E-commerce, short for electronic commerce, refers to all transactions done over the internet that concerns goods or services. The e-commerce industry is one of the most stable and resilient sectors, but it was not always as successful as it is now. Like most industries, it started from a humble beginning and continuously developed over time.
Given its current strong showing despite the pandemic, is it safe to say that e-commerce is the most adaptable and strongest industry?
How it All Started
The initiation of e-commerce can be tracked down to the 1960s when Electronic Data Interchange (EDI) was developed to digitally transfer mail and fax. The 1990s saw the invention of the World Wide Web by Tim Berners-Lee and Robert Cailiau, a platform that became publicly available on the internet. Then, on August 11, 1994, the first real e-commerce transaction occurred when a 21-year old serial entrepreneur, Dan Kohn, sold a Sting CD via his website called NetMarket; the transaction was carried out involving a credit card and was protected by encryption technology.
Amazon was launched the following year solely as a platform for selling books, while eBay (originally named AuctionWeb) was founded not long after for buyers and sellers that preferred an open marketplace. The preceding events also gave birth to PayPal, making e-commerce possible globally. Zappos, Victoria’s Secret, and Alibaba were also brought into being in the same decade.
E-commerce Stays on an Upward Trend
The e-commerce industry has not seen any signs of decline fast-forward to this day, and still continues to thrive steadily globally. New studies forecast that further growth will be experienced in the coming years, anticipating a 265% growth rate from $1.3 trillion in 2014 to $4.9 trillion in 2021.
As of January this year, the biggest category in online shopping is travel, including accommodation, with total sales of $1.19 trillion, followed by fashion and beauty ($620.1 billion), and electronics and physical media ($456.9 billion). Other booming categories include food and personal care, furniture and appliances, toys and DIY hobbies, digital music, and video games. Users around the world are also expected to reach 4,658.1 million by 2024.
How the Growth of E-commerce Affects the World
Startups, small businesses, and global enterprises are all impacted by e-commerce’s significant ripple effect. For large retailers, studies show that they are maintaining their secure position with their consumers, but the emergence of the online marketplace made the competition even more challenging.
Amazon has become the most practical go-to place for consumers who want to buy something that is traditionally sourced from department stores, thus making sales for Sears and Macy’s chains to decline. For small businesses, e-commerce brought a lot of advantages such as wider consumer reach and better customer service to those who prefer to buy online. The platform also gives them the likelihood to diversify and sell their products directly to consumers.
The coronavirus outbreak disrupted and changed the e-commerce landscape forever, although it somehow had a positive result in terms of total sales. Strict protocols and lockdown orders to prevent the spread of the virus brought long-lasting impacts on the way businesses conducted online transactions, and these will likely carry on even after the COVID-19 pandemic. Market players, consumers, and other industry participants were forced to pivot and adapt to the new normal, where everything is almost done online.
Businesses and sectors that have not penetrated or are slower to take on e-commerce needed to quickly adapt to the changing environment or else be forced to completely cease activity. Reputable mortgage lenders, for example, experienced a lag due to the lack of digitization initiatives. Physical distancing protocols are restricting the fulfillment of necessary documents such as verification of IDs, contracts, or land titles that need to be personally witnessed, sworn, or affirmed by lawyers and other third-party specialists. The pandemic will not last, but e-commerce will survive, thus, initiatives from sectors to implement remote processes will help them create better opportunities and mitigate the impacts of potential business hurdles.
What This Means for the Future
In the future, despite a predicted uptake on e-commerce sales, businesses are still contending and looking for ways to overcome hurdles. The number of competitors is also growing due to the fact that the internet is an equal platform for everyone, hence providing each one with a tantamount opportunity. Even the most niche companies are fighting hard to have a place in the market, what more for a small business that offers the same products or services as thousands of other brands.
Quality website traffic and user experience is also a challenge — from designing an attractive, user-friendly, and virus-free website to maximizing the content through SEO. The most critical challenge in e-commerce is security due to numerous hackers as well as fraudsters trying to steal confidential data or infecting websites with viruses, a threat that impacts consumers as well.
As with any other industry, e-commerce presents a pool of opportunities but is also filled with obstacles for market players. Getting ahead of trends and mobilizing the latest technologies can help brands to drive revenue, get new customers, and increase market share.