What is Ecommerce, and How Does it Work?

Ecommerce is the process of trading online. It encompasses all the online activity involved in buying and selling products and services. This exchange could take place between two businesses (B2B) or between businesses and consumers (B2C).

When you go to your favourite online retailer to buy a new pair of shoes, you’re engaging in ecommerce. If you pay online for a ticket to attend a music concert or travel by plane, that’s ecommerce, too.

Ecommerce doesn’t only happen on desktops. In our latest Connected Shoppers Report , we found that 25% of shoppers buy through social media and 16% make purchases in messaging apps. In total, mobile commerce sales make up almost 57% of the ecommerce market share .

In this article, we’ll explore what ecommerce means today, how it works, the main business models, and what you need to build a successful online store.

• What is ecommerce, and how does it work?
• What you’ll learn
• What is ecommerce?
• How does ecommerce work?
• The pros and cons of ecommerce
• The top ecommerce platforms
• Examples of successful Australian ecommerce businesses
• What are the different types of ecommerce business models?
• How to create your own ecommerce business?
• Where ecommerce is heading in 2026
• Summing up
• FAQs

Ecommerce is the process of buying and selling products or services online. It covers everything that happens in an online transaction, including browsing for a product, adding it to a cart, paying securely, and having it delivered.

Ecommerce began in the late 1970s with the first secure electronic transactions, but it took off in the 1990s as the Internet became widely accessible. Since then, it has evolved from static online catalogues to the mobile, social, and AI-powered shopping experiences we experience today.

We found that, today, social media is one of the biggest drivers of ecommerce sales, with 53% of shoppers using it to discover products.

Here’s a quick snapshot of the key aspects of ecommerce.

Ecommerce brings businesses and customers together on different channels. To make ecommerce work, a business needs to create a user experience on a given channel where customers can easily search for and buy products.

The typical process looks like this:

1. The seller sets up an online store: This is where the business chooses a platform, creates pages, and builds the experience customers will use.
2. Products are added to the store: Items are listed with names, images, descriptions, pricing, and availability so shoppers can understand what they are buying.
3. Customers browse and choose products: They search, filter, compare options, and move between pages until they find something that suits their needs. 84% of retailers now use AI to show relevant products, make personalised recommendations, and help customers discover items faster.
4. The customer completes the purchase: They add items to their cart, enter their details, select a payment method, and confirm the order.
5. The order is fulfilled and delivered: The business picks, packs, and ships the order, then updates the customer with tracking information. Many Australian shoppers now expect flexible delivery options, with 54% choosing in-store pickup .
6. Marketing and customer support keep the journey going: After delivery, businesses use email, social media, and customer service channels to answer questions and encourage repeat purchases.

The rise of digital trading has impacted almost every industry and business, from small mom-and-pop cupcake stores to enormous legacy media conglomerates. But just how beneficial has this rise been?

Let’s look at some of the advantages and disadvantages of ecommerce for businesses.

Ecommerce gives businesses more ways to reach customers and grow without traditional limits.

• Global reach: Brands can sell to customers anywhere, at any time, without relying on in-store foot traffic or standard trading hours. One in five Australian households now shop online weekly, up from 5% in 2018.
• Data collection: Online stores make it easier to understand buying habits, preferences, and behaviour, which helps shape targeted marketing and personalised experiences.
• Scalability: Adding new products or expanding into new markets is faster and cheaper online, without needing extra physical space.
• Lower operating costs: Running a website is often more cost-effective than maintaining a physical store, helping businesses reduce overheads.

Despite the benefits, ecommerce brings a new set of risks and pressures that businesses need to manage.

• High competition: Local popularity doesn’t always translate online. Competing with dozens or even hundreds of similar businesses can make visibility a challenge. We found that 74% of shoppers switched brands in the past year.
• Price pressure: Shoppers can compare prices instantly, which makes it easier for competitors to undercut you and harder to maintain margins. Of the 74% of shoppers who switched brands, 62% of them did so to save money.
• Security concerns: Handling customer data comes with responsibilities. Without strong protection, businesses face cyber threats, reputational damage, and potential fines.
• Technology dependence: Ecommerce relies on platforms, integrations, and systems working smoothly. When something breaks, it can interrupt sales and harm customer trust.

Businesses have plenty of options when it comes to choosing ecommerce software. The right for you will depend on your size, the products you sell, and how much control you want over design, payments, and integrations.

Below is a quick summary of popular platforms and what they are best suited for, starting with Agentforce Commerce, the leading AI-powered option for Australian businesses.

