Ecommerce refers to the concept of buying and selling goods or services over the Internet. It started with a man selling a Sting CD to his friend online. Today, ecommerce is a $3.53 trillion industry.
Keep reading to learn how online shopping began and how it's evolved over the last 40 years.
The History of Ecommerce
There are a number of events that led to ecommerce being as popular as it is today.
The invention of the World Wide Web, emergence of marketplaces such as Amazon and eBay, creation of digital wallets such as PayPal, and innovations in the smartphone industry all contributed to its growing popularity.
The Invention of Online Shopping
Michael Aldrich, an English inventor and entrepreneur, created online shopping in 1979.
He connected a modified TV set to a real-time transaction processing computer via a telephone line. This enabled a closed information system to be used and shared for the secure transmission of data.
Aldrich’s technology became the foundation for modern ecommerce.
The Beginning of the World Wide Web
In 1990, Tim Berners-Lee started a project called the World Wide Web. He combined the ideas of hypertext, TCP and domain name systems to create the web as we know it today.
Berners-Lee also developed the first web browser.
The First Online Transaction
The first legitimate online transaction was completed August 11, 1994. On this day, a man sold a CD to his friend through a retail platform called NetMarket.
The Emergence of Online Marketplaces
In 1994, Jeff Bezos launched Amazon, an online bookstore that would later expand its offering to include CDs and other media products. That same year, Pierre Omidyar launched AuctionWeb, an auction platform where enthusiasts could bid on and sell various collectibles. The platform was later renamed eBay.
Today, Amazon is the largest online marketplace in the world, offering a huge variety of both physical and digital products. eBay, on the other hand, is the largest online auction platform in existence.
The Evolution of Online Payments
Before digital wallets, online shopping was done exclusively with the use of credit cards. In 1998, PayPal revolutionized online payments by introducing its digital wallet that allowed people to send and receive funds over the Internet.
Online payment processing became more secure in 2004 with the formation of the Payment Card Industry Security Standards Council (PCI SSC). Businesses need to comply with its security requirements to continue selling online.
In 2010, Square enabled small businesses to accept credit card payments through mobile devices.
The invention of modern smartphones, starting with the first iPhone in 2007, helped spur the popularity of mobile ecommerce. Today, more than a third of all ecommerce transactions are completed through mobile devices.
Types of Ecommerce Models
The three most common ecommerce models include:
B2C (Business-to-Consumer) denotes an ecommerce model where a business sells products to consumers. This is the most common form of ecommerce.
Amazon is an example of a B2C ecommerce business.
B2B (Business-to-Business) is an ecommerce model where businesses sell products or services to other businesses. While B2B buyers might make purchases with the intention of being the end-user, they also often buy products to resell them to consumers. Most B2B sellers are manufacturers, distributors or wholesalers.
Alibaba is an example of a B2B marketplace.
C2C (Consumer-to-Consumer) is a type of ecommerce model based on consumers selling products to other consumers. These types of ecommerce businesses generate revenue from charging listing or transaction fees. C2C transactions usually involve used products. However, new, unused products can also be sold through C2C marketplaces.
eBay is an example of a C2C ecommerce business.
Examples of Ecommerce Platforms
Online merchants have a variety of different ecommerce platforms to choose from today. Some of the most popular ones include Shopify, BigCommerce and Magento.
Launched in 2004, Shopify is one of the most popular ecommerce platforms around. It’s used by more than 500,000 merchants in dozens of different industries. Shopify is user-friendly, enabling people who don’t have advanced technical skills to set up and launch an online store.
The platform offers 24/7 customer support. Shopify’s support team can be contacted through phone, email and live chat. Additionally, Shopify has an entire directory dedicated to Shopify Experts to help with any design, marketing or development needs.
Shopify also has an app store to build on the platform’s core functionalities and enable merchants to build an online store that matches all their wants and needs. Shopify supports more than 100 different payment gateways, including PayPal, Stripe and Amazon Pay.
As a platform, Shopify is very SEO-friendly, allowing merchants to edit everything from page title and meta description tags to URLs and image alt tags. It also provides multi-channel support, enabling merchants to sell their products on marketplaces such as eBay and Amazon, as well as on Facebook and Instagram.
Shopify plans start at $29/month. Pricier, more advanced plans, as well as an enterprise solution, are also available.
BigCommerce is another ecommerce platform that’s highly popular among merchants. While both BigCommerce and Shopify offer similar features, BigCommerce comes with more advanced features out-of-the-box.
Similarly to Shopify, BigCommerce supports a variety of payment gateways, including PayPal, Google Checkout, Stripe and Authorize.net.
BigCommerce’s customer support is available 24/7 and offers migration help for merchants moving over from other platforms. The platform also supports multi-channel ecommerce and allows merchants to sell on marketplaces such as Amazon and eBay.
BigCommerce plans start at $29.95/month. All plans come with yearly sales limits, as well as a free 15-day trial.
Magento is one of the most popular ecommerce platforms in the world. It’s used by more than 250,000 merchants.
