The 60s, 70s, 90s….No-one can agree on the first time electronic commerce started. The 1960s saw the use of a system for exchanging and transferring digital documents between companies. It was called the Electronic Data Interchange. The 70s had Michael Aldrich, who managed to connect a television to a payment system using a standard telephone line connected to several stores. He called it Teleshopping and it was the first of its type in the public domain, a very simple transaction processing computer.
First actual online transaction
But for true person to person electronic commerce, it has to be the 90s, more accurately 1994, when a CD by Sting was sold by one person to another using an online transaction. No real money changed hands, and the transaction was all done electronically.
An online bookstore started during that year too, backed by a certain Jeff Bezos and his parents in Washington, USA.
Historically speaking, and the future of ecommerce sales
Let’s go back in time and have a closer look at these milestones in technology that have introduced us to the world of online retailers and online shopping.
And as we do that, let’s also look at what the future might bring.
The traditional paper method of handling documents, invoices and purchase orders was changed forever by the implementation of EDI, Electronic Data Interchange.
Before EDI, businesses would, for example, produce a shipping order that told the warehouse to move a product to an address. The order would say which products, how many, which shipping address and which billing address and had to be human-readable. Errors were frequent and costly.
From Berlin to the world
A gentleman named Ed Guilbert had worked on the massive Berlin airlift in 1948 and had devised a structured shipping system that kept the city running. These concepts were applied to the formation of the Transportation Data Coordinating Committee in the late 60s.
In a nutshell, the digital paperwork proved the purchase.
In 1979, Englishman Michael Aldrich invented electronic shopping by connecting a regular television to a household telephone line, then linked it with supermarkets who were keen to start selling ‘online’.
Jane snowball (really)
Funnily enough, it was a 72 year old grandmother with a delightful surname who ordered eggs, cornflakes and margarine from her local Tesco supermarket and became the first person ever to do online shopping. The supermarket took her order and then delivered it. Payment was cash, as there was no way of paying using the telephone connection. The technology was called Videotex and used the same setup that Aldrich had invented. Ecommerce has snowballed since then.
Started by the BBC in 1974, Ceefax was a television service that offered a separate screen layer holding information on a number of topics. There were sets of pages with three digit addresses, so if you entered 100 on your remote you got general news. Subsequent pages like 102, 102, etc would give more precise local and international news.
Many people in the UK would check out the 400 pages. Cheap flights and holidays, and although you were unable to pay for them online, you would call the telephone number to reserve your holiday, then pay with a bank cheque later.
On March 4, 1983, Boston Computer Exchange became the world’s first ecommerce business by moving their paper database of used computers to an online bulletin board run by Delphi.
It was a publicly available service, much like the popular online auction site eBay today; buyers browsed the database looking for the products they wanted, then completed the online transactions over the telephone with the seller. Boston Computer Exchange would take a percentage as commission.
It was essentially a business to business to consumer model that lasted over 7 years until it was sold.
So important was the introduction of computers, Time magazine actually announced ‘Machine of the year’ in 1982 instead of ‘Man of the year’.
Five outstanding events happened in the early 90s that pretty much changed the world of regular brick and mortar commerce.
World Wide Web
CERN released their WWW code for free in 1993, allowing independent servers to start popping up all over the place. This in turn allowed early users of the web to navigate and find websites online.
The first web browser was actually called worldwideweb, but was changed to Nexus to avoid confusion.
Limited at the start, but ready to grow
There were very basic search engines, such as Webcrawler and Lycos, and several ecommerce sites like Pizza Hut (yes, you could order pizza online back in 1994, but only if you lived in Santa Cruz, California). Another important website was VirtuMall, which pioneered shopping cart technology.
The web grew from just over 600 websites at the beginning of 1994 to over 10,000 at the end.
Amazon and eBay
Jeff Bezos started his website in 1994–95 and of course we know what happened to it, offering everything from …well, almost everything.
At pretty much the same time, eBay became the first website to match up buyers with sellers of products and services online, and that idea took off like a rocket.
Secure Sockets Layer
In the 1990s, many people were curious about the web but were unwilling to purchase anything online. This was mostly due to web security issues, as nothing had really been done to protect credit card details or any other personal data.
The SSL encryption protocol was invented by a senior scientist at Netscape to protect and safeguard the data that traveled between a client and a server. It has become the industry standard since then.
A dishonorable mention — the cookie
Actually, Netscape communications was responsible for a lot of ‘improvements’ to the web, including the cookie, that little piece of text file that used to proudly announce ‘Hey, I’ve been here before’ when you visit a website.
The original idea was presented because websites had no way to remember a repeat visitor.
Unfortunately it only took advertisers a couple of years to hack into cookies and make them ad friendly, constantly pounding the users with targeted ads.
Closing out a momentous decade, Paypal was released to the public in 1998 and it completely changed the way that money moved around online.
Instead of being reserved for banks and financial services, now every Joe and Jane could send money to others, and make online purchases, safely and securely with account data protection.
Before PayPal, retailers would have to wait for COD payments, cash on delivery, which slowed down their payment processing and compensation rate.
After it was clear that the WWW was going to grow, investors and venture capitalists were throwing money at any new tech startup with the hope of a huge return or at least a steady stream of income.
It was all going wonderfully, and ecommerce companies like Amazon, Booking and eBay were making serious profits.
