All You Need To Know: The History of E-commerce

All You Need To Know: The History of ecommerce

From early EDI to mobile boom and AI insights, explore the evolution of ecommerce and prepare for the next wave of innovations transforming how we shop.

ecommerce has evolved since its start, changing how we live, shop and do business. Let’s dive into the history and the future of ecommerce.

It all began 40 years ago when early technologies like Electronic Data Interchange (EDI) and teleshopping were introduced in the 1970s, paving the way for the modern-day ecommerce business as we know it today.

The history of ecommerce and the Internet are inextricably linked. When the Internet was first made available to the general public in 1991, online purchasing became conceivable. Thousands of firms have followed in the footsteps of Amazon, one of the first ecommerce sites in the US to start selling things online.

Since the advent of online buying, ecommerce’s ease, security, and delightful user experience have all grown dramatically.

Online shopping

Online shopping was founded in 1979 by Michael Aldrich, an entrepreneur by profession in the UK. He connected a modified domestic TV to a real-time multi-user transaction processing computer via a telephone line, marketed in 1980 and offered as a business-to-business system sold in the UK, Ireland, and Spain.

One of the earliest consumer buying experiences was Books Stacks Unlimited, an online bookshop founded by Charles M. Stack in 1992. Stack’s store started as a dial-up bulletin board three years before Amazon. Books Stacks Unlimited was acquired by Barnes & Noble in 1994 and moved to the Internet as Books.com.

First online transaction

On August 12, 1994, issues of the New York Times published, “Internet is open, the team of young cyberspace entrepreneurs celebrated what was the first retail transaction on the Internet using a readily available version of powerful data encryption software designed to guarantee privacy”.

ecommerce Timeline

  • Invention and the early days (1960 – 1982)

The development of EDI in the 1960s paved the way for ecommerce. EDI replaced traditional mailing and faxing documents by allowing a digital data transfer from one computer to another.

Trading partners may exchange orders, invoices, and other business documents using a data format that complies with ANSI ASC X12, North America’s most widely used standard for inter-industry electronic exchange. After an order is sent, it is inspected by a value-added network (VAN) before being forwarded to the recipient’s order processing system. EDI allowed data to be sent without the need for human involvement.

Michael Aldrich’s innovation involves wiring a television to their grocery and having them deliver the food, inspired by a talk with his wife about their monthly supermarket shopping journey. Aldrich developed the term “teleshopping” to describe his idea, a forerunner to today’s internet shopping.

  • Early ecommerce Platforms (1982 – 1990)

The development of EDI in the 1960s paved the way for ecommerce. EDI replaced traditional mailing and faxing documents by allowing a digital data transfer from one computer to another.

Trading partners may exchange orders, invoices, and other business documents using a data format that complies with ANSI ASC X12, North America’s most widely used standard for inter-industry electronic exchange. After an order is sent, it is inspected by a value-added network (VAN) before being forwarded to the recipient’s order processing system. EDI allowed data to be sent without the need for human involvement.

Michael Aldrich’s innovation involves wiring a television to their grocery and having them deliver the food, inspired by a talk with his wife about their monthly supermarket shopping journey. Aldrich developed the term “teleshopping” to describe his idea, which was a forerunner to today’s internet shopping.

  • The World Wide Web arrives (the early 90s)

Tim Berners-Lee and Robert Cailliau submitted a World Wide Web Hypertext Project proposal in 1990. The Dynatex SGML reader, which CERN licenses, served as the motivation for this effort.

Berners-Lee created the first web server and wrote the first web browser in the same year. Shortly after that, he debuted the web on August 6, 1991, as a publicly available service on the Internet. When he decided he would take on the task of marrying hypertext to the Internet, the process led him to develop URL, HTML, and HTTP.

The National Science Foundation eased its limitations on commercial Internet usage in 1991, resulting in a massive increase in online purchasing. The NSF began collecting a fee for domain name registration in September 1995. By 1998, the number of domain names had risen to two million. The NSF’s involvement on the Internet had ended by this point, and much of the supervision had transferred to the private sector.

Many people were concerned about the safety of internet buying from the start. However, Netscape developed a security protocol – Secure Socket Layers (SSL) — and an encryption certificate that made data transmission over the Internet safe. Web browsers could tell if a site had an authenticated SSL certificate and, depending on that, whether or not it could trust it.

SSL encryption protocol is a vital part of web security, and version 3.0 has become the standard for most web servers today.

  • Major marketplaces emerge: Amazon, eBay, and ecommerce platforms

The commercial usage of the Internet advanced dramatically in the mid-to-late 1990s. Amazon, which began as an online bookshop in 1995 and has grown to become the world’s largest online retailer, was one of the earliest ecommerce sites. The number of titles available in traditional brick-and-mortar bookshops was around 200,000. Amazon provided significantly more things to the buyer since it was an online-only retailer with no physical limits.

Amazon’s product selection includes music, video downloads, electronics, fashion, furniture, food, and toys. The retail behemoth was among the first online retailers to provide product reviews and a rating scale. Product reviews are now widely regarded as one of the most powerful tools for increasing sales and establishing consumer confidence.

After Amazon, the success story of eBay – an online auction site that debuted in 1995, and Etsy, which launched in 2005 and, by 2019, saw gross merchandise sales totaling $4.97 billion globally.

For a set annual subscription, Amazon established Amazon Prime in 2005, which offers free two-day shipping inside the contiguous United States on all qualifying orders. The membership soon gained traction, placing pressure on other businesses to provide swift, low-cost delivery choices.

Along the lines of eBay, the Middle East-based auction website was introduced – Souq.com, which later diversified into automobile and real estate classified verticals. The website took off almost immediately, and later on, it expanded to the Kingdom of Saudi Arabia. Since its launch, Souq has become the most prominent ecommerce provider in the region and one of the fastest-growing businesses, which was later acquired by Amazon in 2017.

  • The rise of mobile commerce

Mobile commerce was introduced in 1997 when two mobile device-enabled Coca-Cola vending machines were installed in Finland. Mobile commerce gained speed over the next two decades as more users began conducting mobile transactions, and websites evolved to provide better user experiences. By 2025, mCommerce sales are expected to make up over 10% of all US retail sales, which would be a growth of 7% points since 2018.

Consumers and business buyers turn to mobile devices for product research and coupons, with engagement on social media becoming increasingly popular. Business buyers expect more consumer-focused features like personalization and responsive design and demand the ability to quickly locate product details, secure pricing, and receive online help.

The future of ecommerce

Amazon has set the bar for customer service and innovation in ecommerce. Still, there are many things that independent merchants can accomplish that Amazon can’t, such as creating a memorable brand experience and earning loyal, engaged consumers for life.

So, what will buyers desire next? That is the question that both online shops are pondering. Then there are the millennials, who have changed how people shop online. A website that lags or takes a long time to load will lose millennial visitors faster than you can say “avocado toast.” Before purchasing, millennials often search and read reviews as part of their self-directed buying process.

Sellers must watch comments and listen to what customers say about their products and customer service to succeed in ecommerce. A site with an out-of-date design will signal to millennial shoppers out-of-date procedures, products, and pricing, damaging sales and holding back your firm.

So what’s next for ecommerce? The only certain thing is that there will continue to be more changes on the horizon. Your online stores must be flexible, adaptable, and scalable enough to meet these changes and future-proof your business for long-term success.