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The history of e-commerce
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The history of e-commerce

The history of e-commerce - how the internet became more awesome!

A growing number of businesses are either starting up online, moving online or are using e-commerce in addition to their brick and mortar shops. The advent and increasing popularity of e-commerce has made the transition from dream to actual realisation an easier path for most people. Having a shop online is accessible to so many more people without the added work of having to find / afford premises. It is also a great way of 'testing' out your idea of how your business would work before taking the plunge into launching a real life store.

Not only has e-commerce been revolutionary in the way that it encourages fledgling businesses but it has also changed the way that we shop. So many of us now purchase a good proportion of our goods online whether it be gifts, digital downloads, clothing, groceries, takeaways, courses and so much more. We can purchase from the largest corporations to the smallest independents (most of which, we would never have come across in real life). The e-commerce market is both diverse and wonderful.

But how did this creation that we all find so normal now and integral to our lives first start?

Although, e-commerce was in evidence in the 1960s in the form of a data interchange for business to business trading (networked invoices, orders etc between companies), e-commerce for consumers was still a distant dream. The rail industry was one of the first to adopt the electronic data interchange and it was used more regularly by other industries by the 1980s.

It wasn't until the 1980s that e-commerce started to look a little like it does today. The networking service Compuserve set up an online electronic mall that brought a small number of merchants into the user's home for the first time via their PC.

Users of the electronic mall, selected from lists of products for each virtual store. Compuserve charged consumers a yearly membership fee and buyers were able to take advantage of online discounts. Obviously at this point, people were using dial up internet and were charged per minute to browse. They had to counter this in to the overall benefits of using online services. However, Comp-u-store (as it was called) regularly sent out catalogues to users. So if you knew what you wanted already, you weren't going to use up too much money browsing.

The UK also got involved via a TV shopping service. One lady managed to purchase a variety of groceries from Tesco via use of her remote control and Videotex technology in 1984. The system was created by Michael Aldritch and it turned a TV into an online terminal.

The UK also got involved via a TV shopping service. One lady managed to purchase a variety of groceries from Tesco via use of her remote control and Videotex technology in 1984. The system was created by Michael Aldritch and it turned a TV into an online terminal.

By the 1990s, the world wide web was formed.

The internet was about to become more accessible than ever. In 1994, Netscape created the Secure Sockets Layer Protocol. Once web browsers with SSL encryption integration emerged, it was only a matter of time until businesses started to take payments via the web.

First online purchases

After SSL was implemented, Pizza Hut got in on the action (in 1994) and sold their first internet purchased pizza. Pizza hut claim that this pizza purchase was the first WWW internet purchase.

Netmarket was also set up by some college graduates in the US. Netmarket claim that they took the first digitally secure payment for a retail transaction. Despite the obvious success of this achievement, Netmarket was only accessible to those running specific software (just a small amount of users at the time).
It is much disputed as to who actually took the first secure online payment (some suggest the Internet Shopping Network) but Netmarket definitely paved the way for what was to come.

The first pioneers of e-commerce as we know it today were the big boys / girls - Amazon and Ebay (AuctionWeb initially).

Amazon was hot on the heels of Netmarket, launching in 1995. It began as a virtual book store and traded out of Jeff Bezos' (Amazon founder) garage. When Amazon.com launched, it offered a staggering 1 million book titles and was an instant success. Amazon would go on to expand its inventory to CDs before becoming the store that it is today (an online shop for everything).

Amazon have really cornered the market by covering every type of product you can imagine and encouraging users to write reviews. This means that Amazon consistently show up in the search results for most products. It's genius. Amazon continue to expand and push the limits by offering more digital products and sending out products next day and same day.

Ebay on the otherhand made it easy for anyone to sell something / have a business and is still very much a gateway into people having their own e-commerce websites. Ebay's origins resonate with the idiom that 'one person's trash is another person's treasure'. Ebay founder Pierre Omidyar made an early sale on a broken laser pointer. The listing was only meant to be a test item but someone bought it anyway. Pierre contacted the buyer to reiterate that the item was broken. The buyer said that he was aware and that he was 'a collector of broken laser pointers'. This could very well be the secret to Ebay's success - the fact that anyone can sell and that they can make money on items they would have ordinarily thrown away.

