It seems as though we’ve transacted online forever, but really it is only in the last three decades that eCommerce – that is, the buying and selling of goods via online services or the Internet – in its current form has been around.
The History of eCommerce
The germ of the concept dates back around forty years though, to well before the Internet became ubiquitous.
Encryption technology around telecommunications and the semiconductor industry advanced enough that in 1979, English inventor and entrepreneur Michael Aldrich demonstrated the first ‘online shopping system’[1] using a modified television set connected to a transaction processing computer via a telephone line in the UK. He enabled automated business-to-customer or business-to-business transactions in a closed, secure loop that could be shared by third parties, which would go on to become what we called eCommerce today.
In 1982, Boston Computer Exchange, an online market for people to sell used computers, became the first eCommerce company.
eCommerce stores and marketplaces
It took another 10 years till Book Stacks Unlimited debuted as an online bookseller, using an dial-up bulletin board. In 1994, it moved over to the Internet at books.com, today owned by Barnes & Noble.
In 1995, Amazon also launched as an online bookseller before converting into to a broad spectrum eCommerce store in 1998, and finally evolving into a marketplace that also accepted third-party sellers in 2000. Also in 1995, eBay was founded as an auction site which has gone on to become a giant of online retail globally. The takeup of broadband internet connections in the first decade of this century had a big part to play in this trend too.
Amazon set many of the standards for modern-day eCommerce by offering features that mail-order couldn’t, such as one-click shopping, comparison shopping across retailers, product reviews, quick and sometimes free delivery as well as easy returns.
In 2005, by adding a membership component with Amazon Prime that allowed for two-day shipping and later, access to its streaming service, and building warehouses across the US to be closer to the customer and cut delivery times, it revolutionized the supply chain management and fulfillment side of eCommerce. Etsy, the marketplace for crafts and small sellers, was also launched in 2000.
Membership is also how music streaming services such as Spotify and Deezer and operate – as premium subscription services – though actual streaming of music goes as far back as 1881 when the Theatrophone allowed listeners to listen to opera and theater performances via a telephone line. Netflix and Disney have, of course, done the same for video streaming, which has turned them into a club-type good.
While Amazon is the largest eCommerce store and marketplace globally in terms of revenue and market capitalization[2], Alibaba (founded 1999), Rakuten (founded 1997) in Asia and Mercado Libre (founded 1999) in Latin America are significant players in their markets.
Payment Infrastructure for eCommerce
In 1998, though, another important part of the eCommerce ecosystem, that of the payments that power it, launched when Paypal (originally Confinity) was founded. Paypal is now owned by eBay.
Since then, the proliferation of other digital wallets and peer-to-peer payment processing platforms such as Google Pay (previously Google Pay), Stripe and Apple Pay have made mobile payment even easier and more widespread.
Afterpay, Klarna and Paypal Credit are introducing customers to the idea of buy now, pay later, the practice of paying for eCommerce purchases in three or four installments like in actual retail, making it more widely accepted.
Anyone Can Have a Webshop
With customers not necessarily confined to a geographic location, there needed to be a way to reach them. Google Adwords, introduced in 2000, fulfilled that need. It allowed eCommerce businesses to advertise to people using Google search.
The arrival of Shopify in 2004 upended the till-then expensive coding and equipment necessary for the development of a webshop and point-of-sale systems and democratized it to allow anyone with an account to set one up using available templates. Shopify has built up a 20% market share in the US with WordPress plug-in WooCommerce themarket leader with 26%[3].
Types of eCommerce
Business to Business, B2b The traditional route where companies buy and sell goods and services with each other.
Business to Consumer, B2c This is the route when companies sell to consumers.
Business to Business to Customer, B2b2c A route where larger businesses sell to smaller entities who resell the product & services to a customer. A good example would be an HVAC company selling air conditioning equipment to a contractor who services the end customer.
Marketplaces This is where suppliers (business vendors and individual sellers) sell to buyers (businesses or consumers).
Consumer to Consumer (C2c) eBay is the best-known example of a platform that allows consumers to sell and buy products to each other.
Social, mobile and voice eCommerce applications
The future of eCommerce is all about shopping using mobile devices and apps and increasingly, voice. 81% of visits on Shopify sites is from mobiles[4]. SMS marketing is therefor becoming increasingly important. Social shopping has also taken off with brands using sponsored stories on Facebook and shoppable posts on Facebook, Instagram and Pinterest to reach customers.
Choosing an eCommerce platform
BORN Group has been around since eCommerce was in its infancy. Today, we are integrators for the major systems including SAP Commerce, Salesforce Commerce, Adobe Commerce, BigCommerce, ShopifyPlus, Commercetools, VTEX, and Elastic Path. To make informed platform decisions, we use something called a 5C methodology as part of our technical roadmap that we call the Feature Value Matrix at BORN. These include:
Conform We identify requirements that can be supported to conform to out-of-the-box features in a platform.
Configure BORN identifies requirements that can be supported through configurations made to the platform.
Customize We determine the necessary customizations that will need to be built into the platform.
Compromise The configuration and integration of third party tool or systems such as ERP, OMS and CRM systems that cover tax systems, loyalty programs, payment gateways, fraud detection, affiliate programs, email campaign systems, and user reviews
Connect Identifying all requirements that are supported through integration and offer accelerators for a shorter time to market at a reduced cost.
Through optimization of the 5C’s BORN Group is able to pinpoint your businesses specific needs and map those requirements to the most efficient solution.
eCommerce: Even more potential
Currently, only around 14% of retail sales is e-retail[5]. Moreover, 4 in 10 people worldwide don’t have an internet connection and over half the world doesn’t have a smartphone[6], so there is still a huge amount of potential with regard to eCommerce. Expect to see more omnichannel experiences, personalization, and artificial intelligence-enabled shopping.
The situation with Covid saw eCommerce sales accelerate around the globe – the US alone saw a 30% growth[7] – and is expected to touch USD 476 billion in 2024[8].
To know more about how BORN is leading the charge to merge usability with shopability by making informed platform decisions to drive consumers online, click here.
[1] Michael Aldrich Invents Online Shopping, Historyofinformation.com,
https://www.historyofinformation.com/detail.php?id=4068
[2] Global Amazon retail e-commerce sales 2017-2021, Statista,
https://www.statista.com/statistics/1103390/amazon-retail-ecommerce-sales-global/
[3] Ecommerce Platform Marke Share in the USA, Oberlo, https://www.oberlo.com/statistics/ecommerce-platform-market-share-in-usa
[4] Shopify Announces Third-Quarter 2019 Financial Results, Shopify, https://news.shopify.com/shopify-announces-third-quarter-2019-financial-results
[5] E-commerce share of total global retail sales from 2015 to 2023, Statista, https://www.statista.com/statistics/534123/e-commerce-share-of-retail-sales-worldwide/
[6] How Many People Have Smartphones In The World?, https://www.bankmycell.com/blog/how-many-phones-are-in-the-world
[7] US Ecommerce Growth Jumps to More than 30%, Accelerating Online Shopping Shift by Nearly 2 Years, emarketer, https://www.emarketer.com/content/us-ecommerce-growth-jumps-more-than-30-accelerating-online-shopping-shift-by-nearly-2-years
[8] Retail e-commerce sales in the United States from 2017 to 2024, Statista, https://www.statista.com/statistics/272391/us-retail-e-commerce-sales-forecast/
