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E-commerce (electronic commerce) is the sale or purchase of goods or services through computer networks using systems designed to receive or place orders. The payment and delivery do not have to happen online. An order paid for by cash on delivery, collected in a store, billed by invoice, or fulfilled digitally can still be e-commerce because the defining issue is how the order was placed.
In everyday business language, e-commerce also describes the surrounding activities—storefronts, marketplaces, digital payments, fulfillment, customer service, and online marketing. The narrower definition is useful when comparing official statistics and deciding whether a transaction really occurred electronically.
What does e-commerce mean?
The OECD’s 2025 definition, published October 9, 2025, focuses on an electronic ordering process: a sale or purchase conducted over computer networks through methods specifically designed to receive or place orders.
That includes webpages, mobile apps, extranets, electronic data interchange (EDI), marketplaces, structured social-commerce catalogs, subscriptions, and qualifying AI-assisted ordering systems. It covers physical goods, downloads, software, bookings, subscriptions, and services.
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Payment and delivery are separate questions. A customer can order online, pay after receiving an invoice, and collect the goods at a store; the transaction can still qualify as e-commerce.
For statistical scope and detailed inclusion rules, see the OECD’s 2025 interpretation guidance.
Examples of e-commerce
- Buying clothing through a retailer’s website and having it shipped.
- Ordering a meal through a structured mobile-app catalog.
- Submitting a recurring component order through an EDI or procurement system.
- Booking accommodation, travel, tickets, or a professional service online.
- Purchasing software, a course, streaming access, or a downloadable file.
- Buying from a third-party seller through an online marketplace.
- Placing an order online for pickup and paying at collection.
- Starting a subscription that bills monthly or annually.
What is not necessarily e-commerce?
| Activity | E-commerce? | Why |
|---|---|---|
| Product purchased through a website checkout | Yes | The order is placed through an electronic ordering system. |
| Purchase through a mobile shopping app | Yes | Apps are covered by the current OECD guidance. |
| Online advertisement followed by an in-store purchase | Not by itself | Promotion is not the same as an electronic order. |
| Phone call after viewing a website | Usually no under the OECD statistical definition | The order was placed by telephone. |
| Manually typed email asking to buy | No under the 2025 OECD guidance | A manually typed message is not a structured ordering method. |
| Online order paid in cash on delivery | Yes | Payment method does not determine classification. |
| Online order collected at a store | Yes | Delivery method does not determine classification. |
| Reading product information without buying | No transaction yet | This is research or marketing, not a sale. |
Put simply, online advertising, email, customer support, and product research may support e-commerce without being e-commerce transactions themselves.
Major types of e-commerce
| Type | Who sells to whom | Typical examples and features |
|---|---|---|
| B2C (business to consumer) | Business to individual | Retail websites, apps, consumer software, courses, meal delivery, and streaming. |
| B2B (business to business) | Business to business | Bulk orders, negotiated prices, purchase orders, account catalogs, credit terms, approvals, and EDI. |
| C2C (consumer to consumer) | Individual to individual | Used-goods, collectibles, auction, and local-resale platforms. |
| C2B (consumer to business) | Individual to business | Freelancing, stock photography, user-generated content, influencer work, and bid-based services. |
| B2G/G2B | Business and government | Procurement portals, electronic tenders, contract catalogs, licenses, and paid government services. |
| D2C (direct to consumer) | Brand or manufacturer to consumer | A B2C route that reduces reliance on wholesalers and traditional retailers. |
| Marketplace commerce | Multiple sellers and buyers through an intermediary | The platform supplies discovery, checkout, payments, identity tools, disputes, or shipping; it may not own the inventory. |
| Social commerce | Usually business to consumer through social or messaging platforms | A catalog, cart, checkout, or ordering feature inside the platform. Promotion alone is not social commerce. |
| M-commerce (mobile commerce) | Any e-commerce conducted on mobile devices | A device-based subset using mobile websites or apps, not a separate transaction category. |
E-commerce is therefore broader than online retail. It includes business procurement, services, subscriptions, peer-to-peer sales, marketplaces, and government-related transactions. The OECD’s overview of e-commerce explains why ordering, payment, and delivery should be analyzed separately.
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- Discovery: The customer arrives through search, advertising, social media, email, a marketplace, a referral, or an existing relationship.
- Evaluation: They compare specifications, price, stock status, reviews, seller information, taxes, shipping, and return terms.
- Order creation: They select the product or service, quantity, options, address, and any subscription terms.
- Checkout: The system calculates the total, discounts, shipping, taxes where applicable, and available payment methods.
- Payment authorization: A card network, bank, wallet, invoice workflow, or other provider approves, declines, or schedules payment.
- Confirmation and checks: The seller records the order and may perform inventory, identity, fraud, or availability checks.
- Fulfillment: An item is picked and packed, made on demand, shipped by a supplier, or provisioned digitally.