Australians love online shopping, with one in five households now making a purchase online every week. Due to that, we have plenty of homegrown examples to inspire you and share what's possible.

Booktopia is one of Australia’s most established online retailers, starting in 2004 as a small family-run business with a $10-a-day budget . It has since grown into one of the country’s largest ecommerce brands, processing millions of orders each year from its Sydney fulfilment centre.

While it began as a dedicated online bookstore, Booktopia now offers a wider range of products, including gift guides and accessories to help people enjoy their reading (or listening) experience.

A key part of Booktopia’s resilience has been its move to expand beyond physical books. Today, it also sells ebooks and audiobooks. This mix of physical and digital products has kept them as the biggest 100% Australian-owned and operated online bookstore.

The Lullaby Club is an Australian-owned clothing retailer that launched in 2019 with a focus on comfort, slow fashion, and inclusive sizing. Their brand has skyrocketed as it saw a clear gap in clothing that felt good through pregnancy, breastfeeding, and everyday life.

A big part of their growth has come from their community engagement. They lean heavily into social media and user-generated content, with more than 200,000 Instagram followers.

They also build strong momentum through small-batch releases. Since each piece is produced ethically and in limited quantities, new drops feel exclusive and tend to sell quickly.

This mix of thoughtful design, intentional scarcity, and community-led marketing has helped The Lullaby Club become one of Australia’s most recognisable homegrown fashion success stories.

R.M.Williams is one of Australia’s most recognisable heritage brands, founded in 1932 and known for its boots crafted from a single piece of leather in its Adelaide workshop. After a global expansion, the brand's ownership returned to Australia in 2020, with plans for a new chapter focused on digital transformation.

Salesforce has been a core partner in this new chapter. With AI, data, and CRM tools at the core of their ecommerce store, R.M.Williams can deliver the same personalised sales experience online that customers receive in store.

Noticeably, after rebuilding its ecommerce site using Agentforce Commerce’s Storefront Reference Architecture (SFRA), R.M.Williams saw an immediate improvement in performance. The updated site created a faster, smoother mobile shopping experience, which helped lift online conversion by 20%, increase average order value by 10.27%, and grow online revenue by 34%.

Whether you sell products directly to customers or sell services to other businesses, there’s an ecommerce model for you. Here are some of the different types of ecommerce businesses to consider before launching your online store.

Business-to-consumer (B2C) ecommerce refers to selling goods or services to individual customers. B2C is what most people think of when they hear the term “ecommerce business.” This is the model used by the large Australian ecommerce fashion retailer, The Iconic .

Traditional B2C sales occur between a business and a single consumer. In this model, a shopper finds a business online and places an order, and the business sends the product to the customer. A B2C ecommerce strategy, then, involves using customer data to get a full view of customers across their online shopping journeys.

B2B ecommerce refers to selling products or services to businesses. B2B companies typically have a higher order value and more recurring purchases.

B2B ecommerce products and services may include manufacturing equipment, distribution, website hosting services, financial services, or software solutions for businesses, just to name a few. These businesses provide other businesses with the products or services they need to grow. One well-known B2B company in Australia is Officeworks , which sells office supplies directly to businesses.

Like B2C, the D2C ecommerce customer is an individual consumer. The difference is that D2C allows manufacturers to sell directly to consumers instead of (or in addition to) using third-party retailers or wholesalers. The Australian mattress company Koala uses this model to sell at a lower price point to its customers.

While B2B, B2C, and D2C are the three you’ll be most familiar with, there are several more niche business models you should know about:

• Business to business to consumer (B2B2C): B2B2C involves selling products or services to another business that sells them to the end consumer. Think of a company that sells its products to online retailers who put those products in their stores. One example of this is Stylus Tapes , a company that sells tape to distributors, who then sell it on to end-users.
• Business to government (B2G): B2G entails providing goods or services to government agencies or public sector organisations. Companies often need to bid to acquire the government as a client and adhere to strict regulations. Salesforce uses the B2G model with our Agentforce for Public Sector software.
• Consumer to business (C2B): Involves an individual selling their product or services to businesses. An example is a freelancer offering their copywriting skills to brands on a site like Upwork .
• Consumer to consumer (C2C): A consumer selling to another consumer. These ecommerce transactions usually occur in online marketplaces, such as eBay or Facebook Marketplace.
• Dropshipping: This method lets a business sell products that it doesn’t have in stock. When a customer orders, the business forwards the information to a supplier, who ships the product directly to the customer. The store only handles the customer experience.
• Subscription: This model lets customers pay a recurring fee (normally monthly or annually) to access a service or product. Many people have multiple subscriptions, be it for services like Netflix or physical products like GoodnessMe .

