A Brief History of E-Commerce.
The creation of the Internet is arguably the most important discovery of the modern era, not only because of the implications for personal communication, but in the world of business as well. Internet based business (E-Commerce) is first thought to have been preceded by the Electronic Data Interchange or EDI, which, according to Mivamerchant.com (2011) replaced traditional mail by allowing digital transferring of documents from one computer to another. The EDI provided a number of benefits to businesses, including expediting business transactions with a higher degree of accuracy (Brewer, 2010). While the EDI is one of the first examples of widespread standardization and use of E-Commerce, there are a number of more basic and isolated examples of Internet based business transactions.
Despite the obvious uses for legitimate businesses, the first thing sold on the Internet was in fact a bag of marijuana (Power 2013). According to Markhoff (2005), “In 1971 or 1972, Stanford students using Arpanet accounts at Stanford University's Artificial Intelligence Laboratory engaged in a commercial transaction with their counterparts at Massachusetts Institute of Technology. Before Amazon, before eBay, the seminal act of e-commerce was a drug deal. The students used the network to quietly arrange the sale of an undetermined amount of marijuana.” The ARPANET (Advanced Research Projects Agency Network) was the first network to implement TCP/IP (Control protocols for network usage) and essentially the originator of the modern global Internet (Kleinrock 2005).
Enter Michael Aldrich, who in 1979 connected his television to a transaction- processing computer via a telephone line, creating what he called, “teleshopping”; what is now online shopping (MivaMerchant 2011). This discovery would lay the groundwork for the plethora of online retailers today, but before that could happen, a France Telecom produced precursor to the Internet named Minitel launched in 1982 (MivaMerchant 2011). Lauded as one of the most successful pre-world wide web online services, Minitel lent terminals to telephone subscribers and gave them access to commercial listings (Sayare 2012). France Telecom estimated that almost 9 million terminals had access to the network, servicing over 25 million people and providing upwards of 26,000 services (Sayare 2012). Although Minitel did not become the Internet as we know it today, it highlighted the importance of how successful Buyer to Buyer (B2B) E-Commerce could be, and paved the way for Buyer to Consumer (B2C) E-Commerce to emerge.
In the 1980’s, CompuServe became one of the most popular home PC networking services; allowing users to e-mail, use chat rooms, and more importantly for the purpose of E-Commerce, allowed users to access the “Electronic Mall” which allowed users to purchase goods from approximately 100 online merchants (Roos, 2008). Though the electronic mall itself was not the most widely renowned feature, it provided a glimpse into the future of E-Commerce, as it laid out a format that is now tried and true for online shopping.
Following the popular advances in Internet based businesses, in 1990 a British computer scientist named Tim Berners-Lee created the first Internet browser, and titled it “The Worldwide Web” (Roos, 2008). This invention allowed the public to easily access pages on the Internet. The simple browser created an easy access point for both consumers and businesses to buy and sell their wares (Berners-Lee, 2012). Although this did not immediately lead to comprehensive online commerce, it was arguably the most important step toward achieving E-Commerce.
Shortly after Berners-Lee’s invention rocked the world, more and more advancements in Internet technology followed, creating a more interconnected business environment. Two important occurrences in the early to mid 1990’s helped to advance the field. In May of 1995, the National Science Foundation allowed the Internet to be open to commerce, whereas before there were strict rules in places for research purposes (Kelley 2005). Shortly afterward, Netscape released a new browser named Navigator, which used Secure Socket Layers (SSL) to ensure that data could be securely transmitted over the Internet (MivaMerchant, 2011). Later that year was when E-Commerce began to emerge in its modern form. “In 1994 and 1995, the first third-party services for processing online credit card sales began to appear. First Virtual and CyberCash were two of the most popular. Also in 1995, a company called Verisign began developing digital IDs, or certificates, that verified the identity of online businesses” (Roos, 2008).
1995 became a huge year for E-Commerce, with some of the most recognizable names in the industry today beginning their business operations. Amazon, EBay and Yahoo all launched in 1995, as a result of the huge boom in Internet based operations (Roos, 2008). Amazon set the pace for E-Commerce, as it allowed its users to search for goods, write reviews, and purchase goods in a simple, customer friendly format (Roos, 2008). The accolades that were showered upon Amazon and its creator Jeff Bezos showed how far E-Commerce had come in such a short time. Amazon is still the largest online retailer in the world (MivaMerchant, 2011).
