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An ecommerce store is an online store that allows shoppers to browse and purchase products over the Internet, without leaving the comfort of their homes. Customers can usually search for specific items using keywords, or browse items in a specific category on a website. An ecommerce storefront generally includes product pages, search features, category listings, and a secure credit card payment gateway.
Online store owners will need build a website and purchase secure ecommerce store hosting services. To accept credit card payments, the store owner must apply for a merchant account with a credit card processor, and purchase a secure online credit card gateway. Each part of an ecommerce store setup usually has its own set of fees and vendor contract requirements.
Once the customer decides to purchase the product, he clicks a button to add it to an electronic shopping cart. When he is ready to checkout, the customer clicks a button to go to a secure payment page to input his name, credit card information, and shipping address. All order information is then encrypted and sent to the store’s fulfillment center, to complete and ship the order.
The idea of a secure ecommerce store was first made possible in 1995 when Netscape® introduced the first secure socket layer (SSL) Internet protocol. Using SSL, customers' credit card information, and other private details, is encrypted before it is sent out over the Internet to the ecommerce store's server. Some of the first and most famous ecommerce stores that use electronic payments include Amazon.com® and eBay®.
Other electronic store components, such as electronic data interchange (EDI) and electronic funds transfer (EFT), have been in use since the 1970s. Using EDI, companies can send electronic documents, such as invoices, to and from specific computers that share a secure connection. EFT allows companies to make payments to each other electronically. The addition of the Internet, SSL, and third-party online credit card processors led to ecommerce store growth throughout the late 1990s.
An ecommerce store has some distinct advantages over a brick-and-mortar store. There is less overhead, since no physical store needs to be open and staffed with employees. Advertising an Internet store using online tactics is also less expensive than using traditional print, television, or radio marketing. Customers can also easily compare prices and product features on a website.
Challenges that some ecommerce store owners face include the cost of shipping items out and return shipping. Also, customers cannot actually see or touch the merchandise they wish to buy. An item that looks good in a photograph online may look different in person. Although payments are secured using SSL encryption, Internet fraud and identity theft are still major concerns for many online shoppers.
Shoppers who want to see merchandise in person or are concerned about sending credit card information over the Internet still have plenty of retail stores from which to choose. Customers who want to shop at home without a computer can also shop by direct mail catalog. Catalog orders can be placed by phone or mail. These customers may still use ecommerce stores to compare product features and pricing.