How Ecommerce Works

In the not-so-distant past, the idea of shopping free of time, distance and currency constraints was pure science fiction. That is, if anyone even bothered to consider such a far-fetched notion at all.

Today, you can do exactly that—on a device small enough to hold in your hands.

And, while ecommerce has grown by leaps and bounds since the first online transaction was conducted back in 1994, few people really understand how ecommerce works.

Given you’re reading this, you might well be among them.

However, that’s about to change.

Read on.

The Basics

So, what is ecommerce? Shopify, one of the leading providers of online storefront platforms, defines it as the buying and selling of goods or services using the internet, along with the transfer of money and data to execute these transactions.

This means you can shop sitting at home, on a bus, train, boat or plane—or even walking down the street. You simply touch a picture of an item on a screen, transmit your credit card number and the object shows up at whatever address you designate.

This, in a nutshell, is ecommerce.

How Ecommerce Works

The Process

OK, let’s say you’re watching the James Bond film “Spectre” and his Omega Seamaster watch catches your eye. You don’t know it’s a Seamaster; you just like the look of the watch. So you run a web search for “James Bond’s Watch in Spectre”. The result leads you to Amazon, where several different versions of the Seamaster are on offer.

When you click on the one you want, your web browser communicates with the server hosting the ecommerce site upon which the watch is being sold—in this case, Amazon.

That server then sends your order to another computer tasked with managing the store’s transactions from processing to submission to dispatch. Confirming the watch is in stock, that machine then communicates with a payment gateway to obtain and process your credit card information.

The gateway checks with a computer at your bank to ensure you have the wherewithal to make the purchase (Seamasters aren’t cheap—OK?). Confirming you have the means, the gateway authorizes the managing computer to proceed with the transaction, which, in turn,notifies the server upon which the ecommerce site resides.

That machine then tells your browser the purchase has been made and issues an email with the details of the transaction to the address you provided.

The managing computer also sends a notice to send the watch to you to the computer in the “store’s” warehouse. That machine slates the watch for shipment and sends a notice to the delivery service to come pick it up. A tracking number is also issued and forwarded to you so you can monitor the progress of the watch as it makes its way to your designated delivery address.

If you requested overnight shipping, the watch arrives the next day and you become the proud owner of a copy of the Omega Seamaster you saw Daniel Craig wearingthe day before.

With Bond’s theme music playing in your head, you make an unboxing video and post it to You Tube—setting yet another series of computers into action.

Shopping Has Changed Forever

That, of course, is a highly simplified explanation of how ecommerce works.

However, as you can see, the convenience for shoppers is heretofore unrivalled. In days past, you would have had to call all over town to find a store with the watch in stock. Then, you would have to drive over there to buy it— dealing with traffic, parking and all of the other issues that go along with brick and mortar shopping.

Ecommerce has rendered all of these actions moot,plusit has lowered prices by putting every merchant in the world in competition with one another.

And to think, it all started with the sale of one CD back in August of 1994.

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