Tracing E-commerce

If we define electronic commerce as a business transaction done through electronic means, then the first recorded e-commerce transaction would be a telegraph transmission in 1858 which contained share price information from the New York Stock Market for a recipient trader in Europe. Around 20 years later, Western Union, the global leader in wire transfers, had fully capitalized on the telegraph technology and, in 1877, was able to process $2.5 million worth of business transactions.

An interesting business story that traces its roots to the emergent electronic technology at the time was about a telegraph operator who used the technology to sell an entire shipment of watches intended for a local jeweler, but was eventually refused. The telegraph operator then marketed and sold the unwanted watches to other operators and railroad employees via telegraph. The watches soon became a hit and the operator had to order subsequent shipments to meet the growing demand. By 1893, the telegraph operator, a young man named Richard Sears, formed Sears, Roebuck and Co., which evolved into the largest retailing company in the United States with branches in 2,248 locations and posting revenues of $22.94 billion in 2010. A few years after the second World War (1939-1945), various industries began collaborating on setting up a standard system for documenting exchange. Eventually published in 1975, this system, called the Electronic Data Interchange (EDI) standard is simple enough to bypass any machine specification and was used to process different electronic transactions.

Four years later, Michael Aldritch, a British inventor and entrepreneur developed a system that is now considered to be the direct predecessor of online shopping. The system enabled online transactions among consumers and business organizations.

The separate launches of Amazon.com and eBay in 1995 are two of the key milestones in e-commerce history. Amazon is now the largest online retail company in the United States which employs more than 30,000 staff and generated revenues of $34 billion in 2010. Amazon began as an online bookstore, where customers could view various publications and make purchases electronically. While the company was not profitable at first, it withstood competition and was able to demonstrate that its business model, which relies heavily on e-commerce, was feasible. For this achievement, Time Magazine named Amazon founder Jeff Bezos Person of the Year for 1999, recognizing his role in the steeply growing popularity of online shopping via websites.

EBay, on the other hand, is an online auction website where consumers process buy-and-sell transactions covering a wide range of products and services around the world. With the growing popularity of e-commerce, eBay members now count in the hundreds of millions. As its assets grew, eBay acquired other online companies, one of the most prominent being the PayPal website.

A significant player in e-commerce, PayPal is an online business that facilitates payments and money transfers via the Internet. Consumers create their PayPal accounts by assigning bank accounts and/or credit cards. Aside from consumers, online vendors, auction sites, app stores, and service portals also heavily use PayPal.

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Casey Trillbar is the editor of makeawebsiteguide.com, which is a website aimed at supplying a step by step guide on how to make a website. http://www.makeawebsiteguide.com

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