A Brief History of Ecommerce (and a Look at the Future)
E-commerce, encompassing online buying and selling, has become a cornerstone of American retail, accounting for 15.6% of sales in the third quarter of 2023. This trajectory, however, wasn't achieved overnight. The history of e-commerce stretches back to 1969 with the founding of CompuServe, the first company offering computer sharing services through phone lines. Though early attempts to facilitate online sales existed, the true advent of e-commerce can be attributed to 1979 when British inventor Michael Aldrich demonstrated the concept of electronic shopping via a modified television connected to a computer.
The 1980s saw further advancements, including the launch of the world's first e-commerce company, Boston Computer Exchange, and the introduction of the Electronic Mall by CompuServe in 1984. However, it was the launch of the World Wide Web in 1990 and the subsequent development of secure online transactions in 1994, thanks to Netscape 1.0's Secure Socket Layer (SSL) protocol, that truly catapulted e-commerce into the mainstream. The late 1990s witnessed the emergence of online marketplaces like Amazon and eBay, alongside the rise of PayPal, which revolutionized online payments. While the dotcom bubble burst in the early 2000s, e-commerce eventually rebounded, spurred by the introduction of online shopping platforms like Shopify and the rise of online grocery delivery services. The COVID-19 pandemic further accelerated the shift towards e-commerce, proving its resilience and importance in the modern consumer landscape.
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 History of eCommerce Timeline
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.
1969: CompuServe Founded
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).
1972: Computers Facilitate the First Online Sale
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.”
1976: Online Transaction Processing Introduced
Atalla Technovation and Bunker Ramo Corporation introduced products designed for secure online transaction processing, intended for financial institutions.
1979: Electronic Shopping Invented
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.
1982: The Launch of the First eCommerce Company
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.
1983: Electronic Commerce Acknowledged
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."
1984: CompuServe Opens the Electronic Mall
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.
1990: World Wide Web Launched
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.
1994: The First Secure Online Transaction is Made
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.”
1995: Amazon, eBay, and the Online Marketplace Boom
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.
1998: PayPal Launched
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.
1999: Global eCommerce Reached $150 Billion
Startups proliferated, with entrepreneurs being seduced by the get-rich-quick promise of the internet. Of course, the good times won’t last forever...
2000: The Dotcom Bust and Online Advertising
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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2005: eCommerce Makes a Comeback
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.
2006: Online Shopping Platforms Increased
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.
2012: Food Shopping Goes Virtual
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.
2017: Ecommerce Remains Unstoppable
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.
2020: The COVID-19 Boost
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.
Keep Pace With the Opportunities of eCommerce
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:
- Elevate the customer experience
- Differentiate from competitors
- Increase brand awareness and recognition
- Impress current customers and attract new ones
- Create positive word-of-mouth and social proof
- Drive additional revenue
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.