What Is E-commerce Business?

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The term "e-commerce business" breaks down into "commerce," which is the act of buying or selling, and when business is conducted "electronically," it typically refers to sales or purchases made over the internet. But e-commerce business is about more than online shopping.

What is E-commerce Business?

E-commerce is interchangeable with labels, such as "e-business" and "e-tail," but it's not just about business-to-consumer sales. It also includes the transfer of funds and data within business-to-business dealings. For starters, think of how manufacturers or suppliers do business with online retailers or vice versa. On a small scale, someone who supplements their income by setting up shop online, say, on eBay, Amazon or Etsy, is conducting a form of e-business.

Examples of E-commerce Businesses

You don't have to spend a lot of time online to recognize the names of big e-business players, such as Urban Outfitters, Staples and Walmart. As the traditional sales platform expands to include online shopping, longtime brick-and-mortar chains adapt their business models to include e-commerce. Examples of e-tailers that exist strictly online include Wish, Overstock.com and ModCloth. How do e-commerce businesses of all sorts grab consumers' attention without a storefront? They do it through unsolicited emails, digital coupons, targeted advertisements and social-media marketing, for starters.

How to Start an E-commerce Business

Starting a small-scale e-commerce business may come with fewer overhead costs than opening a brick-and-mortar store, of course, but you're still required to abide by the law. Register your business name, obtain a business license and other required permits. If you're starting a limited liability company or a corporation, you'll also need to file the appropriate business formation paperwork and obtain a federal tax ID number, just as you would for a traditional offline business.

Terms and Conditions for an E-commerce Business

The Federal Trade Commission takes data collection and privacy seriously. So, if you plan to take payments by credit card or gateway payments, for instance, make sure that your business's and website's privacy policies cover data security to protect not just your customers but yourself, too from legal issues. Additional e-commerce terms to discuss with your legal counsel include export regulations, tariffs and how you could be held responsible for nondelivery of items, such as stock from your suppliers. As for shipping goods to customers, prepare to disclose fees, laws and customs-clearance regulations.

How to Create E-commerce Brand Awareness

Successful online businesses usually have a varied and far-reaching online presence, so one of the first things you'll need is a savvy website with optimal search engine optimization (SEO) capabilities. A forum website would come in handy, too, for answering consumers' questions and handling complaints in a helpful, polite way before they lead to bad reviews which are an e-business destroyer! Also, join listing sites, such as Google Directory, and spend plenty of time generating interest through social media and an email newsletter. The bigger your online splash, the better your chance of e-commerce success.

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About the Author

Lorna Hordos is a home-improvement business owner and freelance writer. She has written hundreds of conversational business articles for WordPress.com, Bizfluent, AZ Central and Global Post.