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History & Evolution of E-Commerce

E-commerce has come a long way since its inception in the early 1990s. The concept of conducting business online was initially met with scepticism and doubt, but over the years, it has become an integral part of our lives.

Last Modified: 15th Mar, 2023

It is difficult to fathom that conducting business online would have been deemed feasible just two decades ago. Nevertheless, thanks to the evolution of technology and changes in consumer behaviour, the world is primed for this transformative revolution in the marketplace and conventional business practices. Embracing e-commerce is crucial for every company, regardless of size, and implementing it sooner rather than later is strongly advised. Doing so will enable you to gain a competitive edge and remain at the forefront of progress in your industry.

For starters, what is e-commerce?

It is the sale of goods via the internet, to put it simply. This revolutionary approach to business gives rise to multiple e-commerce platforms, marketplaces, and websites.

Read on to uncover the nitty-gritty of the origin of e-commerce, its latest developments and how it got there, the benefits, and much more.

History of E-commerce

  • 1991 to 1998

1991 marks the year of the internet's increased bandwidth of accessibility. It was then that this privilege was achievable for all. Security protocols such as the Digital Subscriber Line or DSL and HTTP came into play in 2000. This implementation led to safe and secure e-transactions and dependable internet connection. Western Europe and the United States benefited from huge success in selling online goods.

  • 1999 to 2004

The large numbers and big talk gave way to investors and entrepreneurs investing more in the internet. The sudden burst of traffic on the internet and the rising element of speculation caused the dotcom collapse. The dotcom clash, or the dotcom bubble, took a toll on its users from the late 90s to the early 2000s. The forceful shutdown of online communication and shopping companies ensued. However, multinationals such as Amazon, Cisco, eBay, and Qualcomm withheld their ground and survived past this.

Challenges Faced by Businesses during the Early Adoption of E-commerce

The early 2000s era witnessed many small and large businesses switch to e-commerce. The user traffic of e-commerce users took a while for the systems to streamline their process units. Some challenges that they faced were:

  • Unpredictability of demand

The early 2000s didn't have enough equipment and technical tools to forecast a product's demand factor before its release. High SKU brands were often compelled to liquidate or discount a percentage of their goods, causing massive profit erosion.

  • Inadequate target audience reach

Now, companies have the tools, experience, and expertise to target the right audience for their brand. Unfortunately, that wasn't the same for the e-commerce industry two decades ago. Brands used to spend huge amounts to attract the right audience.

  • Delivery complications

Delivering a product to the consumer's doorstep is a hefty expense. Moreover, the increased charges for last-mile delivery were overbearing for companies. 

Tracing the Evolutionary Path of E-Commerce

Read the visual breakdown of the accomplishments and changes in e-commerce to understand it better. Let's walk you through some of the major events the e-commerce domain had to undergo:

  • 1969 - Compuserve launched its first online services for commercial use.
  • 1979 - Michael Aldrich cracked the code for electronic shopping and executed the first online transaction.
  • 1982 - Boston Computer Exchange entered the international market and became the first e-commerce company.
  • 1991 - Tim Berners-Lee and Robert Cailliau invented the World Wide Web.
  • 1992 - This year marks the launch of the first e-commerce website called Book Stacks Unlimited. It was an online bookstore that brought readers together from all over the world.
  • 1994 - An online web browser called Netscape Navigator was launched.
  • 1995 - The launch of eBay and Amazon.
  • 1998 - The creators of Paypal launched their app. It took online payment to the next level.
  • 1999 - The leading company Alibaba was launched.
  • 2000 - Google Adwords was the first online search advertising tool launched. It assisted retailers in advertising their products and services.
  • 2000 to 2017 - The introduction of marketing events such as Cyber Mondays and e-commerce sites such as Etsy, Apple Pay, Amazon Prime, and Square Inc into the e-commerce industry was made.

A Deep-Dive into the Three Versions of E-commerce

To narrow down the examples, this blog will stick to some of the pioneers of e-commerce.

  • eCommerce 1.0

What sets Amazon apart from other retailers? Despite conducting all its business activities online, the differences are not significant. Initially, it began by selling basic goods such as books, DVDs, and CDs, serving as the foundation for the extensive e-commerce giant it is today.

However, this is only the tip of the iceberg, as Amazon's true innovation lies in its groundbreaking model of granting third-party access to its website. This exclusive feature allows sellers to take advantage of Amazon's extensive warehouses and fulfilment network, ensuring seamless delivery to their customers. As of 2006, Amazon opened its doors to third-party sellers, and now, they make up a staggering 61 per cent of the company's Gross Merchandise Volume (GMV).

  • eCommerce 2.0

Direct to customers proved to be a powerful move in the late 2000s. It eliminated the middleman— retailers and distributors. The emergence of digitally-born businesses was the turning point in the e-commerce industry. This innovative approach upturned the previously faced challenges and broke free from traditional retailers.

The direct to customers approach gravitated to third-party providers that volunteered to handle delivery services at relatively cheaper rates. This cut down the last-mile expense.

  • eCommerce 3.0

This e-commerce model highlights the direct connection between customers and manufacturers. Live stream commerce, ultra-fast fashion, and community group buying are one of the best examples. Let's take the largest e-commerce platform in China as an example.

Pinduoduo, with a market capitalization of USD 152 billion has higher rates of active users than Alibaba. They can offer discounts of up to 80 per cent, thanks to the direct link between consumers and manufacturers.

Conclusion 

In conclusion, e-commerce has come a long way since its inception in the early 1990s. The concept of conducting business online was initially met with scepticism and doubt, but over the years, it has become an integral part of our lives. E-commerce has revolutionized the way we shop, communicate, and conduct transactions. As technology continues to advance, it is safe to assume that e-commerce will continue to evolve and shape the future of commerce.

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