By 1998, it became even easier for customers to pay for goods online as Paypal (it was known as Confinity at the time) was formed.

In combination with Ebay, Paypal went from strength to strength but the payment platform is as popular for use on e-commerce sites now as well. The major selling point of Paypal is that it is easy for anyone to send and receive payments.

Using paypal as a payment gateway on an e-commerce site is much easier than using most other merchants and many people get started by using Paypal. It has evolved into a service that people use daily and that people are increasingly using like a bank or virtual wallet (paying friends and family & using in physical stores via the app).

By the millenium, we had become so focussed on our phones that companies took note and Amazon was the first to set up a mobile internet store. 1999 had seen the birth of the mobile internet. We didn't know it yet but eventually mobile would become bigger than any of us could have guessed.

In 2000, Google adwords launched and became a great visibility tool for e-tailers. Google adwords is still important today in terms of its impact on search results but also in the way that e-tailers reach out to potential customers. It opened up the doors to those that didn't know where to start when it came to attracting custom online. Ad marketing is such a big business in its own right that the amount of companies that have been spawned in direct response to adwords has inturn created even more internet commerce.

Digital products became big business when iTunes launched. Apple introduced iTunes in 2003 after a successful couple of years selling their ipods. iTunes launched with 200,000 songs and changed the way that we buy music. This was the first in many innovations that made digital products become as appealing as their physical counterparts.

By 2005, Amazon and Ebay weren't the only online marketplaces as in this year, Etsy was born. Etsy was created to bridge the gap between individual craftspeople and the consumer. Ebay was a good place for fledgling businesses to sell but was mainly an outlet for manufactured / mass produced goods. Buying unique, handcrafted items has become incredibly popular. Etsy has 1.4 million sellers and 20.8 million buyers from countries across the globe. Although craft fairs are still going strong, this was really the only type of outlet for craft sellers pre e-commerce, now their products are visible to millions of buyers.

Not to be outdone, the UK also got involved. Folksy (est 2008) was launched in Sheffield (the home of Squirrel Hosting). The folks at Folksy were inspired by the vibrant craft communities that were emerging globally. Since launching, they've gone from strength to strength and have further validated how much people want to buy from an individual person / small business and not just large corporations.

If Apple ignited the trend for digital music downloads then Amazon very much did the same for e-readers with Kindle. The first Amazon Kindle was released in 2007 (for the US market). It was by no means the first portable e-book reader, many had gone before, notably Rocket, Gemstar, Sony Librie (many more would follow).
What Kindle had was the right branding and the convenience of being able to purchase e-books with your Amazon account through your Kindle - it sold out in hours. Amazon also offer the genius feature of book samples, a way to get users hooked for free before making the purchase.

The Kindle has continued to evolve and has revolutionised the way that we buy and read books. As with all e-commerce innovations, it seems almost strange that we always had to visit the book store to purchase our reading material before e-readers came on the scene. Incidentally, like with music vinyls, real books are still very much in demand and real life book stores still do very well, the Kindle just expanded the horizens and continues to do so.

Around 2008, alot of department stores and supermarkets in the Uk started click and collect services. These became very popular as people were able to browse at leisure online, reserve their item and then go and collect it rather than pay for delivery charges. This saved time physically looking around the store but also saved money for the buyer since they were collecting the goods themselves. Not only that but it meant that people didn't have to wait in for deliveries at home - the ultimate convenience for many. Click and Collect orders have boomed over recent years with retailers processing millions of orders.

Click and collect can eat into retailer's profits since they have to process the goods for the same price as when customers come into the store and pick and pack their own items. Due to this, some retailers have started charging for the service. In July 2015, John Lewis announced that it would charge £2 per click and collect order for goods under £30.
In addition to this, pre-shopping is now a 'thing'. Consumers check and compare prices via the internet whilst in a store. People also often check items on websites before visiting a store. This is often true for items such as furniture. People might see a stylish sofa that they like online but may well want to test it out for themselves before buying.

In 2008 - 2009, something came along that has changed the way that businesses / products are funded forever. No longer do businesses have to solely rely on loans, a wealthy benefactor or money from friends / family. The reason for this? Two of the most popular crowdfunding platforms were established - Indiegogo and Kickstarter.