- Delivery or access: The buyer receives a shipment, collects it, downloads a file, receives a license, or gets account or streaming access.
- After-sales service: Tracking, support, exchanges, refunds, cancellations, reviews, warranties, and repeat purchases may follow.
A useful business model is: e-commerce = demand generation + digital ordering + payment or billing + delivery of the product or service + customer support. The storefront is only one part of the system.
What an e-commerce business needs
Customer-facing tools
- Website, mobile storefront, marketplace listing, or app.
- Product pages, search, navigation, cart, checkout, accounts, reviews, and support.
Commerce systems
- Catalog, pricing, promotions, inventory, tax calculation, and order management.
- Returns, refunds, subscriptions, and recurring billing where relevant.
Payments and finance
- Payment gateway or processor, cards and wallets, fraud screening, chargeback handling, payouts, and reconciliation.
Operations
- Supplier or warehouse, shipping and delivery, returns address, customer-service workflow, accounting, reporting, and analytics.
Acquisition
- Search optimization, paid advertising, email or SMS, social channels, affiliates, referrals, and marketplace merchandising.
Trust and compliance
- Privacy disclosures, terms, accurate prices and product claims, return and refund rules, secure data handling, accessibility, consumer protection, product safety, and applicable tax obligations.
Requirements vary by country, product, business size, sales channel, and whether you sell directly or through a marketplace.
E-commerce operating models
| Model | How it works | Main advantage | Main trade-off |
|---|---|---|---|
| Inventory-led retail | You buy and store stock. | Control over quality, availability, packaging, and delivery. | Capital tied up in inventory and risk of unsold goods. |
| Dropshipping | A supplier ships directly to your customer. | Lower upfront inventory investment. | Less control over stock, packaging, quality, and delivery times. |
| Third-party fulfillment | A logistics provider stores and ships your products. | Scale without operating your own warehouse. | Storage, handling, receiving, and return fees; reduced direct control. |
| Print-on-demand | Products are produced after an order. | Low inventory risk and easy product testing. | Higher unit costs and potentially slower delivery. |
| Digital delivery | Files, software, media, memberships, or courses are delivered electronically. | Low marginal delivery cost and near-instant access. | Licensing, piracy, account sharing, technical support, and refund abuse. |
| Services and subscriptions | Customers book, consume, or renew a service online. | Repeat billing and predictable customer relationships. | Cancellation, entitlement, service-quality, and recurring-payment obligations. |
Benefits of e-commerce
For sellers
- Reach customers beyond a local store and accept orders outside normal opening hours.
- Reduce dependence on physical retail space.
- Test products, prices, offers, and messages quickly.
- Connect ordering with inventory, customer records, and repeat-purchase programs.
- Use marketplaces and digital channels to test demand in new regions.
For buyers
- Convenience and home delivery or digital access.
- Broader selection and easier price and feature comparison.
- Access to products not available locally.
- Reviews, specifications, availability information, subscriptions, and automated replenishment.
For B2B buyers and sellers
- Faster reordering and standardized catalogs.
- Better purchasing visibility and fewer manual data-entry steps.
- Integration with inventory, accounting, enterprise resource planning, and procurement systems.
These are possibilities, not guarantees. Customer acquisition, payment, fulfillment, support, returns, taxes, and platform fees can substantially reduce profitability.
Challenges and risks
Customer acquisition
Launching a store does not create demand. Competition in search results, marketplaces, social feeds, and advertising can make traffic expensive.
Returns and reverse logistics
Physical products may require return shipping, inspection, restocking, refund processing, customer-service labor, and disposal of damaged or unsellable stock.
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Fraud and payment disputes
Sellers face stolen payment details, account takeover, refund abuse, and chargebacks. Tighter controls can reduce fraud but may also reject legitimate customers.
Fulfillment dependency
Late, damaged, missing, or incorrect orders often become the seller’s customer-service problem even when a carrier or supplier caused the failure.
Platform dependence
Marketplaces and hosted platforms can change fees, rankings, advertising rules, seller requirements, payment availability, or account-enforcement policies.
Privacy, security, and accessibility
Stores handle identities, addresses, order histories, and sometimes payment-related data. A hosted platform can reduce technical work, but merchants still need strong account controls, appropriate data practices, fraud procedures, backups, and business continuity. Customers may also face barriers involving internet access, digital skills, disabilities, or unavailable payment methods.
Tax and legal complexity
Cross-border selling can involve sales tax or VAT, customs, duties, product restrictions, consumer rights, data-protection rules, local warranty requirements, and return obligations. In the United States, the INFORM Consumers Act may apply to high-volume third-party marketplace sellers. The FTC describes the threshold as at least 200 separate new or unused consumer-product transactions and at least $5,000 in gross revenue during a continuous 12-month period within the relevant lookback period.
