Museum:History of E-commerce
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.
Even during the 1960s, businesses conducted electronic transactions via primitive computer networks. Through Electronic Data Interchange (EDI), they were able to share business documents with other companies’ machines. During the same time period, the military created ARPAnet, which enabled important information to be circulated in the event of a nuclear attack. These innovations laid the groundwork for e-commerce as it is known today. In fact, when ARPAnet switched to Transmission Control Protocol and Internet Protocol (TCP/IP) in 1982, it utilized the same type of technology that powers the internet of today. In 1969, two electrical engineering students from Columbus, Ohio, launch CompuServe, which becomes the country’s first-ever commercial online service.
In 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. The story goes that Aldrich thought of the idea while on a walk with his wife, bemoaning the inconvenience of making regular trips to the market. Wouldn’t it be so much easier if you could just order what you needed through the TV? Shortly, thereafter, he invented a system that advertised goods and services on television, giving viewers the ability to call in to a processing center to place orders. Aldrich called his system "teleshopping." E-commerce was born.
In the early 1980s, research universities were still the primary owners of computers. However, those who had access to computers could send emails and share documents through networks like BITNET and USENET. For home PC users, CompuServe was the major service provider of message boards, chat rooms and more. CompuServe introduced the Electronic Mall in 1984, which allowed users to purchase from more than 100 online retailers. In 1982, French innovators launched the Minitel, a service that was a precursor to the World Wide Web. This service was free for telephone subscribers and used a Videotex terminal and telephone lines to connect millions of people. The Minitel expanded, and by 1999, more than 9 million terminals connected about 25 million people. Technically, the first online marketplace was Boston Computer Exchange, which launched all the way back in 1982. It was primarily an online market that served people who wanted to sell their used computers.
In 1991, the National Science Foundation lifted its ban on commercial internet use. This historic move made e-commerce possible. Security was the next big issue, and the release of Netscape 1.0 in 1994 featured a protocol called Secure Socket Layer (SSL) that kept both the sending and receiving side of an online transaction secure. SSL made sure that personal information could be encrypted on the web. The first third-party credit card processing companies were launched shortly after. This made the first ever secure online retail transaction possible. On August 11, 1994, The New York Times reported that a man named Phil Brandenberger from Philadelphia purchased a Sting album from his computer.
In 1995, Amazon and eBay are the two companies responsible for revolutionizing e-commerce. Amazon in particular created one of the first full-scale business models for online retail. Jeff Bezos, Amazon’s founder and EO, sold the company’s first ever book in July 1995. Within its first month of business, Amazon had sold books to shoppers in every state and 45 countries. During the same year that Bezos launched Amazon, eBay got its start. Pierre Omidyar started a site called AuctionWeb that allowed users to bid on each other’s used items. It was innovative in its own way, leveling the playing field so that the average person, rather than just entrepreneurs and tech experts, could sell things online. Both companies complete one million transactions by 1997. In 1995, the National Science Foundation started charging user fees for registration of domain names. In just three years, registered domain names jumped from 120,000 to more than 2 million. The late 1990s also saw new ecommerce platform options for merchants. Miva’s first catalog-based ecommerce product was launched in 1997, achieving wide distribution in the late 1990s.
E-commerce payment system PayPal debuts in 1998, giving consumers a trusted artery to handle both personal and business-related financial transactions. According to BigCommerce, the average cost to build an online store in 1999 was about $100,000 — and that didn’t include purchasing inventory, a warehouse space or shipping logistics. Today, startup costs can be as low as $30 and stores can launch in a weekend, the same article notes.
Google debuts Google AdWords, giving e-commerce businesses the power to advertise through the Google search tool. In 2004, the Payment Card Industry Security Standards Council was created to make sure that businesses comply with security requirements. This organization develops and implements security standards for account data protection.
In 2005, Amazon launches Amazon Prime, a membership offering free two-day shipping within the contiguous United States on all eligible purchases for a flat annual fee. The membership quickly became popular, putting pressure on other merchants to offer fast and inexpensive shipping options., and Etsy launched as a global marketplace where people could create shops to sell their unique and often handmade items. In 2009, Square debuts, allowing retailers to accept debit and credit payments through an app.
2010s started when Facebook throws its hat in the E-commerce ring with sponsored stories and Stripe enters the world of online payments, all at 2011. In 2014, Apple introduces the mobile payment and digital wallet tool Apple Pay and Google responds by introducing Android Pay in 2015.