E-commerce, the online buying and selling landscape, is an integral part of daily life for Americans. In the third quarter of 2023, 15.6% of sales in the U.S. were ecommerce, amounting to $284.1 billion. For a business model that represents such a significant portion of retail in the U.S., just how did we get here? The history of ecommerce reaches further than you think.
From its inception with CompuServe in 1969 to the innovative creation by Michael Aldrich in 1979, ecommerce has evolved. So, too, ecommerce and the Internet have grown together and influenced the development of the other. eCommerce shopping has made it even easier to conveniently and safely get what you need delivered right to your home.
"E-commerce revolutionized retail, transforming it from local storefronts to global marketplaces. Since its humble beginnings decades ago, ecommerce has redefined convenience, security, and user experience, proving indispensable for consumers and businesses alike,” said Rick Nelson, CEO, The Fulfillment Lab.
In this blog, we’ll go into the history of ecommerce, when ecommerce actually began, and how such an industry development has changed business for the long-term.
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The moon landing. Vietnam. Woodstock. 1969 is known for a number of things, but it may surprise you to know it’s also where the timeline of ecommerce begins.
Amidst the landmark events of 1969, the history of ecommerce in the USA – and the world – begins in Columbus, Ohio, with the launch of CompuServe, the first e\\commerce company. Because there’s no internet, the company provides computer sharing services to businesses by sending data through phone lines (known as Electronic Data Interchange, or EDI).
You may hear that the first online sale was marijuana, but this is only partially true. While Stanford University and MIT students did use an Arpanet account to make a marijuana sale, money and product still exchanged hands in person. So while a computer facilitated the transaction, it’s not truly “sold over the internet.”
Atalla Technovation and Bunker Ramo Corporation introduced products designed for secure online transaction processing, intended for financial institutions.
Ten years after the founding of CompuServe, British inventor Michael Aldrich demonstrated how electronic shopping could work by connecting a modified television to a transaction-processing computer via telephone line.
It’s around this time that you could argue was when ecommerce became popular, especially marked by the speed of development in the coming years. This is also around the time considered to be when online shopping was invented.
When did ecommerce begin? In 1982, the Boston Computer Exchange (BCE) marked the launch of the world's first eCommerce company. As an online marketplace, BCE enabled people to buy and sell used computers. Operating before the rise of the World Wide Web, BCE utilized a dial-up bulletin board system, pioneering the path for future eCommerce platforms.
The California State Assembly held its first hearing on "electronic commerce." Testifying were CPUC, MCI Mail, Prodigy, CompuServe, Volcano Telephone, and Pacific Telesis. A year later, California's Electronic Commerce Act would pass, imposing certain requirements on systems designed "to conduct the purchase of goods and services via a telecommunications network."
One of the first examples of online retail, CompuServe introduced the Electronic Mall in 1984, allowing its users to purchase products from approximately 100 different merchants. Check out these vintage news clips highlighting this new way to shop.
The first web browser launches, which would be a catalyst for online shopping so internet users could quickly find what they were looking for and retailers could reach a broader audience.
A full ten years after the launch of the Electronic Mall, Netscape 1.0 was released. Featuring a protocol called Secure Socket Layer (SSL), it kept both the sending and receiving side of online transactions secure through encryption. A number of third-party credit card processing companies launched shortly after as the internet became a truly commercial medium.
The first ever secure online transaction using encryption took place on August 11, 1994, when Phil Brandenberger purchased the Sting CD Ten Summoners’ Tales through NetMarket, as reported in the New York Times story “Attention Shoppers: Internet is Open.”
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Online marketplaces begin opening up. This includes Jeff Bezos’ Amazon, initially designed for selling books, and Pierre Omidyar’s AuctionWeb, the first online auction site which would soon become known as eBay.
Originally introduced as Confinity, PayPal debuted as a money transfer tool. By 2000, it would merge with Elon Musk’s online banking company and mark its rise in popularity.
Startups proliferated, with entrepreneurs being seduced by the get-rich-quick promise of the internet. Of course, the good times won’t last forever...
The bubble burst with the NASDAQ falling 75% from March 2000 to October 2002, erasing most of the gains made since the internet took off. Many online and technology entities declared bankruptcy, including Webvan, an early grocery delivery service.
Despite the bust, Google AdWords was introduced as a way for eCommerce companies to advertise through short-text ad copy and display URLs. Pay-per-click (PPC) advertising efforts of online retailers took off.
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eCommerce bounces back from the bust big time, and Cyber Monday (the Monday after Black Friday) is introduced to boost online holiday purchases.
In addition, Amazon launched Amazon Prime, giving members free 2-day shipping within the United States and making expedited shipping a consumer expectation. Today, there are approximately 167 million Prime members in the United States.
Shopify as we know it today was founded by Tobias Lütke, Daniel Weinand, and Scott Lake, making it easy for merchants to create online stores. Many other eCommerce platforms, such as Magento and BigCommerce, quickly entered the space and made a name for themselves.
Though the aforementioned Webvan and other grocery delivery services failed or struggled in the past, food shopping finally found its groove in 2012, with the founding of Instacart. Instacart sends shoppers to local stores to pick out groceries that consumers order online. Today, with advances in cold warehousing and delivery, online food shopping is big business.
Also in 2012, fulfillment solutions provider The Fulfillment Lab was founded by Rick Nelson, giving eCommerce business owners further insight into their inventory, new methods of customizing packaging, and more ways to increase sales.
As brick-and-mortar sales decline, global e-commerce transactions soar, generating $29.267 trillion, including $25.516 trillion for B2B transactions and $3.851 trillion for B2C sales.
The coronavirus pandemic forced many physical stores to close their doors, and lockdowns kept many citizens quarantined at home. To purchase essentials and combat boredom, people embraced online shopping. According to data from IBM’s U.S. Retail Index, the pandemic accelerated the shift away from physical stores to digital shopping by roughly five years.
As legacy wholesalers go online and global retail giants like Walmart expand their ecommerce initiatives, digital competition will only grow.
In addition, competitors in product categories that aren’t traditionally in demand online, such as household essentials, health, and personal care items, will also be competing for ecommerce shoppers.
To survive and grow, ecommerce retailers will need to find their niche or find other ways to compete. One way to compete, of course, is by outsourcing shipping to a third-party logistics (3PL) company such as The Fulfillment Lab.
Along with offering safe and secure storage and shipping, The Fulfillment Lab delivers an awesome customer experience. Think about it: Without a physical storefront, eCommerce retailers don’t have a main touchpoint with customers until they receive their package. So, the delivery needs to be memorable.
Our fulfillment marketing makes this possible, allowing eCommerce retailers to tailor the entire fulfillment experience to their customers. This helps to:
Using our global Fulfillment Software (GFS™), ecommerce retailers can quickly integrate their e-commerce platform and set up fulfillment logistics. It only takes a couple of minutes to begin managing inventory, tracking orders, customizing packages, and much more.
Contact us today to get started.