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The History of eCommerce

The History of eCommerce

It seems like online shopping has been around forever, yet the history of eCommerce is fairly short in timeframe.  Today, the sky is the limit to what you can purchase online, but let’s consider where it all began. The transformation of eCommerce has been astounding and continues to this day.  ECommerce has boomed in just the last decade and with it the volume and diversity of products and services that are offered.

When we think of eCommerce, we may focus on what it means respective of the B2C world, but it’s much more than that. ECommerce refers to all manners of conducting business online encompassing any form of products or services bought or sold over an electronic medium.

The Origins of eCommerce

Ecommerce emerged in the 1960s with ARPA (Advanced Research Projects Agency) commissioning the world’s first routers in 1968.  Within the next year, a network called ARPANET was created which ensured that crucial lines of communication could be maintained in the event of a nuclear disaster.  Three years later, researchers developed a new method for dialing into ARPANET using just a computer terminal. Terminal Interface Processor (TIP) eventually led to Transmission Control Protocol and Internet Protocol (TCP/IP), a familiar combination even in modern times.

This technology expanded the Internet from military bases and university labs to business offices. Companies used it to share business documents with one other, relying solely on Electronic Data Interchange (EDI), a digital information transfer technology that could replace mail and fax for sharing documents. This technology made it possible to transfer information from computer to computer seamlessly without the need for human involvement.

In 1979, English inventor Michael Aldrich pioneered what would eventually become known as eCommerce by connecting television and telephone lines. The story goes that Aldrich thought of the idea while on a walk with his wife, lamenting the inconvenience of making regular trips to the market. Wouldn’t it be so much easier if you could just order what you needed through the TV?

Shortly, thereafter, he invented a system that advertised goods and services on television, giving viewers the ability to call into a processing center to place orders. Aldrich called his system “teleshopping” and eCommerce was born.

eCommerce evolution in the 1980s and 1990s

As we entered the 1980s we were just learning the wonders of cable television, when a group of astute technology users formed the Boston Computer Exchange, which was a bulletin board system-based marketplace established to facilitate the sale and trade of used computers.  The Boston Computer Exchange was groundbreaking in its development of a fully automated, online auction and marketplace for general commerce.

Ecommerce continued to advance and in 1990 the first web browser launched under the name of “WorldWideWeb”.  With this in place, the development of what we know as the internet developed from the display of basic style sheets to the launch of eCommerce giants like Amazon and eBay in a few short years.

By the end of the 1990s, our email inboxes were inundated, and DVDs replaced VHS tapes as the preferred method of viewing entertainment, but this change did not last for long once Netflix was launched in 1997. Netflix was the world’s first online movie rental store building its success on the model of flat-fee unlimited rentals with no due dates, late fees, shipping & handling fees, or per-title rental fees.  Netflix took the customer service game to the next level for all future online businesses and changed the entertainment industry altogether.

The following year, Paypal emerged as “Confinity” with a tool for transferring money.  Paypal now functions as a bank, executing payment processing for online vendors, auction sites, personal and commercial users.  Their services have expanded to allow customers to send, receive and hold funds in 26 currencies worldwide. To this day, Paypal Holdings and their subsidiary Venmo are huge players in the digital wallet game.

eCommerce today

As eCommerce continued to evolve, customers enjoyed the ability to access any item they want in the digital space, and in 2012 Instacart was launched in San Francisco by a former Amazon employee.  Partnering with over 300 national, regional, and local retailers they provided personal shoppers who pick, pack, and deliver orders according to the customer’s time frame.

In 2014, it was time for Apple to jump into the eCommerce game, capitalizing on the boost in the use of portable devices with their launch of Apple Pay in the digital wallet and mobile payment realm.  This paved the way for mobile devices as a new channel for marketers to reach a wider audience with easier access to shopping and payment methods

As eCommerce continues to evolve, social sites have become shoppable with Pinterest adding buyable Pins to their boards in 2015.  These pins allow board followers to purchase right on the site without leaving the site.

After eBay partnered with PayPal, companies have partnered or acquired additional organizations to diversify or otherwise enhance their business model, and this practice shows no sign of stopping.

Monumental changes across the eCommerce industry have led large retailers to continue to push their online sales and even smaller, local businesses have turned to digital avenues to continue to drive their business.

As a result of these evolutions, the buying habits of both consumers and businesses have also evolved.  Ecommerce business has adopted AI and automation to better meet the needs of their customers.   It has also changed how we prospect for new customers, allowing us to map the customer journey to better understand how and why they purchase.

What has eCommerce taught us?

If we learn anything from the history of eCommerce, it should be that this evolution will continue, and we need to be able to evolve along with it.

Creating efficient, convenient, and personalized experiences with highly sophisticated tools will be the order of the day. Regardless of the trends your organization chooses to pursue, make sure that the work is intentional and reaches toward a seamless and engaging experience for all.

If there’s one takeaway from the origins and history of eCommerce, it should be that the industry is constantly changing. Innovations are always just around the corner, which means your company must constantly adapt to stay ahead. Fortunately, countless online businesses have proven this can be done. You just need to follow two rules.

First, always put your customer first. The very origins of eCommerce are rooted in a desire to give customers more of what they wanted: convenience, selection, and savings. No matter what Google does to its algorithm or which devices become the next user-favorite, if you put your customers first, you’ll be set up for success.
Second, stay flexible. If you let success lead to complacency, you won’t be successful for long. Always look for new ways to keep your customers happy and they’ll be sure to repay your efforts.

The future of eCommerce looks to be just as exciting as its past. If you keep these two rules in mind, you’ll have plenty to be excited about, too.

In the United States, eCommerce sales are expected to overtake in-store sales by 2024. However, as legacy wholesalers go online and global retail giants like Walmart expand their eCommerce initiatives, digital competition will only grow. In addition, competitors in product categories that aren’t traditionally in-demand online, such as household essentials, health, and personal care items, will also be competing for eCommerce shoppers.

Take a look at a visual representation of the eCommerce timeline.

History of eCommerce infographic