Only a few decades ago, the concept of ecommerce was an entirely novel one. Today, ecommerce has become a trillion-dollar industry transforming the way we shop and live.
It all started with the introduction of teleshopping and Electronic Data Interchange (EDI) in the 1970s allowing businesses to replace their traditional mail with digital ones and in the 1990s continued to evolve, leading to the rise of popular online marketplaces like Amazon and eBay.
In this article, we will turn the clock back in time to see how ecommerce all began from a mere thought into an industry that has become an integral part of our lives.
What is ecommerce?
Ecommerce or electronic commerce refers to the selling and buying of products and services on the internet.
Businesses and brands set up an ecommerce store or website, list their products, and sell them to online shoppers. When a shopper buys the product, they accept payment, process the order, and ship it to their customers.
Unlike brick-and-mortar stores, sellers can put their products in front of millions of customers beyond their geographic area and capture unique markets.
On the flip side, customers can sit at home, choose a product they want, and have it delivered right to their home.
Let’s explore the timeline of ecommerce from its humble beginnings to its present-day global dominance:
The 1960s to 1980s - Invention and the early days
Ecommerce goes all the way back to the 1960s with the introduction of Electronic Data Interchange (EDI) which changed how businesses operate. EDI allowed businesses to replace traditional mail and faxes with digital options. Businesses could now communicate with their suppliers and partners using EDI networks.
Then came 1965 which was the beginning of network communication across a wide area. MIT Professor Lawrence G. Roberts successfully connected a computer located in Massachusetts to a computer located at Standford Research Institute. This was a groundbreaking project that eventually paved the way for the creation of ARPANET in 1969. This was the first version of what we know today as the Internet.
However, it wasn’t until the 1970s that two innovations emerged, paving the way for ecommerce. The first innovation was the Shopping Cart concept by a computer scientist, Michael Aldrich. The second innovation was the Electronics Funds Transfer (EFT) created by the Barclays Bank Research Group. Both innovations made it possible for people to add products to a cart and transfer payment data securely, building a solid foundation for modern ecommerce.
Moving into the 1980s, many companies began adopting computer technology to carry out business operations like tracking inventory, managing transactions, and interacting with customers.
The 1980s to 1990s - Online marketplaces and ecommerce platforms emerge
The 1980s saw the rise of the Internet as a powerful platform for commerce.
Technically, the first ecommerce company was Boston Computer Exchange founded in 1982. The platform was an online marketplace that helped facilitate the sales of used computers.
Digital marketplaces like CompuServe and The Source also emerged to facilitate the electronic trade of goods and services.
The World Wide Web emerged in 1991, opening up a new era of what we call ecommerce today. Many companies began to embrace the World Wide Web, creating websites and online stores to promote their products online.
The 1990s to 2000s - Growth and the rise of major marketplaces
Following the introduction of the World Wide Web and the beginning of the digital era, many opportunities began to spring up for businesses online. First, Tim Berners-Lee and Robert Cailliau pioneered the groundbreaking World Wide Web project, which introduced the URL, HTML, and HTTP.
In 1992, Charles M. Stack launched Book Stacks Unlimited which was originally a bulletin board that later was launched as an online marketplace.
Before Google ever came to be, the first web browser called the Netscape Navigator was launched in 1994 by Marc Andreessen and Kim Clark, being the major browser on Windows. Netscape’s development of Secure Socket Layers (SSL) was an elevation in the safety of internet data transmission. So, customers could transact safely online.
Following this was the emergence of two ecommerce giants as we know today. The first is Amazon which Jeff Bezos launched as a platform for books in 1994. By 1998, Amazon had become the largest online retailer. Today, Amazon is the largest online marketplace and has expanded from just books to other products and services including cloud computing and artificial intelligence.
The second was eBay founded by Pierre Omidyar in 1995. It started as an online auction platform and has now evolved into one of the largest marketplaces with a global presence.
In 1999, PayPal was launched as the first eCommerce payment system. Alibaba also launched in 1999 as an online marketplace and has today become one of the largest platforms for ecommerce businesses. Other platforms like Etsy and Shopify launched in 2005 and 2006 respectively.
In 2005, Amazon launched the Amazon Prine which allowed customers to get free two-day shipping for an annual flat fee. Amazon Prime became popular and paved the way for fast shipping by other merchants.
The first online transaction
The first ever online transaction happened on August 11 1994 and was a historical moment for ecommerce.
Mark Stephen Meadows, a computer scientist researcher, bought a CD of Sting’s from his friend, Dan Kohn’s online record store in Philadelphia. This was the first recorded online transaction that was done without any physical transactions.
The 2010s till date - Continous growth and innovation
The ecommerce industry saw the rise of many ecommerce platforms and innovations that facilitated the rise of the ecommerce industry. WooCommerce, Google Wallet, Apple Pay, Stripe, and other innovations began to spring up.
One notable innovation during the 2010s was the rise of mobile commerce or m-commerce. Consumers became more comfortable shopping online and embraced it using their smartphones.
Social media platforms also began to create features that facilitate online shopping. Facebook introduced the earliest form of advertising to Business Page owners and Instagram also included Shoppable Instagram in 2016.
Ecommerce continued to experience growth until 2020, when the Covid-19 global pandemic changed consumer perception towards ecommerce. Consumers couldn’t go to physical stores and turned to online shopping as the primary way to get the products or services they needed. This led to explosive growth which brought some businesses over 500% ecommerce sales growth.
Not only did the global pandemic impact ecommerce sales, but it also changed consumer behavior and necessitated the fast innovation of technologies to meet consumers’ ever-changing needs
To provide seamless shopping experiences, we have seen the adoption of multiple delivery options, payment options, fulfillment options, and so on to meet customer demands.
Social media networks like Facebook, Instagram, and Twitter have created opportunities for ecommerce businesses to interact with their customers and build an online community that facilitates the growth of their brand.
The rise of mobile commerce
In recent years, mobile commerce has been on the rise with many consumers using mobile devices to shop for their favorite products and services.
Mobile commerce has made it easy for consumers to shop for more products on the go. It has also led to the development of new features and technologies like augmented and virtual reality as well as personalized shopping.
Businesses have also had to adapt to this change by creating mobile-friendly websites and apps.
Payment platforms like PayPal and Stripe have also designed their product for mobile shopping, making it easy for consumers to make payments using their mobile devices.
Mobile commerce has also increased competition among businesses that seek to meet the ever-changing demands of their customers.
The future of ecommerce
What is likely to happen with ecommerce in the future? What new innovations will emerge? Well firstly, ecommerce is here to stay.
As consumer behavior and needs become increasingly complex, the need for innovative technology like Artificial Intelligence (AI) and machine learning will continue to be utilized to provide more personalized shopping experiences.
Virtual Reality (VR) is also becoming a major game changer in the way customers shop for products. With VR, businesses can provide virtual tours and provide customers with a more memorable shopping experience.
Voice-based shopping using virtual assistants like Alexa and Google Assistant has and will continue to become increasingly popular.
In the area of payments and security, we will see more Blockchain technology to help consumers make secure payments and reduce fraud. Blockchain technology can also allow customers to make secure payments using cryptocurrencies.
Ecommerce has gone through an interesting evolution right from the 1970s when it started as merry online catalogs.
Today, ecommerce has become a global industry with limitless opportunities for both businesses and consumers.
As we already discussed, the future is nothing but exciting as many more trends and innovations spring up to provide convenient ways for customers to shop for products and services and give businesses the opportunity to expand their reach.