Published on January 11th, 2019 | by Guest0
How the E-Commerce Industry Grew and Became Bigger Than Ever
If you’ve bought something within the past month, there’s a high chance you purchased that item online. Everything from clothes to electronics, art supplies to snacks for school, and now even fresh produce and meat can be purchased online.
As Statista predicts, U.S. e-commerce revenues are expected to generate over $138.7 billion dollars annually by 2022, while global e-commerce could raise overall revenues to $4.87 trillion dollars by 2021. But how exactly did the e-commerce industry get started and become so big at such a rapid pace?
The history of e-commerce isn’t very old; some of the biggest changes only go back a few years. Yet it’s through innovation, disruptive businesses, and more that e-commerce has become the billion-dollar industry that it is today. Let’s look at how the history of e-commerce has shaped it into what it is today and what the future may hold for this massive industry.
A Brief History of E-Commerce
The World Wide Web (WWW) was created in 1990, but it wasn’t until 1995 that the U.S. National Science Foundation lifted their restriction on commercial sales via the web. Within a few months, the first online sale was completed in the U.K., and shortly thereafter, Jeff Bezos launched his business, Amazon, as an online bookstore. Since then, e-commerce has only exploded in scale, and within a few years of the first transaction, major online businesses were growing rapidly. By 1999, global e-commerce sales had reached $150 billion dollars.
Even with the dot com bust of 2000, growth was still happening at an expedited pace. In 2002, Alibaba in China had achieved profitability within two years of launching, and eBay acquired the online payment service of PayPal. Amazon continued to grow and expand their products, and by 2015, they would account for nearly half of all e-commerce growth, with over 500 million products sold.
But it’s not just retail businesses that have learned to profit from the industry’s growth over the past decade; even web developers and software analysts have seen a massive spike in job growth and opportunities thanks to e-commerce. Although the dot com bust saw many developers lose their jobs, it didn’t take long before the job market recovered and many of them found new websites to create, manage, and analyze.
Plus, starting an e-commerce business has become easier than ever, and almost anyone with a product to sell, a business plan in mind, and access to the internet can run and operate a successful e-commerce business.
Current Trends in E-Commerce
But enough about the past — what’s happening in e-commerce now? Here are some of the current trends in e-commerce, how they’re shaping the conversations around how people shop, how brands interact with customers, and how companies can stay on track of all the analytical madness.
E-Commerce Myths or Misunderstandings
One of the biggest myths about e-commerce is that it is destroying brick-and-mortar businesses, or even that it will take up to 50 percent of all retail sale in the next five to 10 years.
As Forbes contributor, Steve Dennis, points out, this simply cannot happen. Not because e-commerce isn’t powerful enough, but because there will always be a need for brick-and-mortar stores in some capacity — especially when customers are more eager to try on, feel, touch, and compare products in person. As enticing as online sales may be, sometimes there’s no substitute for seeing the actual item in person, and that alone is keeping many businesses afloat.
In some ways, e-commerce might make up 50 percent of retail sales in specific industries, such as clothing, books, and home or office goods. But e-commerce will most likely never outsell brick and mortar when it comes to home improvement items/services or groceries — despite Amazon’s best intentions. Plus, many e-commerce businesses are now starting to create their own brick-and-mortar versions — even Amazon, Warby Parker, and many other top online retailers. Chances are, brick and mortar isn’t going anywhere anytime soon.
Big Data’s Role and Privacy Concerns for Customers and Businesses Alike
Big data plays a pivotal role in e-commerce simply by helping manage, organize, and make sense of all the data involved in a sale. Everything from inventory management to supply chain logistics can help e-commerce companies stay on top of the rising demands from customers. They can track items in real time through the supply chain, be notified when they need to place new orders on items, and so much more. Without big data, e-commerce might simply be a nightmare to manage — both for companies and customers.
On the reverse, big data is also to thank for the recent callouts against Facebook — the most recent scandal revealing that the “free” social media company was selling private user information to other sites like Spotify, Microsoft, Netflix, Amazon, and many others. This information could then be used to make targeted ads for users on the social media giant’s website. E-commerce benefited greatly from this breach of confidence, but it could end up hurting some companies as customers become distrusting of targeted ads. Time will tell what Facebook’s fate will become and how e-commerce will have to adjust both branding and outreach, yet again, to cater to an evolving customer base.
However, big data in e-commerce doesn’t come without its own valid critiques, especially where big data usage and online sales are concerned. With the growth in technology, there has also been a growth in data or identity theft, the breach of confidential customer information, and much more. Even Equifax, one of the top three credit bureaus in the nation, wasn’t safe from bad actors stealing vital information (such as social security numbers, dates of birth, names, addresses, and credit history) of nearly half of their customer base — if not more — in 2017.
So how is e-commerce dealing with these valid customer concerns, and how are entrepreneurs adapting to better protect their businesses and customer information? According to Forbes, 2018 was the year of security focus — in other words, the year that businesses stepped up their game to really try to combat hacking. Unfortunately, it can be quite difficult to stay one step ahead of hackers and bad actors, but putting company protocols in place, partnering with cybersecurity experts, and educating employees can be the most effective ways of preventing future breaches.
What Does the Future Hold for E-Commerce?
Looking towards the future, e-commerce still has a lot of room to grow. Companies such as Amazon, Alibaba, eBay, and now even Google with “Google Express” are all competing for customer attention and the chance to make billions. Although e-commerce as a whole is unlikely to trump brick-and-mortar businesses, Statista predictions still estimate that e-commerce will grow exponentially before 2021.
However, it’s not just money that exists in the future for e-commerce: Automation, sustainable processes, global growth and international competition, and a massive growth of data that requires dedicated servers and cloud storage are all going to be a part of the larger conversation around e-commerce.
Flying delivery drones are already being considered by giants such as Amazon and UPS, but who knows what other companies have waiting up their sleeves. Additionally, as more countries and businesses focus on sustainability, many e-commerce companies may have to adjust their supply chain focus from one of just convenience to that of both convenience and global awareness.
Predicting the future is never an easy task, but for the giant industry that is e-commerce, there is nowhere to go but up!
Article credits: This write-up has been contributed by Brooke Faulkner.