How do you go about starting an ecommerce business? This guide will provide you with a solid foundation that you can use to build out your idea.

Before you can start launching an online business, you need to know what products you want to sell. We suggest you identify a problem before you develop the solution. Ask yourself:

• What pain points are customers facing that I can help to solve?
• Why are they having these pain points?
• What product or service could I provide that could help to solve this problem?

With a product idea in mind, you’ll want to validate it. You need to go through a process to make sure you aren’t wasting your time. Here’s what you need to do:

• Identify your target audience: Who is your target customer for your product? Create your ideal customer persona (ICP). This will be the backbone of every other decision you make while creating your business.
• Talk to the audience: Reach out to your audience and talk to them about the pain points you’ve identified. This will help you work out if your product is something they need.
• Learn your competitors: Check your direct competitors. Is there anyone else doing something similar to you? If so, you need to know about it so you can work out how to beat them.

Got a product that you’re confident will work? Now you need to know how to obtain it. There are a few different approaches here:

• Create them yourself: Making your products yourself gives you control over quality, but this is only really helpful for small businesses.
• Partner with a manufacturer: Working with a manufacturer takes time to set up, but once you’ve established your partnership, it’s one of the most affordable ways to create your products at scale.
• Rely on dropshipping: Dropshipping is an excellent opportunity if you don’t want to worry about demand forecasts and inventory management. It involves relying on third parties to ship your products whenever you make an order.

Now, it’s time to create your ecommerce platform. The best place to start is with a business plan. Here are some of the things you’ll need to include.

Basics first. Specify all of the essential details about your business:

• Executive summary: An overview of your business idea, your target market, and your goals.
• Business name: Take the time to come up with a relevant, memorable name for your company.
• Mission, vision, and values: Why are you developing this business, and what values do you stand for?
• Business model: Are you opting for a B2B or B2C model? Are you intending to use dropshipping? Will you be operating on a subscription model? This will inform your sales channels.
• Profit centres: How will your business make money? Lay out different revenue streams clearly within your plan.

Who are you aiming your products at? Understanding your target market will inform everything from your product positioning to your marketing strategies.

Your market research can help with this. Create an ideal customer profile (ICP) that explains your perfect buyer. You should be able to answer important questions like:

• What demographics are you aiming your product at?
• Where does your ideal customer work? What’s their income?
• Where do they live? Urban? Rural? Hot or cold climates?
• What does your ideal customer believe in? What are their motivations?
• What are the challenges your customers are facing?
• What is your customer's shopping behaviour?
• What kind of technology does your target audience use?
• What are your customer expectations? What do they need from you?

There is no right or wrong way to create your customer profile. But the more detailed you can be, the better.

Who do you need on board to bring your vision to life? List all of the stakeholders you need to achieve your goals:

• Do you need any co-founders on board to guide the strategic direction?
• Will investors be necessary? If so, you should clearly outline your needs.
• Which manufacturers do you intend to work with, if any?
• Do you need employees to handle specific day-to-day operations and provide ecommerce customer service?
• Will you be working with suppliers?
• How will you work alongside regulatory bodies and policy setters, especially if you’re considering cross-border ecommerce?
• Will you need to approach financial institutions to secure a business loan?
• Do you intend to involve the local community in your business?
• Is your goal to work with a retailer?
• Do you need to partner with a distributor to help your product reach customers?
• What supply chain management professionals do you need to work with to make sure your product reaches the end consumer?
• Are there any tech providers or ecommerce software solutions you should contact for your online commerce platform?

Defining these stakeholders in your business plan will give you a roadmap for building your business. It will also help you set realistic expectations about the relationships you need to build to realise your vision.

Lastly, you need to talk about finances. The aim here is to show the profitability of your business. Here are the components you should aim to include:

• Sales budget: A sales budget is a document that outlines the profit you anticipate making over a specified period based on your unit prices and expected sales.
• Expenses: Create a forecast outlining all of your predicted expenses. Investors and banks will want to know that you can produce the goods and services you’re forecasting to sell. Define all of the startup costs, as well as the running costs.
• Cash flow forecast: Create a cash flow statement that outlines all the money you expect to come in and out of the business over the coming year. You can estimate this based on your costs of production and expected profit. It’s important to be realistic here.

Your business plan will guide you strategically as you begin building your brand and marketing. It’s also absolutely essential for getting key stakeholders on board with your project.