The formation of EBay was another huge step forward in the development of E-Commerce. EBay allowed users to buy and sell used goods, and soon became immensely popular. In 1996, with two full time employees, EBay sold $7.2 million worth of goods (Roos, 2008). In 1997 that number climbed to $95 million, and by 2007 was $52.5 billion in auction sales (Roos, 2008). As Amazon and EBay rose in popularity, two more companies whose names are synonymous with Internet business, Google and Yahoo, launched and quickly became leading names in the industry. Originally launching solely as web directory services, according to MivaMerchant.com (2011), they “began their own ecommerce subsidiaries with Google Shopping and Yahoo! Auction, in following years.”
As E-Commerce continues to evolve, the methods by which consumers make their purchases have grown alongside it. Beginning with the creation of PayPal in 1998, which, according to MivaMerchant.com (2011): “The company is an acquired bank that performs payment processing for online vendors, auction sites, and other commercial users. They allow their customers to send, receive and hold funds in 24 currencies worldwide”. Some of the most recent innovations to come to the E-Commerce world involve methods of payment and online currency. One of the more relevant evolving currencies today is Bitcoins, a so-called crypto currency that “uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network.” (Bitcoin.org 2012). In November of 2013, the total market capitalization of all bitcoins in existence exceeded US $10 billion for the first time (Fensh, 2014).
The rise of Internet based currencies has enabled various new venues of E-Commerce.
In 2011, Ross William Ulbricht, while operating under the name “Dread Pirate Roberts, launched the website “The Silk Road”, an online black market (Anderson and Farivar, 2013). The Silk Road was only accessible through the Tor web browser, which enables users to browse anonymously. Users were able to buy drugs, erotica, art and many other products (Anderson and Farivar, 2013), using the aforementioned crypto currency, Bitcoin. The site became immensely popular, with an estimated $15 million worth of transactions occurred there annually (Brito, 2013). Though Ulbricht would be arrested, The Silk Road is still up and running, with a new user taking on the name of Dread Pirate Roberts (Anderson and Farivar, 2013).
Since its inception, E-Commerce has constantly grown in popularity around the world. The United Kingdom is the owner of the largest E-Commerce market in the world, while the Czech Republic’s economy is the most affected by E-Commerce, with “Almost a quarter (24%) of the country’s total turnover is generated via the online channel” (Eurostat, 2013). In 2012, E-commerce sales topped $1 trillion for the first time in history (Emarketer, 2013). This astounding growth demonstrates the importance E-Commerce now has in the world today.
Conclusions
The history of E-Commerce has been a brief yet torrid one. E-Commerce has the good fortune of being attached to one of the fastest developing resources in the world, The Internet, and as such it grows alongside it. From humble beginnings to a $1 trillion industry, E-Commerce is a rapidly growing technology with no signs of slowing. The founding fathers of this industry are still active today. And although some aspects of E-Commerce leave it vulnerable to exploitation, continued government regulations stabilize the industry for continued future growth.
Despite the obvious uses for legitimate businesses, the first thing sold on the Internet was in fact a bag of marijuana (Power 2013). According to Markhoff (2005), “In 1971 or 1972, Stanford students using Arpanet accounts at Stanford University's Artificial Intelligence Laboratory engaged in a commercial transaction with their counterparts at Massachusetts Institute of Technology. Before Amazon, before eBay, the seminal act of e-commerce was a drug deal. The students used the network to quietly arrange the sale of an undetermined amount of marijuana.” The ARPANET (Advanced Research Projects Agency Network) was the first network to implement TCP/IP (Control protocols for network usage) and essentially the originator of the modern global Internet (Kleinrock 2005).
Enter Michael Aldrich, who in 1979 connected his television to a transaction- processing computer via a telephone line, creating what he called, “teleshopping”; what is now online shopping (MivaMerchant 2011). This discovery would lay the groundwork for the plethora of online retailers today, but before that could happen, a France Telecom produced precursor to the Internet named Minitel launched in 1982 (MivaMerchant 2011). Lauded as one of the most successful pre-world wide web online services, Minitel lent terminals to telephone subscribers and gave them access to commercial listings (Sayare 2012). France Telecom estimated that almost 9 million terminals had access to the network, servicing over 25 million people and providing upwards of 26,000 services (Sayare 2012). Although Minitel did not become the Internet as we know it today, it highlighted the importance of how successful Buyer to Buyer (B2B) E-Commerce could be, and paved the way for Buyer to Consumer (B2C) E-Commerce to emerge.
In the 1980’s, CompuServe became one of the most popular home PC networking services; allowing users to e-mail, use chat rooms, and more importantly for the purpose of E-Commerce, allowed users to access the “Electronic Mall” which allowed users to purchase goods from approximately 100 online merchants (Roos, 2008). Though the electronic mall itself was not the most widely renowned feature, it provided a glimpse into the future of E-Commerce, as it laid out a format that is now tried and true for online shopping.