E-commerce versus digital commerce
E-commerce is the electronic sale or purchase transaction. Digital commerce is the broader operating model around it: discovery, marketing, personalization, analytics, customer service, payment, fulfillment coordination, and post-purchase engagement.
Commercial writers often use the terms interchangeably. When precision matters, reserve e-commerce for the transaction and digital commerce for the wider customer and operating experience.
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How to choose a sales channel
Own online store
Best when brand control, customer ownership, repeat purchases, and a differentiated checkout matter. You must generate traffic and manage more of the technology, compliance, support, and operations.
Marketplace
Best for built-in discovery and rapid product testing. You trade some customer-data and presentation control for fees, competition, ranking dependence, and marketplace rules.
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Social commerce
Best for products discovered through creators, communities, and visual content. Native checkout varies by platform and geography, while algorithms and presentation limits can change.
B2B portal or procurement integration
Best for repeat business orders, negotiated terms, account pricing, approvals, and customer-specific catalogs. Implementation and integration with ERP, inventory, tax, and procurement systems are more demanding.
How to choose an e-commerce platform
Compare the total operating model rather than the headline subscription price.
| Approach | Good fit | Trade-offs |
|---|---|---|
| Hosted platform | Businesses wanting a faster launch with hosting, checkout, core commerce tools, and support bundled. | Ongoing subscription, possible transaction fees, less control over infrastructure, and vendor-policy dependence. |
| Open-source store | WordPress users and technically capable merchants needing extensive customization and control. | You manage hosting, updates, extensions, backups, security, compatibility, and technical support. |
| Marketplace-first selling | Sellers prioritizing existing demand and quick market validation. | Commissions, ranking competition, customer-data limits, and account or listing restrictions. |
| Custom commerce system | Organizations with unusual workflows, large scale, or specialized integration requirements. | Higher implementation, maintenance, security, and staffing demands. |
Current examples and published pricing signals
- Shopify: Its U.S. pricing page showed, on August 18, 2026, Basic at $29 per month billed yearly or $39 monthly; Grow at $79 yearly or $105 monthly; Advanced at $299 yearly or $399 monthly; and Plus from $2,300 monthly. Listed U.S. online card rates began at 2.9% + $0.30 for Basic, 2.7% + $0.30 for Grow, and 2.5% + $0.30 for Advanced. Country, billing cycle, eligibility, payment method, taxes, and add-ons affect actual costs. Third-party transaction fees may apply when using an outside payment provider, as explained in Shopify’s pricing guidance. See Shopify’s official pricing page.
- WooCommerce: The official pricing page presents the core platform as having no revenue share and no feature lock-in behind higher-priced tiers. Hosting, domains, extensions, development, maintenance, security, and payment processing remain separate costs. See WooCommerce pricing.
- Stripe: Stripe provides payment infrastructure and Checkout rather than a complete storefront, inventory, and fulfillment system. Its pricing is usage-based and varies by payment method, geography, product, and business circumstances. See Stripe pricing.
Cost checklist
- Monthly subscription, hosting, domain, and staff-account costs.
- Payment-processing and third-party transaction fees.
- Apps, extensions, integrations, development, and maintenance.
- Advertising, marketplace commissions, fulfillment, storage, and shipping.
- Returns, refunds, chargebacks, support, taxes, duties, and compliance tools.
- Data portability, migration options, checkout flexibility, inventory depth, and the technical expertise required.
For U.S. retail statistics, note that the Census Bureau’s e-commerce estimates cover retail employer firms and exclude categories such as online travel, financial brokers and dealers, and ticket agencies because those are not classified as retail in that survey. The series is subject to revision; an April 2025 revision removed nonemployers from the time series to align with the Annual Integrated Economic Survey. Never compare a retail-sales estimate with a marketplace gross-merchandise-value figure without checking each dataset’s scope.
Frequently asked questions
Frequently Asked Questions
Is e-commerce only buying physical products online?
No. It includes services, software, downloads, subscriptions, bookings, tickets, courses, streaming access, and other electronically ordered offerings.
Does an e-commerce transaction require a website?
No. Orders can use apps, marketplaces, extranets, EDI systems, and structured social or messaging catalogs.
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Yes. Dropshipping is an e-commerce fulfillment model in which a supplier ships the product directly to the customer after an electronic order.
Is e-commerce profitable?
It can be, but profitability depends on contribution margin after acquisition, payment, platform, fulfillment, returns, taxes, support, and fraud costs. Revenue alone is not profit.
What is the difference between a marketplace and an online store?
An online store is usually controlled by one seller. A marketplace connects multiple sellers with buyers and may provide discovery, payments, dispute tools, or shipping without owning every listed product.
What laws apply to e-commerce?
Rules depend on location, product, customers, and channel. Common areas include consumer protection, privacy, payment security, tax, accessibility, advertising, product safety, shipping, returns, and cross-border customs.
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