Magento is especially popular with enterprise B2C and B2B ecommerce businesses due to its flexibility and customization options. Out-of-the-box, Magento comes with a whole suite of advanced ecommerce capabilities, a content management system and customer segmentation features. It’s highly scalable and integrates with a large number of software solutions.
The community edition of Magento is completely free. The pricing for the enterprise version of Magento starts at $22,000.
The Future of Ecommerce
Ecommerce keeps evolving and takes advantage of new technologies to offer consumers a better shopping experience.
Personalization, voice search, Augmented Reality (AR) and Virtual Reality (VR), in particular, are finding their way into ecommerce. Recommerce, the sale of second-hand goods, is also gaining in popularity.
Ecommerce businesses have been trying to create a personalized shopping experience for their customers for years. With advancements in AI and automation technology, merchants are now able to provide a personalized shopping experience at scale.
Through personalization, customers are able to get tailored product recommendations, which helps them solve their pain points and challenges.This type of personalization is achieved by analyzing customers’ browsing behavior and purchase history, as well as a variety of other relevant data points.
Eighty percent of consumers state that they’re more likely to buy from brands that offer a personalized shopping experience.
Additionally, it’s been shown that 77% of them are willing to choose, recommend or pay more for products from brands that personalize the shopping experience.
Shoppers are completely fine with sharing their shopping behavior and interests if these will be used to deliver relevant offers and provide a more personalized experience.
Personalization isn’t going away any time soon. With the ecommerce landscape becoming more competitive by the day, merchants will be working hard on providing highly personalized experiences to all their customers.
Searching the Internet with the use of one’s voice has been made possible in recent years with the introduction of devices such as the Amazon Echo and Google Home.
It’s estimated that around 66 million Americans own a smart speaker.
Interacting with and searching the Internet through voice is becoming more and more adopted by consumers. Voice search opens up the possibility of voice commerce, with consumers being able to purchase products from brands using their voice only.
Consumers are already taking advantage of voice shopping, with 25% stating that they’re more likely to use voice search when buying everyday household items. Other popular categories among voice shoppers include apparel and entertainment (movies and music).
The main reasons why consumers like shopping with voice include being able to do it hands-free, as well as shop while doing other things.
There are a few kinks that need to be ironed out for voice commerce to become more prominent, though. For example, 10.57% of consumers state they don’t like having to say a smart speaker’s wake word (such as “Alexa” or “OK, Google”). Another 23.35% claim they’re not comfortable sharing payment information with a voice assistant.
While not all consumers have adopted voice shopping yet, it’s likely that it will become one of the main ways of shopping online in the future. In fact, it’s estimated that voice shopping will generate $40 billion for U.S. and U.K. businesses by 2022.
Recommerce (or second-hand ecommerce) is the concept of selling used products online. It’s steadily becoming more and more popular among consumers. This is especially true when it comes to the second-hand apparel market, which is expected to reach $51 billion by 2023.
Today’s consumers are increasingly focusing on sustainability, as well as looking to stay ahead of trends affordably, which is why they're turning to recommerce.
Women in particular have embraced recommerce, with 64% stating that they’re willing to buy second-hand products. This type of shopping transcends both age and income — Boomers, Millennials, Gen X and Z all buy second-hand products. The same is true for luxury, department-store and value-chain shoppers.
Millennial and Gen Z shoppers are adopting second-hand shopping faster than other groups. It’s estimated that 1/3 of all Gen Z shoppers buy second-hand goods.
With more and more consumers considering the resale value of an item before making a purchase, recommerce is set to become even more popular in the coming years.
AR and VR
Augmented Reality (AR) and Virtual Reality (VR) technologies allow ecommerce businesses to provide more realistic and immersive shopping experiences to their customers. Brands such as Sephora and IKEA have already embraced these technologies.
Sephora’s Virtual Artist app uses AR to enable shoppers to try out different products before making a purchase. IKEA’s Virtual Store, on the other hand, takes advantage of VR technology to allow shoppers to explore IKEA’s offering as if they’re actually in the physical store.
With the help of AR and VR, shoppers can try out products virtually in the comfort of their own home. They can also explore virtual showrooms created by brands and get an in-store experience without leaving their couch.
While these things might have sounded futuristic 10 years ago, they’re today’s reality. With the pace with which AR and VR are evolving, we’re bound to see even more advanced applications of these technologies, as well as their wider adoption in ecommerce.
The Future of Ecommerce is Bright
Advancements in technology keep pushing retailers to improve the shopping experience and provide customers with more convenient ways to buy online. Ecommerce businesses are taking advantage of advanced marketing automation, and AR and VR technologies to provide hyper-personalized, highly immersive shopping experiences.
While the future of ecommerce is strong, merchants need to work hard to stay ahead of technological advancements and provide cutting-edge shopping experiences to their customers.
Boris Mustapic is a writer and content marketing specialist with a decade of experience in the digital marketing industry. Having built his own successful ecommerce business, Boris likes to share his knowledge with ecommerce enthusiasts. Apart from writing about marketing and ecommerce, Boris also enjoys a good book and a glass of red wine.