Electronic commerce, or e-commerce, involves buying and selling products and services on the Internet. Participation in e-commerce can come in many forms, like ordering goods, purchasing a service, buying a subscription to information, or even setting up an online bill-paying schedule. Modern life without e-commerce would be not only inconvenient but also much more complicated. But as ingrained as e-commerce has become in our lives, it wasn't that long ago when it did not even exist. E-commerce traces its roots back about 40 years, when "teleshopping" first appeared as the precursor to modern e-commerce. Retail giant Amazon created one of the first e-commerce websites, and many other businesses have joined the ranks since the early 1990s.
When Was Online Shopping Invented?
Michael Aldrich of the United Kingdom invented and pioneered e-commerce in 1979 by connecting television and telephone lines. He created 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." With the arrival of the Internet, one of the first online shopping sites was a bookstore called Book Stacks Unlimited. This website actually predated Amazon by two years. Eventually, Book Stacks Unlimited was acquired by Barnes & Noble.
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The first fully online transaction is reported to have been a sale of a Sting CD between two friends, which took place in 1994. The New York Times reported on this transaction, calling it the first retail transaction on the Internet. The sale was protected using data encryption software to ensure the privacy of the participants.
The origins of the technology that led to this transaction trace back to Electronic Data Interchange, a digital information transfer technology that could be a replacement for mailing and faxing documents. This technology made it possible to transfer information from computer to computer seamlessly without the need for human involvement.
In 1982, French innovators launched the Minitel, a service that was a precursor to the Internet. This service was free for telephone subscribers, and it 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. But meanwhile, the Internet opened to the public in 1991, and its rapid rise soon eclipsed the Minitel. In 2011, France Telecom discontinued the Minitel service.
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The World Wide Web Arrives
Tim Berners-Lee and Robert Cailliau published a proposal to build a hypertext browser called "WorldWideWeb" in 1990. During the same year, Berners-Lee also designed the first Web server. On August 6, 1991, Berners-Lee debuted the first website, ushering in the World Wide Web as a publicly available service. The National Science Foundation relaxed restrictions governing the commercial use of the Internet a short time later, which paved the way for online shopping. 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. Many concerns surrounded online shopping, but the development of Secure Socket Layers technology for security made it possible to send data over the Internet safely. Browsers identified authenticated SSL certificates on websites, indicating whether websites were safe and trustworthy. The SSL encryption protocol continues to be a prominent feature of Web security.
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Marketplaces, Payment, and Mobile Commerce
After the formative years of the Internet, advancements began to take hold that increased its commercial use. Amazon launched in 1995, initially as an online bookstore. At that time, brick-and-mortar bookstores could only carry about 200,000 books, but as an online store, Amazon had no such limitations. Since then, Amazon has expanded to the point that it now offers virtually every type of product. Amazon was also a leader in its use of user reviews. Using a rating scale for products, customers leave reviews that can have a major impact on sales.
Meanwhile, eBay emerged as a successful online auction website, also debuting in 1995. In 2005, Etsy launched as a global marketplace where people can create shops to sell their unique and often handmade items. And Amazon released Amazon Prime in 2005, a service that offered members free two-day shipping within the continental United States. This program forced other merchants to decrease shipping time and shipping charges.
PayPal launched in 1998 as a global e-commerce company that offers payment processing for online vendors and other commercial users. PayPal customers can hold, send, and receive funds in many different currencies. 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.
As mobile computing began to develop and grow, Amazon launched its first mobile website in 2001, starting the mobile commerce race. Because more people were using their mobile devices to access e-commerce websites, the push to make mobile sales possible was strong. Consumers today use mobile devices not only for purchases but also for product research, to find coupons, and to engage via social media.
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Stepping Into the Future of E-Commerce
E-commerce and consumer trends continue to evolve as technology expands and changes. The Census Bureau estimated that U.S. retail e-commerce sales for the fourth quarter of 2019 were $158.0 billion, an increase of 2.6 percent from the third quarter, and those figures are only poised to grow further.
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How to Compete and Thrive in the Modern Marketplace
As strong as Amazon is, other merchants can compete and thrive alongside this retail giant. A smaller, independent merchant can often connect with consumers in ways that a behemoth like Amazon can't match. Retailers also can work to create a memorable brand experience, which helps gain customer loyalty.
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Buyer Preferences Driving Rapid Distribution
Figuring out what shoppers will want next is a continual challenge for retailers of all stripes, but online merchants must also continually find advantages over brick-and-mortar stores. For example, new advances in product visualizers can enable online retailers to show products in various situations before purchase. It's also crucial to keep a website fine-tuned so that it loads quickly, or online merchants risk losing visitors. And since many shoppers browse the Internet to read reviews before buying an item it's important to monitor social media, answering questions and responding to comments in order to maintain a good reputation.
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