Every successful digital commerce business has a potent brand image. You will need:

• A memorable logo
• A distinct brand font
• A slogan or value statement
• Brand colours for your designs
• A brand voice (personable, authoritative, trustworthy, technical)
• Any additional brand imagery to set you apart

The goal here is to give personality to your business. From the outset, you need to tell your consumers how they should feel when they interact with your website. This step will help you design everything from your ecommerce website right down to your shipping labels.

A strong website is the cornerstone of a successful ecommerce business. Start by choosing a content management system (CMS). WordPress is the most popular, but you can also opt for a website builder.

As you build your site, here are a few things to keep in mind:

• Choose a domain name that reflects your brand name.
• Prioritise your users’ experience. Make sure your site is fast and easy to use.
• Use a unique brand font and choose your brand colours wisely to reflect your brand style.
• Source high-quality imagery, but make sure these images will load quickly enough to avoid users clicking off the page.
• Set up an online payment gateway, such as PayPal, Stripe, or Worldpay, to give customers secure ways to buy your products. It’s best to establish several payment processing options to give consumers more choice.

Ready to sell? If your customers don’t know you exist, they won’t land in your shopping cart, no matter how great your product is.

Your ecommerce marketing strategy will help your target audience find your ecommerce store. The first step is to take stock of your ideal buyer persona. How does your audience find things online? What are they looking for?

From there, you can take a few different digital marketing approaches depending on your audience’s needs:

• Website content: Creating informative SEO-friendly blog posts can help customers find you organically online. When they search for a query that you’ve written about, they can find your content and learn about your business.
• Social media: Instagram and TikTok can help you engage younger demographics. Show a sneak peek of your brand, or invest in influencer marketing to spread the word faster.
• Email marketing: Designing an email newsletter can help push consumers down your online sales funnel. They’re a great way to build long-term customer relationships and foster loyalty.

There’s no shortage of ways to market your local or global ecommerce brand, but these are a few ideas to help you get started and grow your business.

To understand where ecommerce is heading, it’s worth looking at the forces affecting how customers shop.

You’ve heard it before, but it bears repeating: Generative and predictive AI are changing the ecommerce game. They’re making teams more productive and giving them new and valuable ways to engage with customers.

Thanks to AI trained on large language models (LLMs) and historical business data, tasks that used to take your teams days or weeks now take just hours. For example, generative AI can automatically write accurate, detailed product descriptions. With low-code generative development tools, business users at all skill levels can create landing pages and localised sites with less time and effort. Ultimately, new technology means that ecommerce teams can work smarter and faster.

AI is also improving the customer experience. Remember when chatbots could answer only a few select questions? Now, their conversations are more human, more personalised, and more helpful.

Chatbots trained on LLMs can guide shoppers to specific products based on their purchase history, preferences, and past searches. The bots can also answer more complex questions, such as: How does this blouse fit? Does it run true to size? Businesses can significantly boost their bottom line and customer satisfaction by providing these tailored experiences in real time and at scale.

Customers want to shop, however, wherever and whenever they like. This means online, offline, and, increasingly, in spaces like messaging apps, voice platforms like Amazon’s Alexa, or social media. In the future of commerce, new channels will crop up. Businesses that find ecommerce successful will move quickly and engage customers in new spaces as they emerge.

Customers use multiple channels to browse products and shop online, and businesses must ensure a cohesive omnichannel experience. That’s the purpose of unified commerce: It means all your back-end systems are connected with your customer-facing channels. This creates a seamless customer experience, whether a shopper visits your website, mobile app, social media, or anywhere else.

We know that customers already want personalised experiences. In fact, 53% of them expect companies to anticipate their needs. As AI improves the shopping experience with predictive intelligence and natural language processing, customers will notice which brands are doing it right. A staggering 81% of customers expect faster service as technology advances, and 73% expect better personalisation.

Ecommerce is a proven business model that helps drive revenue growth for some of the world’s largest brands. By getting started with online commerce, you’ll reach more customers online and significantly increase your business revenue.

Ready to embark on your ecommerce journey? Start here:

• Learn how to prepare your business for ecommerce success. Get the step-by-step guide to organise your teams, goals, and road map for a painless digital transformation.
• Want to get started quickly? Consider a minimum viable product approach. It’s one of the fastest ways to get a commerce site up and running.

Explore flexible tools to help you reduce costs, increase sales, and adapt quickly. To grow your revenue online, check out all Agentforce Commerce has to offer.