How do Ecommerce Websites Work?
Often when I design a client’s eCommerce website at Urban Moon, they have questions about the workings of the website. So I am writing this article to explain everything in detail about how an eCommerce website works.
How do eCommerce websites work? E-commerce websites work through a back-end system in which the admin uploads the products and their categories, pricing, etc. The customers select the product(s) and place their orders on the front end. Payment is processed through a third-party payment gateway, while fulfillment is usually handled separately, outside the system.
The working of an Ecommerce website varies from simple to advanced and you can decide which functions you want to handle within the system and which ones outside. In order to make an informed decision, you must know the nitty-gritty of how different parts of the website work which I cover in detail in this article.
The working of an Ecommerce website
Most eCommerce websites that are built on an LMS like WordPress have a rather simple basic functionality. First and foremost, the admin or the website owner creates the product listings at the back end. Let’s see some of the nuances involved in creating the products as an admin on an eCommerce site.
The simplest products are the ones with a single specification like size and color. Thus, for simple products, the customers do not have the option to select the category or the size. There is only one category and one price for such products.
The admin also has the option to give discounts on products to attract better conversions. In other words, the admin can input the regular price and the sale price at the back end. These products appear on the front end of the website with a little ‘Sale’ mark and the regular price struck out, which often entices the target audience and leads to conversion.
Then there are options to create variable products, in which you can have multiple categories like size, color, specifications, etc. You can assign a different picture, price, and discount to each category. For example, if the customer selects a white T-shirt, they will see the picture of the white T-shirt which is priced at $14.99. However, if they select the black color of the same T-shirt, they will see a different picture of a black T-shirt, priced at $16.99.
For receiving payments, you can integrate Stripe with your website. You need to install a plugin called WooCommerce Stripe Payment Gateway and input the API key that you get from your stripe account. This is a very convenient way to receive payments directly into the bank account linked to your stripe account. On the front end, your customers get the option to pay through Debit Cards, Credit Cards, and even Google Pay. You can also enable other payment options like cash on delivery or direct bank transfer under the settings of your website.
Once you receive the order, you need to think about fulfilling the order. In case you are selling physical products, you either need to store your own inventory and ship the products to the address every time you receive the order. Or you can use drop shipping, where you deliver the items directly from a third-party manufacturer or wholesaler to your customers.
However, in the age of the internet, it is probably more convenient and profitable to sell digital products. In such cases, you do not need to worry about the shipping part, and the whole process is virtually automated. Once your customers place their orders and make the payments, they get direct access to the digital product, like software, an online course, eBook, etc.
How do eCommerce websites handle incoming orders?
In popular eCommerce plugins like WooCommerce, there are various types of emails that the system triggers upon events like order placement. There are emails for the admin or the owner of the site, and there are emails for the customers. You can customize the content and format of these emails and add graphics, colors, or other info as desired.
There are emails that the admin gets whenever there are new orders or canceled orders or failed orders. Simultaneously, the customers also receive emails notifying them of events like your ‘order being processed’ or ‘order shipped’ or ‘order completed’ etc.
Also, whenever a new order is received, you as the admin can view it at the back end of your website under the orders tab. The WooCommerce, for example, shows each individual order entry, the date, the amount, and the status like processing, on hold, or completed, etc.
Clicking on the order in this list will show you all the details of the items within the order. Here you can manually update the status as the order progresses, for example, you can mark it as completed once the customer receives the product, or you can mark it as canceled if the customer wants to cancel it, and so on.
How do eCommerce sites handle the inventory?
In the inventory section at the back end of your eCommerce website, there is an option to input the stock quantity. You can enter the number of units of a particular product you have in store, and your customers can only order within that limit. You can also enable the stock quantity to be displayed in the front end so that the customer does not select more than that quantity while ordering. When a customer places an order for a certain quantity of the product, the stock quantity is automatically reduced by that number.
However, there is also an option to enable backorders. This basically means that the customers are allowed to order even more than the stock quantity. In such cases, either the customers are notified that the quantity that exceeds the stock quantity will be delivered as a backorder. You can even choose to accept backorders without even notifying the customers. This option is suitable if you have suppliers that can quickly fulfill the excess quantities. If that is not the case, it is advisable to disable back orders and only allow customers to order within the stock limits, else your customers’ experience will suffer.
Further, there is also an option to set your low stock threshold. Your low stock threshold decides the lower limit of stock that you might want to have, after which you refill the stocks. For example, if you normally keep 50 units of T-shirts in your stock, you can set the low stock threshold to 10, and whenever the stock quantity goes below 10, the website will send you an email notification asking you to refill your stock.
How do eCommerce websites get traffic?
Well, eCommerce websites get traffic from the same sources as most other websites. The most common way through which eCommerce websites drive traffic is through social media ads and Google Ads. Most users click on ads in the spur of the moment and end up on the website. A percentage of this traffic gets converted and you make your sales. If you can optimize your ads and make them profitable, you can build a successful business.
Other ways in which eCommerce businesses get their traffic is through content marketing, building subscribers and followers on social media, and word-of-mouth marketing. Whichever method you choose to drive traffic to your website, you should make sure it is sustainable in the long run. It is also important to diversify your traffic sources over time so that any changes in any of the platforms do not make you lose your business overnight.
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