Understanding the Fundamentals of How Ecommerce Works 

Understanding the fundamentals of how eCommerce works are essential to any business. First of all, it is important to know the different types of businesses that are involved in eCommerce. This is because not every type of business has the same model. In addition, identifying what products to sell can be difficult if you don’t do the proper research. It’s also possible that the product you plan to sell already exists in the market. 

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Business models 

When deciding to build an eCommerce site, it’s important to consider how you plan to operate it. There are two major types of eCommerce business models: in-house and outsourced. In-house businesses develop key aspects of the eCommerce process in-house, while outsourced businesses delegate more work to third-party vendors. 

In-house businesses are not always the best choice for eCommerce. For example, a brick-and-mortar shop might not be the most appropriate choice if you have high traffic, as an online store can help you attract a larger audience. Business-to-business companies, on the other hand, sell to other businesses, often directly. These types of businesses often include manufacturers, producers, and suppliers. 


Processes of eCommerce involve the different steps that are necessary to make an eCommerce website work. These steps are similar to the ones involved in a brick-and-mortar store. In both cases, there is a customer-facing part and an employee-only part, which includes spaces behind the registers and management offices. However, with an eCommerce site, these steps take place on a computer. 

These steps include the creation of a pick list, processing of a customer’s order, tracking of orders, and shipping the goods. These processes can be automated through the use of software, such as the BPA Platform. These platforms offer custom integration capabilities to automate eCommerce activity between a web shop, courier service, and in-house business software. 

Transaction costs 

In addition to product costs, transaction costs affect e-commerce in two ways. Lower transaction costs increase the efficiency of the economy, thereby freeing up capital for productive work. At the same time, the cost of the transaction may increase if there are barriers to communication between buyers and sellers. Lower transaction costs are also beneficial for the sharing economy. For example, if transaction costs are lower, consumers may be more willing to share goods and services among themselves, thus resulting in lower prices. 

Transaction costs are a significant portion of overhead for any business, but eCommerce stores can reduce their costs by using a payment processing company. Unlike a brick-and-mortar store, eCommerce merchants don’t have to pay a salesperson’s salary or a cashier’s fee. Additionally, customers don’t have to wait in lines or pay for gas to get to the store. However, merchants should not forget that they still pay fees for processing credit cards, which are part of the transaction cost. 

Impact on retail workforce 

The retail industry employs over 16 million people, but with increased automation and eCommerce, it is facing massive disruption. To survive, government and businesses must collaborate to develop solutions. These solutions may include reworking the social insurance system and providing more training for workers. Ecommerce has made retail increasingly competitive and consumers expect more personalized service and lower prices, which means that a retailer’s employees need new skills. 

Until recently, the retail industry hasn’t given much thought to its workforce. Yet as the retail industry continues to face a massive disruption, many companies are beginning to focus on employee training. For example, Walmart created its academy for retail workers, which offers classroom learning and hands-on exercises. This program has provided over 150,000 workers with training. In addition, organized labor has stepped in to support training programs for workers. The United Food and Commercial Workers International Union, which represents about 1.3 million retail workers, have a system in place that helps its members adapt to the new environment.