E-commerce means buying and selling goods or services using the internet. It matters because many businesses now reach customers through websites, apps, online marketplaces, and social media shops. For students, e-commerce connects business basics with real skills like budgeting, pricing, data analysis, marketing, and customer service.
Understanding it helps you see how a digital storefront can become a real business model.
Key Facts
- Revenue = price per item x number of items sold
- Profit = revenue - total costs
- Conversion rate = purchases / visitors x 100%
- Average order value = total revenue / number of orders
- Gross margin = (revenue - cost of goods sold) / revenue x 100%
- Customer acquisition cost = marketing cost / number of new customers
Vocabulary
- E-commerce
- E-commerce is the buying and selling of goods or services over the internet.
- Online storefront
- An online storefront is a website or app page where customers view products, prices, descriptions, and checkout options.
- Conversion rate
- Conversion rate is the percentage of visitors who complete a desired action, such as making a purchase.
- Payment processor
- A payment processor is a service that securely handles digital payments between customers, banks, and businesses.
- Fulfillment
- Fulfillment is the process of receiving an order, preparing the product, and delivering it to the customer.
Common Mistakes to Avoid
- Confusing revenue with profit: revenue is the money collected from sales, but profit is what remains after costs are subtracted.
- Ignoring shipping and transaction fees: these costs reduce profit and must be included when setting prices.
- Assuming more website visitors always means more sales: traffic only helps if the store has a strong product, clear information, and a good conversion rate.
- Collecting customer data without a clear purpose: data should be used responsibly to improve service, measure performance, and protect customer privacy.
Practice Questions
- 1 An online shop sells 80 T-shirts for 950, what are the revenue and profit?
- 2 A store has 2,500 website visitors in one week and 125 purchases. What is the conversion rate?
- 3 Two online stores sell the same product at the same price. Store A offers faster shipping but higher shipping fees, while Store B offers free shipping but slower delivery. Explain how different customers might choose between them and how each store could improve its offer.