Shop Studio - Shopware Agency

History of E-Commerce

E-Commerce (entailing the buying and selling of goods) has become a multi-billion dollar business. Over the last 2 decades many companies have brought their merchandise online. Among them very few that are worth billions of dollars and millions of companies who have a comparatively small audience. As a matter of fact, it has never become easier to sell your merchandise online. But how did it all come about? Let’s find out!

Image E-Commerce

The Internet and its infancy

The idea of the Internet is not as young as some might think. It started with just connecting a few computers between different US universities. These days, computers, smartphones and many other devices can go online. A lot of developments have happened over the last decades. Did you know that e-commerce has been around since the late 70s? In 1979, Michael Aldrich, a British inventor, came up with a system that could connect your TV to a computer. His system was called the Videotex. Alas, it never really took off. But it would mark the start of an industry worth many trillion dollars. Back then, there were much fewer online shopping and payment options available.

Online shopping in the 80s

Even in the 80s, online shopping already took place. Of course, the interface looked very basic and the shopping experience was a very different one. But it took until 1990 for web browsers to be a thing. Tim Berners-Lee, a person who has had a huge influence on the modern Internet, wrote the first web browser. It’s name? WorldWideWeb. What a coincidence! The name was later changed to Nexus in order to avoid confusion. The code was written on a NeXT computer, which is on display in the CERN museum.

The 90s and 2000 bring some big changes

The Internet in the 90s and early 2000s looked vastly different from how we know it today. These days, we are used to excellent design and websites loading in milliseconds. Back then, many websites looked much more basic. You were lucky if you had ISDN or were among the early DSL users. Many folks had to rely on a 56.6K modem. Every time you dialed into the Internet, you did not only block your parents phone line, but the dial-in process sounded like your were listening to a conversation led between aliens.

The dot-com bubble

The 90s were a great time for technology. At the beginning, also for investors. But this was about to change in the not so distant future. Sure, from 1995 to 2000, the NASDAQ gained about 400% in value. Many people thought that the index will just keep on rising. But as an old proverb says: what goes up, must come down. Between 2000 und 2002, the NASDAQ also lost quite some value. Many companies during the dot-com bubble had decent financing but did not manage to establish a sustainable business model that would work out in the long-term. It thus comes as not much of a surprise that they also went out of business. One company even stopped operating just nine months after its IPO. It was craziness at its finest and it took some time for the market and the trust in technology/e-commerce to be reinstated.

Browsers are growing up

Although there were other browsers around, Mosaic really took off in the 1990s. In the mid-90s, Microsoft did license Mosaic and built the Internet Explorer around it. At the same time, Netscape Navigator rose in prominence and was a widely used browser in the second half of the 90s. Some say that Microsoft bundling its operating system with is own browser might have led to the demise of Netscapes. Even courts debated this question which resulted in a settlement between Microsoft and the Department of Justice.

Why are we even talking about browsers? Because they play a very important role when visiting online stores. They enable us to use many different features and to peruse the vast amount of products awaiting us online. Not only in regular online shops but also on digital auction platforms. The one that is probably best known also came around in the mid-90s; in 1995 to be precise. As you can see, shopping online doesn’t just entail buying new goods. In addition to auction platforms, you can also sell vintage und used items and still make a handsome buck or two from doing so. Its founder, Pierre Omidyar did recognise that early on. His company started out with the name AuctionWeb. In 1997, it got the name we all associate it with today. In 1998, it did an IPO and went public, making his founder an instant billionaire. It also bought a well-known payment provider in 2002. This is a strategy many successful companies work with. They observe the markets and other successful companies to examine which one would integrate well with their own company.

Successful companies from the 90s that still exist today

In addition to the auction platform, Jeff Bezos also founded a globally renowned store in the 90s. Starting out with books, it now sells many other items; both new and used alike. Did you already know that the company’s original name used to be Cadabra? Neither did I, but it certainly pulled off some magic. Bezos recognised the power and global reach of the Internet early on. He left his job at an investment firm on Wall Street to branch out on his own. He then literally started the company in his garage. Given those humble beginnings, it is amazing to see how far the company has come almost 30 years later. Some say that the review option on every article has contributed to the company’s tremendous success. It might be one contributing factor but there are very likely a few more. While the success of the company and Bezos is a dream come true, you should understand that it is the rare exception, not the rule. Sure, startups are great and humanity evolves because of innovation. Yet, the majority of startups will fail. This is a sad, but realistic truth.