Then in March of 2000, there was a recession in Japan, which triggered a worldwide selloff of tech stock. Boom.
Many tech companies folded during that time, and even those that survived lost a lot of value. By re-inventing themselves, they managed to keep their heads above water and now are flourishing in the market.
The 21st century
It took nearly two years for the ecommerce market to recover from the dot-com bubble burst, and in the US it was bubbling along nicely. JC Penney was the first chainstore to have a turnover of 1 billion dollars online.
Down, but not out
Things looked rosy, until the financial market crash in 2008. Then it took another year to get back to a positive growth rate.
Projections for 2023 and beyond are crazy. By the time we reach 2025, ecommerce will grow to an astonishing $1.4 trillion in the US, a jump of 50% from this year. Globally, it looks like it will be over $7.5 trillion, as forecasted by Statistica.com .
Although it is thought to be dominated by younger people, the ecommerce industry actually appeals to a wide variety of ages and backgrounds. Due to ecommerce platforms and the simple operation of online sales, people of all ages are gradually accepting the convenience of online shopping 24/7 on home PCs or on mobile devices from anywhere.
Bricks and mortar stores are finished, right?
A resounding NO to that! There are plenty of reasons why physical stores will still be around even in 2025 and beyond. The fact that most stores have a strong online presence shows that the two versions of the business model are compatible and work well together.
The five senses
When people travel to a physical storefront in a shopping mall, they employ all five of their senses as part of the shopping experience.
Touch a silk scarf, smell a new perfume, you get the drift. Feeling the quality of a product is something you don’t get when you shop online.
Interaction with staff
Depending on the level of customer service, you can get far more information from a staff member about a particular product in retail sales.
Additionally, a sense of familiarity lends itself to repeat customers, when styles and preferences are remembered by quality staff. A friendly introduction to a new product range will add to the experience.
It doesn’t get much better than that, does it. Go into a store, find what you want, buy it and leave the store with it. No waiting for the courier or going through the hassle of returning it if it’s the wrong size. And no shipping charges either. Online shopping can’t compete with that.
The whole immersive experience
There are many parts that go with shopping, from traveling to the location, browsing, enjoying a coffee, chatting with friends and staff, and making a purchase. Add these parts together and they become greater than the sum.
The rise and fall of 3rd party cookies
The inventor of the cookie, Lou Montulli from Netscape, has recently stated that he didn’t like the way his invention was being used.
What initially was meant to be a way to count the number of visitors and their frequency to a website turned into an ad marketer’s dream.
Let’s look at the difference between 3rd party and 1st party.
3rd party cookies are created by a website other than the one you wish to visit. So perhaps you might want to visit a big ecommerce website like eBay or Amazon.
While you are browsing the pages and looking for specific items, a 3rd party cookie will be tracking your movements.
Later, you might get a contact email from a company that sells something you looked at. It’s a sneaky way of increasing online advertising.
A 1st party cookie is created by the domain you are visiting, and no-one else. It is used for recognition of returning customers, and also provides the ability to make multiple purchases while browsing different parts of the website.
These cookies can be described as functional to the website, to provide a better service to the visitor.
People who live in the European Union have a blanket protection from 3rd party cookies by personal choice, under the rules of the General Data Protection Regulation, or GDPR.
They can refuse all cookies except for those deemed functional by the website, and there are very strict guidelines as to what is acceptable.
In the EU at least, cookies are not king anymore and the advertisers don’t like it. But they might have come up with a brand new way to attract and keep customers visiting their sites.
Innovative marketers have discovered that openness is good for a brand, and customers want a transparent relationship with a business.
Instead of using 3rd party cookies to collect data on people, they are looking at approaching customers head on and asking them if they will volunteer certain information in exchange for something of value to the customer.
It might consist of asking for a date of birth so that the business can ‘share’ the happiness of the moment with offers and discounts on that day.
Trust is something that is hard to build and so so easy to break. By asking clients for information instead of taking it, loyalty will increase and connections will be stronger, as long as the brands stay on top of the openness platform.
And if Google says so…
The tech giant is looking to get rid of 3rd party cookies completely, probably by 2024. They were working on a slightly controversial program called FLoC, Federated Learning of Cohorts, a system where Chrome browsers capture information for interest based advertising.
They have since changed that to a similar service called Topics, where there is a more controlled collection of data over a revolving period of three weeks. Topics are picked and shared with the website for ad purposes.
History of ecommerce means the future is bright
With the removal of 3rd party cookies, the introduction of more openness by brands, and the connection between customer and business becoming stronger, the ecommerce industry is on the right lines to massive success and increased annual growth.
If you take into account more inclusion from the social proof of personal reviews and recommendations, endorsements from the glitterati and the use of powerful influencers, the only way is up.
From the beginnings of data transfer, to Michael Aldrich’s Teleshopping, WWW, and everything else that we have achieved in only 60-odd years, the growth rate of online shopping has been stunning.
I apologise if I appear to have only used western references and influences in the ecommerce business, as the spread of the industry is global. China and India have had a huge impact on ecommerce with China’s Alibaba and India’s Bigbasket ecommerce platforms leading the way.
Although Amazon is the market leader in retail ecommerce sales, Alibaba is catching up and also has a 30% stake in Bigbasket, making it seem possible that Alibaba will overtake Amazon in a decade or so.
So, what’s next for eCommerce? It’s all about the customers so it should get interesting.