Following the popular advances in Internet based businesses, in 1990 a British computer scientist named Tim Berners-Lee created the first Internet browser, and titled it “The Worldwide Web” (Roos, 2008). This invention allowed the public to easily access pages on the Internet. The simple browser created an easy access point for both consumers and businesses to buy and sell their wares (Berners-Lee, 2012). Although this did not immediately lead to comprehensive online commerce, it was arguably the most important step toward achieving E-Commerce.
Shortly after Berners-Lee’s invention rocked the world, more and more advancements in Internet technology followed, creating a more interconnected business environment. Two important occurrences in the early to mid 1990’s helped to advance the field. In May of 1995, the National Science Foundation allowed the Internet to be open to commerce, whereas before there were strict rules in places for research purposes (Kelley 2005). Shortly afterward, Netscape released a new browser named Navigator, which used Secure Socket Layers (SSL) to ensure that data could be securely transmitted over the Internet (MivaMerchant, 2011). Later that year was when E-Commerce began to emerge in its modern form. “In 1994 and 1995, the first third-party services for processing online credit card sales began to appear. First Virtual and CyberCash were two of the most popular. Also in 1995, a company called Verisign began developing digital IDs, or certificates, that verified the identity of online businesses” (Roos, 2008).
1995 became a huge year for E-Commerce, with some of the most recognizable names in the industry today beginning their business operations. Amazon, EBay and Yahoo all launched in 1995, as a result of the huge boom in Internet based operations (Roos, 2008). Amazon set the pace for E-Commerce, as it allowed its users to search for goods, write reviews, and purchase goods in a simple, customer friendly format (Roos, 2008). The accolades that were showered upon Amazon and its creator Jeff Bezos showed how far E-Commerce had come in such a short time. Amazon is still the largest online retailer in the world (MivaMerchant, 2011).
The formation of EBay was another huge step forward in the development of E-Commerce. EBay allowed users to buy and sell used goods, and soon became immensely popular. In 1996, with two full time employees, EBay sold $7.2 million worth of goods (Roos, 2008). In 1997 that number climbed to $95 million, and by 2007 was $52.5 billion in auction sales (Roos, 2008). As Amazon and EBay rose in popularity, two more companies whose names are synonymous with Internet business, Google and Yahoo, launched and quickly became leading names in the industry. Originally launching solely as web directory services, according to MivaMerchant.com (2011), they “began their own ecommerce subsidiaries with Google Shopping and Yahoo! Auction, in following years.”
As E-Commerce continues to evolve, the methods by which consumers make their purchases have grown alongside it. Beginning with the creation of PayPal in 1998, which, according to MivaMerchant.com (2011): “The company is an acquired bank that performs payment processing for online vendors, auction sites, and other commercial users. They allow their customers to send, receive and hold funds in 24 currencies worldwide”. Some of the most recent innovations to come to the E-Commerce world involve methods of payment and online currency. One of the more relevant evolving currencies today is Bitcoins, a so-called crypto currency that “uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network.” (Bitcoin.org 2012). In November of 2013, the total market capitalization of all bitcoins in existence exceeded US $10 billion for the first time (Fensh, 2014).
The rise of Internet based currencies has enabled various new venues of E-Commerce.
In 2011, Ross William Ulbricht, while operating under the name “Dread Pirate Roberts, launched the website “The Silk Road”, an online black market (Anderson and Farivar, 2013). The Silk Road was only accessible through the Tor web browser, which enables users to browse anonymously. Users were able to buy drugs, erotica, art and many other products (Anderson and Farivar, 2013), using the aforementioned crypto currency, Bitcoin. The site became immensely popular, with an estimated $15 million worth of transactions occurred there annually (Brito, 2013). Though Ulbricht would be arrested, The Silk Road is still up and running, with a new user taking on the name of Dread Pirate Roberts (Anderson and Farivar, 2013).
Since its inception, E-Commerce has constantly grown in popularity around the world. The United Kingdom is the owner of the largest E-Commerce market in the world, while the Czech Republic’s economy is the most affected by E-Commerce, with “Almost a quarter (24%) of the country’s total turnover is generated via the online channel” (Eurostat, 2013). In 2012, E-commerce sales topped $1 trillion for the first time in history (Emarketer, 2013). This astounding growth demonstrates the importance E-Commerce now has in the world today.
Conclusions
The history of E-Commerce has been a brief yet torrid one. E-Commerce has the good fortune of being attached to one of the fastest developing resources in the world, The Internet, and as such it grows alongside it. From humble beginnings to a $1 trillion industry, E-Commerce is a rapidly growing technology with no signs of slowing. The founding fathers of this industry are still active today. And although some aspects of E-Commerce leave it vulnerable to exploitation, continued government regulations stabilize the industry for continued future growth.