Wondering how we went from shopping in-store and buying infomercial products from a 800 number to making virtually any purchase with a few clicks? Welcome to the history of ecommerce. We’ll look at how it all started, which technologies paved the way for electronic commerce, and what might come next.
The Precursor to Ecommerce
Before ecommerce, it was all about brick and mortar and mail order.
Brick and Mortar
Stores in a physical location, where you can walk in and browse items on shelves, are also known as brick and mortar stores. Think of all the individual shops in your local shopping mall — all of those are brick and mortar businesses.
The limitations are obvious — businesses need to own or rent a physical store and showcase their products there. A traditional brick and mortar bookstore has hundreds or thousands of books that need to be stored. There are rent and utilities costs to consider. You require physical security — also known as theft prevention. You need to keep your business space clean, have attractive displays, and hope you’ve selected a location that is going to attract customers. You need knowledgeable store representatives so they can answer customers’ questions and reliable employees to monitor your cash and receipts.
In contrast, a company like Amazon doesn’t need to worry about aesthetics. They have all their inventory packed up and ready to ship out – eliminating the need for ambiance, cashiers, and lots more. Amazon doesn’t need to store the books they sell physically at their premises.
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Catalog and Mail Order
Another precursor to ecommerce is shopping via catalog or mail order. Sellers advertise their goods and services they offer either in a catalog, an advertisement in magazines, or on television. Customers would send an order in the mail, via a telephone call, or place their order with a representative.
One of the earliest catalogs of this type date back to the 15th century when publisher Aldus Manutius printed out a catalog of the books he offered his printing services for. The first mail order company was founded in 1861 by the Welsh entrepreneur Pryce Pryce-Jones. He sold local Welsh flannels under the name Royal Welsh Warehouse.
As the internet emerged, this model evolved to allow buyers to place their orders through a website (and later mobile apps), paving a way for the modern ecommerce model we are already so used to today.
The Beginnings of the History of Ecommerce
Michael Aldrich Invents Ecommerce
An abundance of new inventions resulted from advances in networking – including ways to shop.
The most important persona of the early history of online shopping is Michael Aldrich, the father of ecommerce. Aldrich was an English entrepreneur and inventor who made online transactions processing possible. He invented a system that connected a modified television to a computer capable of processing real time transactions via telephone line.
He came up with his invention back in 1979 but only began advertising it in 1980. Aldrich’s invention allowed customers to “hook up” their television set to their local supermarket, who would advertise their goods over television, place their order, and have their groceries delivered to their doorstep. Aldrich called his invention “teleshopping” and it’s considered to be a direct precursor to modern electronic commerce, better known as ecommerce.
Aldrich's genius did not stop there — in the years to come, he continued to invent, build, and sell various systems, including a locator system for auto manufacturers.
The First Item Sold On The Internet
The first ever sale to happen online occurred in 1994 – the transaction was for a CD of Sting’s Ten Summoner's Tales. The purchase was completed with a credit card and the CD was delivered to its destination via US Postal Service and we can, therefore, consider this a first legitimate online buy.
Limitations in the Early History of Ecommerce
Minitel, a French-developed predecessor to the World Wide Web, was invented in 1982. It was free for telephone subscribers and used a video text terminal and telephone line to connect millions of people — 25 million by 1999.
Real expansion occurred after the rapid rise of the World Wide Web, invented in 1991. It soon eclipsed Minitel, which was finally discontinued in 2012. This expansion allowed for more people to connect across the globe, making it the first condition for ecommerce development as we see it today.
Another limitation that kept online shopping from flourishing in the early days were the security risks implied with online purchases. That changed with the invention of Secured Socket Layer (SSL) in 1995 — which quickly became the most prominent feature of web security. It made the process of online shopping a much more comfortable and convenient experience for a massive audience of shoppers. After the invention of SSL, we witnessed a growing number of newly registered domains. This transformed the World Wide Web into a commercial use powerhouse, particularly for online shopping.
The First Ecommerce Stores
One of the first online stores was Books.com — a domain name occupied by a company called Book Stacks Unlimited, founded by Charles M. Stack in 1992. This was two years before Amazon was founded. Book Stacks Unlimited started as a dial-up bulletin board in Cleveland, and in 1994 moved to the internet. It offered more than half a million titles to more than half a million visitors each month.
Amazon.com, the biggest online store to date, was founded by Jeff Bezos in 1994. It started as an online bookstore and it introduced the concept of online book reviews — direct feedback from other consumers. That really made a difference and attracted a huge number of new customers to their platform.
Soon, Amazon expanded its scope, introducing CDs, DVDs, and video sales. With time, Amazon added more and more items to their repertoire and today it remains the biggest and most well-known online store. Amazon now offers everything from food to furniture.
The First Payment Systems
Electronic payment systems witnessed their revolution with the arrival of the internet. They were crucial for the success of ecommerce — you can’t make sales if you can’t accept payment. Stanford Federal Credit Union was the first financial institution that offered online banking to their members, starting with their online banking system in 1994. This and other similar systems to emerge were not entirely user-friendly or easy to operate.
The evolution of electronic payment and verification systems allowed for quick verification and authorization of digital payments with just a few and simple steps. Nowadays, mobile devices are widely used as payment methods where customers can perform online transactions via their mobile wallets, such as Google Pay and Apple Pay.
Another important milestone was the invention of WordPress by Mike Little and Matt Mullenweg in 2003 — a fork of the b2/cafelos platform. WordPress is simple to set up and offers multiple plugins that make your ecommerce experience easy and painless. The most used ecommerce plugin on WordPress is WooCommerce.
Another important website platform for anyone interested in running their own ecommerce business is Magento — an ecommerce platform owned by Adobe. Read more about Magento in our article, What is Magento?
The Future of Ecommerce
Now that you’ve learned all about the history of ecommerce from its early beginnings, let’s look at where it’s headed.
Overview and Predictions
During the recent pandemic and lockdown, the world witnessed a significant rise in ecommerce. People have gotten used to buying everything they need from the comfort of their own homes. It is safe to assume this trend will continue and that we’ll see more and more customers moving from their local supermarkets to their online equivalents.
With the rising number of ecommerce customers, we expect another aspect of online shopping to continue to grow, as it did during the pandemic — live commerce. These are online events that allow customers to buy the products while watching live streams of their favorite brands. This model of ecommerce is one we predict even more brands will adopt.
One of the most important aspects of ecommerce is and will continue to be the customer experience. Those who can provide the best experience to their buyers will continue to see a lot of success. Knowing the importance of customer feedback and how bad reviews can quickly overshadow good ones – customer experience should be at the center of any ecommerce business.
As we already mentioned, the COVID pandemic gave a significant boost to ecommerce sales and growth. According to trade.gov, we can expect a continued and steady 8% growth for all ecommerce sectors all the way through to 2024.
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