An online store is a website or app where customers buy products or services. It’s the foundation of the ecommerce market, which is expected to reach $3.89 trillion in revenue in 2026. Online shops are supported by a whole system that coalesces discovery, checkout, payments, fulfillment, and operations into a single flow.

Below, we’ll discuss what an online store is, how it works, and how businesses use it to sell goods and services online.

What’s in this article?

• What is an online store?
  
• How does an online store work?
  
• What features does an online store need to function?
  
• How do online stores accept and process payments?
  
• What can you sell through an online store?
  
• What types of online stores exist?
  
• What makes an online store successful at scale?
  
• How Stripe Connect can help
  

What is an online store?

An online store is a digital place where a business sells products or services directly to customers over the internet. It’s a website or app where people can browse what’s for sale, place an order, and pay for it without being in the same physical space as the seller.

How does an online store work?

The online store system is designed to move a customer from discovery to payment to fulfillment with as little friction as possible. Here’s how the process unfolds.

Customer discovery

Shoppers arrive at an online store through search engines, links, ads, or direct visits. Then, they explore products through category pages, search results, and individual product pages that show pricing, availability, and other details. When a customer chooses an item, they can add it to a virtual shopping cart that keeps track of selected products—including quantities and options such as size and color—while the customer continues browsing.

Checkout initiation

Once the customer is ready to buy, they move to checkout, where the store collects necessary information (e.g., shipping details, contact information, and delivery preferences) in a structured flow. The store calculates totals behind the scenes, applying taxes, shipping costs, discounts, or promotions so the customer sees a clear final price before they pay.

Payment processing

After the customer enters payment details and confirms the purchase, the store’s payment system securely transmits the information to a payment processor, which facilitates the transaction. The payment processor checks with the customer’s bank to confirm the transaction is valid and that funds are available, then returns an approved or declined response within seconds.

Order confirmation

If the payment is approved, the store immediately confirms the order on-screen and typically sends a confirmation email or receipt. This marks the sale as complete. The store generally logs the order in its backend system, updates inventory levels automatically, and ensures the item isn’t oversold or miscounted.

Fulfillment and delivery

Depending on what was sold, the store might execute the next step in the flow, which could be granting access to a digital product, starting the shipping process for a physical product, or initiating a service or booking. Customers receive updates such as shipping confirmations, tracking information, and access instructions, which are all managed through the store’s systems. If something goes wrong, a store can provide mechanisms for support, refunds, or returns, keeping the entire transaction lifecycle tied to the original order.

What features does an online store need to function?

Many online stores rely on the same underlying capabilities to make buying easier for customers. Here are some of the functions shops typically need to have:

• Product catalog and pages: A structured way to present products or services with clear pricing, descriptions, images, options, and availability so customers can evaluate what they’re buying

• Navigation and search: Tools that help customers quickly find what they want through categories, filters, and keyword search, especially as the store’s catalog grows

• Shopping cart: A temporary holding space for selected items that allows customers to review quantities, options, and totals before checkout

• Checkout flow: A clear process that collects shipping, contact, and delivery details while minimizing cart abandonment

• Payment handling: Secure collection of payment information and transmission to a payment processor without exposing sensitive data or creating compliance risk

• Order management: A backend system that records purchases, tracks order status, and links each order to the correct customer and payment

• Inventory tracking: Automatic updates to stock levels as sales occur to prevent overselling and support accurate planning

• Fulfillment logic: Rules and tools to deliver digital products or help ship physical goods, including confirmations and tracking where relevant

• Customer accounts: Optional accounts that let customers save information, view their order histories, and make returns more easily

• Automated communication: Order confirmations, receipts, shipping updates, and access instructions sent without manual intervention

• Customer support pathways: Clear mechanisms for questions, refunds, and issue resolution tied back to specific orders

• Security, performance, and mobile support: Encrypted connections, reliable uptime, fast load times, and a convenient user experience on mobile devices

How do online stores accept and process payments?

Paying online might feel instant for customers, but each payment initiates a tightly coordinated set of actions behind the scenes. Here are the steps involved:

• Payment method selection: Customers choose how to pay at checkout. Credit and debit cards, digital wallets, and local payment methods are common options.

• Secure data capture: Payment details are collected through encrypted forms so sensitive information is never transmitted in plaintext.

• Authorization request: The encrypted payment data is sent to a payment processor, which routes the transaction to the customer’s bank to confirm the payment is valid and that funds are available.

