History Of E-Commerce

Over the past 12 years, the Internet has changed the way we buy and sell goods and services. Do you remember buy airline tickets before the Internet? Can you imagine buying a new computer or car without doing hours of web research? And Christmas shopping? You actually had to step foot in the mall.

E-commerce has grown; it's estimated that 72 million users shopped online on "CyberMonday," on November 26, 2007.

By definition, e-commerce means the buying or selling of goods and services over the Internet. According to the Pew Internet & American Life Project, 66 percent of the adults online have purchased something over the Internet, whether it's books, shoes or a Caribbean cruise.

But if you extend e-commerce's definition to include researching products and services online without buying anything, or bidding on an online auction but not winning, then the number of adults who participate in e-commerce jumps to 93 percent . That's just about all of us.

Even with a slumping global economy, online retail sales continue to rise. According to recent forecasts by Forrester Research, online retail sales will increase 17 percent in 2008 to reach an annual total of $204 billion, with the biggest sellers being clothing, computers and cars.

E-commerce's history is short but fascinating. Over the course of a few decades, networking and computing technology have improved at exponential rates. Powerful personal computers linked to global information networks have powered a whole new world of intellectual, social and financial interactions. And this is only the beginning. How did e-commerce get started? What were the first companies to really capitalize on the selling power of the Web?

How E-commerce Started

Development of EC applications started in the early 1970s with electronic funds transfer (EFT), which refers to the computer-based systems used to perform financial transactions electronically. However, the use of these applications was limited to financial institutes, large corporations, and some daring businesses.

Electronic data interchange (EDI) was then developed in the late 1970s to improve the limitation of EFT. EDI enlarged the pool of participating company from manufacturers, retailers, services, and others. Such systems were called Interorganizational System (IOS).

An Interorganizational System (IOS) allows the flow of information to be automated between organizations to reach a desired supply-chain management system, which enables the development of competitive organizations.

From the 1990s onwards, electronic commerce would additionally include enterprise resource planning systems (ERP), data mining and data warehousing.

The term ‘electronic commerce’ was coined in the early 1990s when Internet became commercialized and users began flocking to participate in the World Wide Web. EC applications were then rapidly expanded.

Possibly EC is introduced from the Telephone Exchange Office. The earliest example of many-to-many EC in physical goods was the Boston Computer Exchange, a marketplace for used computers launched in 1982. The first online information marketplace, including online consulting, was likely the American Information Exchange, another pre-Internet online system introduced in 1991.

Since 1995, many innovative applications, ranging from direct online sales to e-learning experiences had been developed. Almost every organization in the world has a Web site.

In 1999, the emphasis of e-commerce shifted from B2C to B2B.

In 2001, from B2B to B2E, e-government, e-learning, and m-commerce.

In 2005, social networks started to rise and so did E-commerce and wireless applications.

E-commerce will undoubtedly continue to shift and change in the future.

Year	Event
1984	EDI, or electronic data interchange, was standardized through ASC X12. This guaranteed that companies would be able to complete transactions with one another reliably
1992	>Compuserve offers online retail products to its customers. This gives people the first chance to buy things off their computer
1994	Netscape arrived. Providing users a simple browser to surf the Internet and a safe online transaction technology called Secure Sockets Layer
1995	Two of the biggest names in e-commerce are launched: Amazon.com and eBay.com
1998	DSL, or Digital Subscriber Line, provides fast, always-on Internet service to subscribers across California. This prompts people to spend more time, and money, online.
1999	Retail spending over the Internet reaches $20 billion, according to Business.com
2000	The U.S government extended the moratorium on Internet taxes until at least 2005

The Founding Fathers of E-commerce

In July 1995, Jeff Bezos boxed up the first book ever sold on Amazon.com from his Seattle garage .Within its first 30 days of business, the self-proclaimed "Earth's largest bookstore" sold books to online shoppers in all 50 U.S. states and 45 countries . Amazon provided one of the first full-scale e-commerce business models.


With Amazon, Bezos tapped into a powerful new e-commerce market. Books, he had realized, were cheap to ship and easy to order directly from publishers. Publishers had already created vast digital archives of their titles on CD-ROM, something that could be uploaded to a Web site

Amazon.com set the standard for a customer-oriented e-commerce Web site. Users could search available titles by keyword, author or subject. They could browse books by category and even get personalized recommendations. They could also purchase books quickly and securely with the patented "one-click" checkout system.

But the most popular Amazon.com feature has always been the reader review option . On Amazon, any registered member can write and publish a book review. And other users can rank each review, creating a hierarchy of top Amazon reviewers. Amazon's online community feel -- in addition to the steep discounts on many books -- has contributed to the site's popularity.

Amazon went public in 1997, and as the dot-com boom reached its pinnacle in 1999, Bezos was named Time's "Person of the Year." Amazon has expanded its offerings beyond books. It currently offers music, movies, electronics, toys, home and garden equipment, clothing, jewelry, video games and digital downloads. Amazon runs seven different international Web sites, has distribution and customer service centers in seven countries and employs more than 17,000 people worldwide. Yet despite its growth, Amazon hasn't always been a financial powerhouse: It didn't post its first quarterly profit until 2001 and its first annual profit until 2004 . But in the first quarter of 2008, Amazon announced a profit increase of 33 percent over last year, an impressive achievement in tough economic times.

Back in 1995, when Bezos was shipping books from his garage, Pierre Omidyar, a software programmer, started coding a simple Web site he called AuctionWeb. Omidyar was curious if people would use the Internet to bid on each other's used items. Looking around for something to sell, Omidyar picked up a broken laser pointer. Within a day, it had sold for $14.83 . Omidyar e-mailed the buyer to make sure the guy knew it was broken. "I'm a collector of broken laser pointers" . Welcome to eBay.

eBay leveled the e-commerce playing field. You didn't have to be a Web entrepreneur or an existing business to sell things online. All you had to do was raid your attic, post a listing, and there was a good chance that someone, somewhere, would pay money for your old junk. In 1996, with two full-time employees, eBay sold $7.2 million worth of goods. By 1997, with the help of a Beanie Babies frenzy, eBay sold $95 million in goods. In 2007, eBay sold $52.5 billion in auctions, had more than 220 million registered users and 13,000 employees .

Both eBay and Amazon paved the way for today's e-commerce merchant. Consumers can buy almost anything online, including shoes, home goods and even a real shark's tooth. Just type "unusual items for sale" in a search engine, and see what comes up.