Some incredibly important and prolific projects have gained momentum on these crowdfunding platforms and it's changed the way that people buy and sell goods. Projects need backing and funding to get started and consumers love exclusivity, rewards and becoming a pioneer. Incredible innovations are being funded and crowdfunding really seems like the future of enterprise and creativity.

By 2009, Facebook started the trend for purchases via social networks when businesses could launch e-commerce stores within their Facebook page. This is something that Twitter have also been playing around with lately. Likewise, Pinterest are launching a 'buy' functionality via their interface.

Obviously, this is about integrating the shopping experience with social which is increasingly where we spend most of our 'internet time'. However, it's also a way of cashing in on people using their portable devices and giving them an easy way to buy whilst browsing / out and about. This type of e-commerce is still evolving and could become a major player in the years to come.

Social has affected commerce in less direct ways. Even the way in which we communicate with online retailers has changed. No longer do we only have access to customer services via phone, email or live chat but also via social media channels. The customer's experience is now broadcast to the world and is not just a conversation between two people.

There are now more ways than ever to buy products - through web stores, mobile sites / apps, smart TVs, social networks and consoles.
in 2013, Xbox 360 users had access to the Pizza Hut menu via their console. Xbox went one further in 2014 with a Dominos app that allowed users to order pizza without having to leave their game using kinect commands.

Even those who sell via the more traditional e-commerce methods (web and mobile store) have more options than ever. There seems to be an endless supply of e-commerce plugins, scripts, CMS systems - Prestashop, Oscommerce, Opencart, Ecwid, Woocommerce, Shopify, Magento to name a few.

In 2015, Google made changes to its algorithm which resulted in favour being bestowed on responsive, mobile friendly websites. It was dubbed 'Mobilegeddon' and has since prompted many businesses to upgrade their site to a responsive design. The suggested implication of this update is that if people are searching Google on their mobile devices (which people are doing more and more), mobile friendly sites will show up in the results before those sites that aren't optimised for mobile. The full impact of this update isn't especially clear as of yet but it is likely that similar future updates will continue to shake up the search results as we change our net browsing habits.

In conclusion, the internet has undergone an incredible amount of change in the last few decades (it also seems to have flown by).

E-commerce is evolving so quickly that after publishing this post in 2015, it won't be long before it is out of date or needs amending. Who knows what new, innovative e-commerce solutions will emerge in the coming years? One thing that I know for sure is that what seems new now, will seem very normal, very quickly. We adapt to new shopping habits as quickly as they emerge - we are evolving alongside our technology.

What changes do you think will happen? Which companies do you think will still be selling online in 2025? Tweet us @squirrelhosting with your thoughts #ecomfuture or let us know below in the comments.

Article by Christina @ Squirrel Hosting All facts / dates stated are believed to be correct at the time of writing. Sources: http://money.howstuffworks.com/history-e-commerce.htm, http://www.barclaycard.com/news/thirty-years-of-ecommerce.html, http://www.wired.co.uk/magazine/archive/2014/03/features/ecommerce-is-history, http://news.cnet.com/E-commerce-turns-10/2100-1023_3-5304683.html, http://www.encyclopedia.com/topic/EDI_(Electronic_data_interchange).aspx, http://www.bbc.co.uk/news/magazine-24091393, http://articles.philly.com/1988-12-15/entertainment/26226456_1_electronic-mall-gift-shop-compuserve, http://content.time.com/time/business/article/0,8599,2004089,00.html, http://www.entrepreneur.com/article/197608, http://www.computerweekly.com/photostory/2240110044/Photos-20-years-of-websites-the-defining-moments-of-the-web/7/1995-eBay-launched-under-the-name-AuctionWeb, http://gizmodo.com/5844662/the-history-of-amazons-kindle-so-far/, http://www.bbc.co.uk/news/business-33371265, https://www.etsy.com/uk/about/?ref=ftr, http://blog.folksy.com/about, http://www.independent.co.uk/life-style/gadgets-and-tech/dominos-xbox-one-app-allows-gamers-to-order-pizza-by-waving-and-shouting-at-console-9871187.html

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