo