History of E-Commerce: Facts, Stats & Tips on What’s Next | George Washington University

Shopping online is an essential thread woven into the fabric of everyday life. Visiting a site like Amazon or eBay and buying needed goods — and a few things that are not needed — has become such a routine practice, it's hard to believe that e-commerce was once a wild notion that we could barely comprehend.

Indeed, e-commerce has come a long way from novel concept to paradigm-shifting behemoth. Its combination of convenience and cost-effectiveness has revolutionized the way we think about retail and monetary transactions. How revolutionary? Consider the following stats:

• E-commerce generated approximately $2.3 trillion worth of sales in 2017.
• E-commerce sales are projected to reach $4.5 billion in 2021.
• 96 percent of Americans have purchased something online in their lives.

As technological innovation continues to flourish in the digital age, e-commerce seems poised to make an even larger impact on our everyday lives.

This guide aims to provide a detailed overview of the rise of e-commerce and popular industry brands, information on what makes an e-commerce site successful, and a preview of where the industry may be heading next.

History of E-Commerce: How Did We Get Here?

It's commonly thought e-commerce's roots were planted in the 1990s, at the dawn of the internet era. While the concept as we know it took shape then, its genesis goes back much further. In fact, it goes back a half-century.

• 1969 — Two electrical engineering students from Columbus, Ohio, launch CompuServe, which becomes the country's first-ever commercial online service.
• 1979 — English inventor Michael Aldrich uses a transaction-processing computer and a doctored television to create the very first secure data transmission, laying the groundwork for online shopping.
• 1982 — The first online marketplace, Boston Computer Exchange, opens for business.
• 1995 — Influential e-commerce marketplaces Amazon and eBay launch. Both companies complete one million transactions by 1997.
• 1998 — E-commerce payment system PayPal debuts, giving consumers a trusted artery to handle both personal and business-related financial transactions.
• 2000 — Google debuts Google AdWords, giving e-commerce businesses the power to advertise through the Google search tool.
• 2005 — Amazon launches Amazon Prime membership.
• 2009 — Square debuts, allowing retailers to accept debit and credit payments through an app.
• 2014 — Apple introduces the mobile payment and digital wallet tool Apple Pay.

Key E-Commerce Facts and Statistics

It's no secret e-commerce is big business. As mentioned earlier, e-commerce sales are slated to reach $4.5 billion by 2021. Yet there's much more behind e-commerce's power and influence than projected revenue.

For instance, while online shopping is a popular activity, there is still plenty of room for e-commerce to grow.

• 67 percent of Americans ages 50 and older buy from online retailers.
• 40 percent of internet users purchased items online several times a month.
• 20 percent of internet users bought items or services online weekly.

One of the reasons e-commerce is expected to boom in the next few years is shifting demographics.

• Millennials make 54 percent of their purchases online.
• 40 percent of American males ages 18 to 34 state they would “ideally buy everything online.”
• 33 percent of American females ages 18 to 34 make the same claim.
• Millennials ages 18 to 34 spend more money online than any other age demographic.

Technological innovation is another key reason for the projected e-commerce growth. The proliferation of mobile devices and apps have made it easier to buy online than ever, and studies indicate people have taken full advantage of this.

• Customers spend nearly 60 percent of their online shopping time via mobile devices like smartphones and tables.
• Nearly 60 percent of consumers who own a virtual assistant like Siri or Alexa use it to purchase products.
• 40 percent of millennials have used voice search prior to making an online purchase.
• It's projected that brands that redesign their websites to adapt to visual and voice searches will see a 30 percent increase in digital commerce revenue.

Examples of Great E-Commerce Sites

E-commerce wouldn't have grown exponentially without excellent stores in the marketplace. The best proponents of the concept are entities that not only offer popular merchandise at competitive pricing, but they also use great customer service models that equal high-quality in-person service experiences.

Some of the giants in the e-commerce game include:

Amazon — Born in 1995 as an online bookstore, this e-commerce titan generated $15.7 million in revenue in its first year. It’s since built up an online empire, with an online store featuring a broad range of products, a fine art marketplace and an Emmy-award-winning entertainment studio.

eBay — Originally launched in 1995 under the name AuctionWeb, this peer-to-peer trading community generated $9.6 billion worth of revenue in 2017. The e-commerce giant also owns the popular online ticket exchange company StubHub.

PayPal — This game-changing e-commerce player was brought to life in 1998 by a group of investors that included famed entrepreneur Elon Musk. PayPal’s concept of allowing secure digital money transfers provided shoppers with a trusted method to pay for online goods and services. The company’s merchant services also made it easy for independent stores to make online purchasing an integral part of their business model.

Venmo — This PayPal subsidiary has emerged as a popular peer-to-peer payment app, particularly among millenials. According to its parent company, the app generated revenues of $13.1 billion during 2017.

Etsy — Billed as a “global marketplace for unique and creative goods,” this Brooklyn-based e-commerce platform focuses their retail model on vintage and handmade items. It generated its first billion-dollar quarter in the fourth quarter of 2017, although some buyers and sellers have expressed concerns about the site “selling out” amid its financial success.

Alibaba — This China-based e-commerce giant is considered by some to be Amazon’s main rival from a global perspective. It’s positioned itself as a leader in e-commerce innovation in areas such as cloud-based processing.

Tips for Building an E-Commerce Site

It’s projected that online sales will account for 14.6 percent of overall retail spending by 2020. This anticipated growth can make building an e-commerce-ready website essential for businesses. However, just having an online marketplace isn’t enough — it needs to be designed to attract and retain customers.

There are a few things to bear in mind when building an e-commerce site. First, it’s important that the website is appealing to the eye and user-friendly. Studies indicate:

• 38 percent of people won’t stay on a website if they don’t like the look of its layout.
• 44 percent of online customers will let their friends know about a poor web experience.
• 42 percent of online consumers want to see testimonials on an e-commerce platform.

To access more stats on this subject, please read this article by Conversio.

It is also important for an e-commerce website to create an online shopping environment that replicates basic elements of an in-person shopping experience, such as customer service interactions and demonstrations.

• 68 percent of American online shoppers interact with live chat features.
• 73 percent of shoppers are more inclined to buy something if they watch a video explaining its function or purpose.
• 93 percent of consumers believe appearance is the most vital deciding factor in buying a product.
• 88 percent of online shoppers state detailed product information is an extremely important part of the purchasing decision process.
• 46 percent of online shoppers want to see more product comparisons online.

For more information on these metrics, please read this article by Disruptive Advertising.

Finally, it’s important for an e-commerce website to create enticing ways to convert shoppers into purchasing customers. This can be achieved through incentivization, payment convenience and being honest with fees.

• PayPal transactions generate 70 percent more conversions than non-PayPal transactions.
• 68 percent of online shoppers state free returns and exchanges as the primary incentive to purchase products online.
• 24 percent of online consumers state a willingness to spend more money to qualify for free shipping.
• Online shoppers engage in online shopping cart abandonment 68 percent of the time.
• Shopping cart abandonment is projected to cost e-commerce sites at least $3 billion in revenue a year.
• 56 percent of consumers say their shopping cart abandonment stems from being saddled with unexpected costs.
• 43 percent of shoppers abandon their carts due to expensive shipping costs.
• 80 percent of online consumers say an inconvenient return policy deters their shopping experience.

For a deeper look at these statistics, please visit Statista.

What’s Next for E-Commerce?

In many respects, we’ve only seen the start of e-commerce’s presence in the global marketplace. Again, e-commerce revenue is projected to hit $4.5 trillion by 2021. However, increased earnings is not the only growth expected in the field. Innovation and conceptual expansion are expected to play key roles in its increased proliferation.

Some of the these avenues for growth include:

• Artificial intelligence — AI-driven products are already influencing the market. Again, nearly 60 percent of online shoppers use virtual assistant devices like Alexa and Echo to make purchases. This technology is predicted to play an increased role in handling consumer complaints and tailoring personalized shopping experience through collected behavioral data.
• More mobile checkout options — Experts predict more on-the-go payment options to hit the market and provide competition to existing brands like Apple Pay. This flood of choices and their collective convenience could translate into a potential upswing in consumer impulse buying.
• Brand-specific e-commerce — Strategists project an increase in e-commerce participants that solely promote their own companies, as opposed to being a marketplace like Amazon. This concept is already finding success in the e-commerce marketplace through online companies like Airbnb and Houzz.

Sources:

Big Commerce, “E-Commerce 101 + The History of Online Shopping: What the Past Says About Tomorrow’s Retail Challenges”

BusinessWire, “Infiniti Research Unfolds the Future of E-Commerce by Highlighting the Top E-Commerce Trends”

Conversio, “75 E-Commerce Facts, Quotes & Statistics That Will Blow Your Mind”

Disruptive Advertising, “Be in the Know: 2018 E-Commerce Statistics You Should Know”

Ecommerce Platforms, “Essential E-Commerce Statistics for 2018”

Ecommerce Platforms, “In-Depth PayPal Reviews: Is PayPal the Right Payment Platform For You?”

Etsy, “Keep Commerce Human”

Forbes, “Alibaba vs. Amazon: The Battle of Disruptive Innovation Beyond Traditional E-Commerce”

Fortune, “Why Etsy’s Stock Jumped 24 Percent Amid Some Complaints from Sellers and Buyers”

History, “Amazon Opens for Business”

Investopedia, “How Safe Is Venmo and Is It Free?”

Statista, Online Shopping Behavior in the United States — Statistics & Facts