• Approved or declined response: The bank returns a decision within seconds, which allows the store to either complete the order or prompt the customer to try another payment method.

• Order confirmation: Approved payments should prompt an immediate confirmation for the customer and lock in the order on the business side.

• Settlement of funds: Funds are captured and settled to the business’s bank account, typically in batches.

• Fraud and risk checks: Throughout this flow, automated systems help reduce potential fraud without interrupting legitimate purchases.

What can you sell through an online store?

Online stores can be used to sell a wide range of offerings. As long as a business can clearly define what’s being sold and reliably deliver it, the model generally works.

Here are the broad categories of what you can sell in an online store:

• Physical products: Tangible goods that are stored, sold, and shipped to customers (e.g., apparel, electronics, home goods, food products, cosmetics)

• Digital products: Files or access delivered online, including software, courses, media, design assets, and other downloadable or cloud-based products

• Services: Time- or outcome-based offerings such as consulting, professional services, tutoring, maintenance, and creative work, often tied to scheduling or booking systems

• Subscriptions and memberships: Ongoing access to products, services, or content sold on a recurring basis, typically billed monthly or annually

• Hybrid offerings: Combinations of physical, digital, and service-based products, such as hardware paired with software access or physical goods bundled with digital content

What types of online stores exist?

An online store’s structure shapes how its products are priced, sold, and delivered, as well as how the business grows over time. Here are the different kinds of online shops businesses can choose from:

• Direct-to-consumer (D2C) stores: Shops where businesses sell their own products or services directly to customers through a branded website. They often control pricing, customer data, and the end-to-end experience.

• B2B stores: Online stores designed to sell to other companies, often with features such as bulk pricing, negotiated contracts, invoicing, and account-based purchasing.

• Digital-first stores: Stores built entirely around digital goods or online services, where one-time fulfillment happens instantly through access, downloads, or account activation.

• Service-based stores: Shops focused on selling appointments, bookings, or project-based work. Scheduling replaces shipping.

• Marketplace-style stores: Platforms that enable multiple sellers to offer products or services through a shared storefront. The platform coordinates payments, payouts, and rules.

• Subscription-led stores: Stores for businesses centered on recurring revenue, where customers pay on an ongoing basis for continued access to products, services, or content.

• Hybrid stores: Stores that combine multiple models, such as physical products alongside subscriptions and services bundled with digital tools.

What makes an online store successful at scale?

To grow an online store, businesses must be prepared to solve problems early. Here are some traits many successful online stores have in common:

• Infrastructure that scales: The site stays fast, reliable, and available even during traffic peaks, promotions, or seasonal surges, without requiring manual intervention.

• Consistent customer experience: The store works just as well on mobile as on desktop and supports local languages, currencies, and payment preferences as it expands globally.

• Order efficiency: Inventory, fulfillment, and customer communication are automated enough to handle higher order volumes without rapidly increasing overhead or error rates.

• Payment systems built for growth: Payments continue to work reliably across countries, currencies, and volumes, with fraud controls and compliance handled in the background.

• Data-driven decision-making: The business uses sales, conversions, and customer data to refine pricing, improve checkout, and prioritize revenue drivers.

• Trust and reliability: Clear policies, accurate delivery timelines, and responsive support can help build confidence, which matters more as customer volume increases.

• Flexibility: The store can add new products, pricing models, markets, or sales channels without requiring a full rebuild.

How Stripe Connect can help

Stripe Connect orchestrates money movement across multiple parties for software platforms and marketplaces. It offers quick onboarding, embedded components, global payouts, and more.

Connect can help you:

• Launch in weeks: Use Stripe-hosted or embedded functionality to go live faster, and avoid the up-front costs and development time usually required for payment facilitation.

• Manage payments at scale: Use tooling and services from Stripe so you don’t have to dedicate extra resources to margin reporting, tax forms, risk, global payment methods, or onboarding compliance.

• Grow globally: Help your users reach more customers worldwide with local payment methods and the ability to easily calculate sales tax, value-added tax (VAT), and goods and services tax (GST).

• Build new lines of revenue: Optimize payment revenue by collecting fees on each transaction. Monetize Stripe’s capabilities by enabling in-person payments, instant payouts, sales tax collection, financing, expense cards, and more on your platform.

Learn more about Stripe Connect, or get started today.