The history of eCommerce - part 2

The history of eCommerce - part 2

Introduction

In part one of this series we looked at the earliest origins of eCommerce, from before the time of the commercial use of the internet.  Today we look at eCommerce from the the early days of the internet and the mad scramble by businesses of capitalise on this new way to sell products to customers and other businesses.

In the early days, the internet was in many ways a hard concept to explain to people.  Today of course it seems completely normal, and its rare to find someone who doesn't use the internet.  But for most of the 90's the opposite was true.

This was a time when printed material was really the primary way you learnt about a new topic, so a trip to the library or bookshop was a very common way to learn.  Even today many consider a printed book to be a more authoritative source of information on a topic than an online source, but supplementing the information from a book with online information allows you to see a wider picture of the topic you're interested in.

This was probably part of the reason why it was hard to communicate to people what exactly the internet was and what it offered.  But despite the percentage of internet users sitting at just 1% in 1995, retailers didn't take much convincing to see the benefits of being able to sell to people directly in their homes.

Percentage of internet users worldwide since 1990

The release of Netscape Navigator as the first really user-friendly internet browser marked a seismic shift in how people could use the internet.  And support for cookies presented the opportunity for each user's internet experience to be truly customised.  This really marked the start of effective eCommerce as we know it today.

Retail opportunities

The Office for National Statistics figures only date back to the end of 2006, but back then we were seeing internet sales as a part of total sales sitting at just 2.5%, so we can speculate that in 1999 this percentage sat at 1-2% or even less.  So the opportunities for online sales in the 1990's were relatively small, but at the same time most retailers recognised the importance of investing in an online presence to secure the future of their business - and they were right to do so.  During the pandemic the UK internet sales percentage shot up to a staggering nearly 38% of total sales, although it has now dropped to a more expected 26% which largely matches what you could have projected from pre-pandemic times stats.  However, there is still a year on year trend where the percentage of internet sales is increasing, with historic data suggesting around a 10% increase every 6 years.  If this trend continues, by 2040 internet sales will make up 50% of total sales.

The start of the internet marked the beginning of an unparalleled amount of change in modern society, and virtually everyone recognised the fact that the world was going to change completely, and it wasn't just a fad.  Of course time has proven this to be true, but even so, throughout the 90's, online opportunities for retailers were minimal compared to what could be achieved from a bricks and mortar store.  But a few retailers who managed to get the formula just right, still became well established, household names in this era.

Amazon

If you were an internet user in the 90's you probably struggle to remember many online brands, but some really shaped the eCommerce landscape back them.  One you will remember is Amazon which launched in 1995.  What you might not remember is that initially the only thing Amazon sold was books.  I remember Amazon very quickly becoming the go to source to buy basically any book you could imagine.  For me at least what really made Amazon work was the fact that there was a selection of books available to buy that you just would never find on the high street.  This store alone probably spelt the end for many peoples trips to the library or book shop because the selection and availability of books far outstripped anything you could find on your local high street.  Of course it didn't take long for Amazon to expand their range to more than just books and now of course they have countless product lines both from Amazon themselves but also many other sellers.  The combination of availability, good delivery times and competitive pricing has kept Amazon at the forefront of eCommerce ever since.

eBay

eBay also launched in 1995 and presented a new way to shop - buying from other internet users rather than from a business.  It also presented the opportunity for people to make money by becoming an established seller themselves, and reviews and ratings from other users gave credibility to both buyers and sellers.  In the early days of eBay it very much became known as the place to buy virtually anything, often at a significantly lower price than you'd find elsewhere.  eBay remains popular today, but doesn't have the same influence in the eCommerce space as it used to.

Netflix

In 1997 Netflix launched, although in an entirely different form to how we know it today.  It wouldn't be technically possible to stream video on demand over the internet until the late 00's, so Netflix started as purely an online DVD rental service.  In the UK we might remember LoveFilm which offered a very similar product in the early 2000's, and was then aquired by Amazon to eventually become Prime Video.  Initially you needed to pay per DVD rental but in 1999 Netflix launched a subscriber based service where you could have unlimited DVD rentals for one monthly price.

Netflix succeeded because it offered a range of films to rent you'd never find in your local rental shop.  The convenience was also a major selling point - you could select the film you wanted from the comfort of your own home, keek it for as long as you wanted, and then post it back when you'd finished watching it.  The formula worked, and by 2003, Netflix announced they'd broken the 1 million user mark.

PayPal

PayPal launched in 1998, and gave both retailers and customers a hugely convenient and secure way to pay for services and products.  It made offering an effective online retail solution much more accessible for many retailers who perhaps didn't have the budget or means to offer an effective, user friendly payment solution.

However PayPal did take a few years, and interations to become the payment giant we know today.  It only gained true popularity after becoming the payment method of choice for eBay, and this hugely accelerated it's recognition and take up by both customers and retailers.

Conclusion

The 90's marks the start of the modern era of eCommerce and while some of the brands that launched back then are still well established today, many fell behind the competition and no longer exist.

I guess what we can see from looking back at eCommerce in the 90's, is that the brands that succeeded and are still successful today are the ones who did something new, and did it better than anyone else.  It's increasingly hard to do something that's entirely new in eCommerce these days, but the opportunity to strive to do what you're doing better than anyone else is still very much alive, and key to the success of any eCommerce store.

Thanks for reading part two, you can find part one on the earliest history of eCommerce here, and in part 3 next week, we'll be looking at the founding of some more giants, and the origins of many of the eCommerce frameworks we use today.

See you next week!