How E-commerce Actually Works

Most marketplace sellers source products in one of three ways. Wholesale or distribution means buying existing branded products from an authorized distributor and reselling them. Brand-direct means working with a brand, often as its marketplace seller. Private label means having a manufacturer produce a product under your own brand.

Whatever the route, the key number is landed cost: the product price plus freight, duties if importing, prep and delivery to the warehouse. A product that looks cheap at the factory can be unprofitable once it's landed. Lead time matters too — how long between placing an order and having sellable stock.

When stock arrives it's received: counted against the purchase order, checked for damage, and put away in a known location. From then on, every unit is tracked — because the stock number on each marketplace comes from the warehouse count.

Sellers have two broad choices here. Seller-fulfilled means you (or your warehouse) store and ship the inventory. Marketplace fulfillment — Walmart Fulfillment Services (WFS) or Fulfillment by Amazon (FBA) — means sending inventory to the marketplace's own warehouses and letting them ship. Many stores use a mix.

A listing is the product page: title, images, attributes, description, price and shipping promise. Each marketplace has its own content rules and category requirements, and incomplete or inaccurate listings can be suppressed — hidden from search — without much warning.

Price is part of the listing. It has to cover product cost, the marketplace's fees, shipping and an allowance for returns, and still be competitive. That's why pricing is a calculation, not a guess.

The marketplace takes the customer's payment and passes the order to the seller with a ship-by date. Missing it hurts the seller's performance metrics. The marketplace pays the seller later, after deducting its fees.

Stores selling on more than one marketplace need one view of all orders and one inventory count — otherwise the same last unit can sell twice.

The item is picked from its location, packed in the right box or mailer with protection, labeled with a carrier label, and handed off. Tracking is uploaded to the marketplace so the customer can follow the package.

Choosing the carrier and service is a trade-off between speed and cost. Packaging matters too: the wrong box size can raise the shipping price, and poor protection leads to damage and returns.

When the package arrives, tracking confirms delivery. Marketplaces measure on-time delivery, valid tracking and cancellations for every seller. Strong numbers help keep listings visible; weak numbers can limit them.

Some orders come back. A clear returns process — receiving, inspecting, restocking or writing off — keeps both customers and inventory counts in order.

Revenue minus product cost, marketplace fees, shipping, packaging, returns and advertising is what's actually earned. Tracking this per product shows which items deserve more inventory and which should be cut.

Sales speed and supplier lead time together decide when to reorder. Reorder too late and listings go out of stock; too early and cash sits on shelves. Then the cycle starts again at the supplier.