E-commerce (electronic commerce) is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet. These business transactions occur either as business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer or consumer-to-business. The terms e-commerce and e-business are often used interchangeably. The term e-tail is also sometimes used in reference to the transactional processes that make up online retail shopping.
How does e-commerce work?
E-commerce is powered by the internet, where customers can access an online store to browse through, and place orders for products or services via their own devices.
As the order is placed, the customer’s web browser will communicate back and forth with the server hosting the online store website. Data pertaining to the order will then be relayed to a central computer known as the order manager — then forwarded to databases that manage inventory levels, a merchant system that manages payment information (using applications such as PayPal), and a bank computer — before circling back to the order manager. This is to make sure that store inventory and customer funds are sufficient for the order to be processed. After the order is validated, the order manager will notify the store’s web server, which will then display a message notifying the customer that their order has been successfully processed. The order manager will then send order data to the warehouse or fulfillment department, in order for the product or service to be successfully dispatched to the customer. At this point tangible and/or digital products may be shipped to a customer, or access to a service may be granted.