Bezos took his company public in 1997. The company actually wasn’t profitable for many years. Even stockholders got impatient, because Bezos always focussed on the long-run and reinvested his earnings. His focus probably also helped him to not go bankrupt during the burst of the dot-com bubble. Overall, in business and life, it is a good idea to have a long-term focus. To control your own impulsiveness and impatience. In most cases, it tends to pay off.

When talking about innovation and e-commerce, many people tend to think about the U.S. and understandably so. Yet, there are some very well known and successful companies in other countries as well. One of those companies was founded by former English teacher Jack Ma in 1999. Today, he is one of the best known businessmen from China. The name of his company sounds like the name of a person that is surrounded by 40 thieves. Unlike its US counterparts, this company waited until 2014 to go public.

Jack Ma picked the name because of its universal appeal; most people have heard of the famous tale. The company started out as a B2B marketplace; limiting its target audience to just other businesses at this point in time. It took the company just three years to become profitable. The site enabled Chinese sellers to conduct business with international buyers. Given that it is available in many Western languages, it makes connecting much easier. The company also launched a marketplace with a C2C focus, thus widening its target audience. In addition, it also started its own payment company which has become one of the most widely used payment companies on this planet. It seems to be a trend to either start or buy your own payment company when your auction or marketplace platform becomes very successful.

Having your own online shop has never been easier

Also, starting your own e-commerce store has become much easier these days. There are easy to configure solutions like Shopware. They operate like a CMS, but are much more powerful. They allow for easy and quick configuration while also looking very appealing at the same time. Shops can be configured the way you want them to look. Pictures and text can be easily copied onto the website. Having your own online store has never been easier than today.

Mobile and its significance

Also, mobile commerce contributed to the rise as well. Given the rapid development of smartphones over the last years, as well as 5G with a maximum speed of 20 GB per second offer a tremendous amount of options. Moreover, these days most people prefer going online with a mobile device compared to a desktop computer or a laptop. It has become much easier to access the Internet from anywhere and at whatever time we please. Companies have recognised this trend and many new startups have come into existence over the last years. This concerns companies serving huge target audiences just as much as many other ones that operate in a niche but might have become the digital market leader in their respective field of business.

What is Cyber Monday all about?

Cyber Monday has become a traditional shopping day for many folks who love buying goods online. It is celebrated on the Monday following Thanksgiving. Is is the digital equivalent to Black Friday These days more than 10 billion Dollars are spent on Cyber Monday. It takes place in quite a few countries around the world and sometimes turns into an entire week of special discounts.

COVID-19 has helped

Although COVID has done a lot of damage around the globe, it also increased the amount of money being spend online. This might not come as much of a surprise. Given requirements like social distancing and being essentially confined to your own apartment the rise in online spending is pretty logical. Yet other branches, many of them brick and mortar, have suffered quite some revenue losses. Thus, if you can, it is always a good option to also make the goods or services your business sells available online. It is likely to benefit you in the long run.

What will the future of e-commerce look like?

The future promises to be interesting. There are many technologies that we have just started using and they offer quite some potential. Two of them are augmented reality and virtual reality. Both concern themselves with visual realities. Augmented reality tends to put a virtual layer on reality. Virtual reality just works with a ‘fantasy world’. How can you integrate them into e-commerce? It has already been done. A large furniture store uses AR to help people visualise what a certain piece of furniture would look like in their apartment. Doing so can help increase sales and lower returns.

Voice also has an interesting future. It enables us to easily navigate certain aspects of our life. Given our hectic schedules, it can make life easier and a bit more comfortable. At this point in time, it is also a good idea to look at Voice Search Optimization. Given the immense importance SEO plays for anyone doing business online, it might pay off to focus on Voice Search Optimization early on.

Lastly, artificial intelligence is just starting. Its uses cases are numerous and the technology can be used to make things easier for buyers and sellers alike. It can easily recognise patterns and help with automatising many aspects of running an online store. One great example is recommending articles that can be interesting for prospective buyers. In addition, AI can also be employed in a chatbot context. This enables a store owner to both help customers that have questions before buying something and thereafter.

E-commerce is a very interesting and broad field. Given the amount of time people spend online, it does not look like its growth will reverse in the foreseeable future. It will be very interesting to observe, which novelties e-commerce boasts in 5-10 years from now.