E-commerce hosting is a business in which a company provides other companies whatever they need to sell their products and services on the World Wide Web - including a Web server to serve a company's pages, possibly the Web site design (including catalog pages), and the special capabilities needed to accept, process, and confirm sales orders. E-commerce hosting usually includes providing templates for building virtual storefronts or online catalogs, providing software for customized electronic "shopping carts," taking and filling customer orders, arranging for secure credit-card purchasing, and providing tools for tracking and managing inventory.
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Here's how it typically works:
A company contracts with an e-commerce hosting provider to purchase hosting space on its computer server. This space usually is billed monthly, along with any leasing of computer software for processing online orders. The computer server may be shared with other clients, or in the case of companies expecting a substantial amount of traffic, may be dedicated exclusively to one client.
To ensure secure payment processes, these providers also usually assist with setting up Internet merchant accounts, which are bank accounts established to process Visa, MasterCard, American Express and Discover credit-card transactions. Some hosting providers will register a company's domain name as part of the package.
E-commerce hosting firms customarily manage all the technical aspects of creating and maintaining a commercial Web site for its customers. For smaller companies, this is often more effective and cost-efficient than setting up and manageing their own e-commerce site themselves since they are essentially sharing the cost of expensive equipment and Internet connections with other companies.
An e-commerce hosting provider may also provide services other than managing online transactions, including EDI, the gathering of demographic or other information (usually for marketing purposes), or transactions between businesses (business-to-business e-commerce).