E-commerce (electronic commerce) is the activity of electronically buying or selling of products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. E-commerce is in turn driven by the technological advances of the semiconductor industry, and is the largest sector of the electronics industry.
E-commerce typically uses the web for at least a part of a transaction’s life cycle although it may also use other technologies such as e-mail. Typical e-commerce transactions include the purchase of products (such as books from Amazon) or services (such as music downloads in the form of digital distribution such as iTunes Store). There are three areas of e-commerce: online retailing, electronic markets, and online auctions. E-commerce is supported by electronic business.
E-commerce businesses may also employ some or all of the following:
- Online shopping for retail sales direct to consumers via web sites and mobile apps, and conversational commerce via live chat, chatbots, and voice assistants;
- Providing or participating in online marketplaces, which process third-party business-to-consumer (B2C) or consumer-to-consumer (C2C) sales;
- Business-to-business (B2B) buying and selling;
- Gathering and using demographic data through web contacts and social media;
- B2B electronic data interchange;
- Marketing to prospective and established customers by e-mail or fax (for example, with newsletters);
- Engaging in pretail for launching new products and services;
- Online financial exchanges for currency exchanges or trading purposes.
History and timeline
The term was coined and first employed by Dr. Robert Jacobson, Principal Consultant to the California State Assembly’s Utilities & Commerce Committee, in the title and text of California’s Electronic Commerce Act, carried by the late Committee Chairwoman Gwen Moore (D-L.A.) and enacted in 1984.
A timeline for the development of e-commerce:
- 1971 or 1972: The ARPANET is used to arrange a cannabis sale between students at the Stanford Artificial Intelligence Laboratory and the Massachusetts Institute of Technology, later described as “the seminal act of e-commerce” in John Markoff’s book What the Dormouse Said.
- 1976: Atalla Technovation (founded by Mohamed Atalla) and Bunker Ramo Corporation (founded by George Bunker and Simon Ramo) introduce products designed for secure online transaction processing, intended for financial institutions.
- 1979: Michael Aldrich demonstrates the first online shopping system.
- 1981: Thomson Holidays UK is the first business-to-business (B2B) online shopping system to be installed.
- 1982: Minitel was introduced nationwide in France by France Télécom and used for online ordering.
- 1983: California State Assembly holds first hearing on “electronic commerce” in Volcano, California. Testifying are CPUC, MCI Mail, Prodigy, CompuServe, Volcano Telephone, and Pacific Telesis. (Not permitted to testify is Quantum Technology, later to become AOL.) California’s Electronic Commerce Act was passed in 1984.
- 1983: Karen Earle Lile (AKA Karen Bean) and Kendall Ross Bean create e-commerce service in San Francisco Bay Area. Buyers and sellers of pianos connect through a database created by Piano Finders on a Kaypro personal computer using DOS interface. Pianos for sale are listed on a Bulletin board system. Buyers print list of pianos for sale by a dot matrix printer. Customer service happened through a Piano Advice Hotline listed in the San Francisco Chronicle classified ads and money transferred by a bank wire transfer when a sale was completed.
- 1984: Gateshead SIS/Tesco is first B2C online shopping system and Mrs Snowball, 72, is the first online home shopper
- 1984: In April 1984, CompuServe launches the Electronic Mall in the US and Canada. It is the first comprehensive electronic commerce service.
- 1989: In May 1989, Sequoia Data Corp. introduced Compumarket, the first internet based system for e-commerce. Sellers and buyers could post items for sale and buyers could search the database and make purchases with a credit card.
- 1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using a NeXT computer.
- 1992: Book Stacks Unlimited in Cleveland opens a commercial sales website (www.books.com) selling books online with credit card processing.
- 1993: Paget Press releases edition No. 3 of the first app store, The Electronic AppWrapper
- 1994: Netscape releases the Navigator browser in October under the code name Mozilla. Netscape 1.0 is introduced in late 1994 with SSL encryption that made transactions secure.
- 1994: Ipswitch IMail Server becomes the first software available online for sale and immediate download via a partnership between Ipswitch, Inc. and OpenMarket.
- 1994: “Ten Summoner’s Tales” by Sting becomes the first secure online purchase through NetMarket.
- 1995: The US National Science Foundation lifts its former strict prohibition of commercial enterprise on the Internet.
- 1995: Thursday 27 April 1995, the purchase of a book by Paul Stanfield, product manager for CompuServe UK, from W H Smith’s shop within CompuServe’s UK Shopping Centre is the UK’s first national online shopping service secure transaction. The shopping service at launch featured W H Smith, Tesco, Virgin Megastores/Our Price, Great Universal Stores (GUS), Interflora, Dixons Retail, Past Times, PC World (retailer) and Innovations.
- 1995: Amazon.com is launched by Jeff Bezos.
- 1995: eBay is founded by computer programmer Pierre Omidyar as AuctionWeb. It is the first online auction site supporting person-to-person transactions.
- 1995: The first commercial-free 24-hour, internet-only radio stations, Radio HK and NetRadio start broadcasting.
- 1996: The use of Excalibur BBS with replicated “storefronts” was an early implementation of electronic commerce started by a group of SysOps in Australia and replicated to global partner sites.
- 1998: Electronic postal stamps can be purchased and downloaded for printing from the Web.
- 1999: Alibaba Group is established in China. Business.com sold for US$7.5 million to eCompanies, which was purchased in 1997 for US$149,000. The peer-to-peer filesharing software Napster launches. ATG Stores launches to sell decorative items for the home online.
- 1999: Global e-commerce reaches $150 billion
- 2000: The dot-com bust.
- 2001: eBay has the largest userbase of any e-commerce site.
- 2001: Alibaba.com achieved profitability in December 2001.
- 2002: eBay acquires PayPal for $1.5 billion. Niche retail companies Wayfair and NetShops are founded with the concept of selling products through several targeted domains, rather than a central portal.
- 2003: Amazon.com posts first yearly profit.
- 2004: DHgate.com, China’s first online B2B transaction platform, is established, forcing other B2B sites to move away from the “yellow pages” model.
- 2007: Business.com acquired by R.H. Donnelley for $345 million.
- 2014: US e-commerce and online retail sales projected to reach $294 billion, an increase of 12 percent over 2013 and 9% of all retail sales. Alibaba Group has the largest Initial public offering ever, worth $25 billion.
- 2015: Amazon.com accounts for more than half of all e-commerce growth, selling almost 500 Million SKU’s in the US.
- 2017: Retail e-commerce sales across the world reaches $2.304 trillion, which was a 24.8 percent increase than previous year.
- 2017: Global e-commerce transactions generate $29.267 trillion, including $25.516 trillion for business-to-business (B2B) transactions and $3.851 trillion for business-to-consumer (B2C) sales.