In the earliest times, commerce began as a system of trading one thing for another. Early humans traded animal skins or services for food, for example. Gradually, the concept of currency was established; primitive societies used shells or beads as currency, and in Mesopotamia and Egypt, gold bars were used as currency, but they had to be weighed every time an exchange was made.
The development of metal coins, thought to have originated between 700 and 500 B.C., standardized value and simplified commerce a great deal. Coins could be counted, not weighed, making transactions easier.
As gold and silver began to be used for coins around 500 B.C., trade between countries became possible, since these precious metals had a standard value anywhere. This enabled countries with surpluses of certain goods to sell their goods to other nations that needed them.
While the essentials of commerce have not changed since prehistoric times, in the last century a great deal of transformation has occurred. At one time, all business was small business, with merchants selling goods to local residents or other businesses (imagine the general store of a small town in the early 1900s). But the rise of corporations led to the establishment of chain stores and department stores.
In the 1980s, the “superstore”—a’ la Barnes & Noble, or the much-feared Walmart—came into being. Small retailers trembled at the news that one of these superstores was moving into town. With their massive economies of scale and low prices, superstores or “big-box” retailers put many small stores out of business.
But in the 1990s, the pendulum began to swing back in favor of small retailers again as the rise of ecommerce leveled the playing field. The groundwork for ecommerce was laid in the 1960s with the development of Electronic Data Interchange (EDI), which allowed digital transfer of data from one computer to the other. But concerns about security kept this tool from wide commercial use until 1994, when Netscape developed Secure Socket Layers (SSL) encryption. Around the same time, the first third-party services for processing online credit card sales emerged, and Verisign developed the first digital IDs, or certificates, to verify an online business’s identity.
In the mid-1990s, Amazon and eBay changed the face of ecommerce in America. The ability to search books by many criteria, get personalized recommendations and review purchases helped make Amazon popular among consumers. Meanwhile, eBay gave individuals a way to open their own online stores securely and simply.
The dotcom crash of 2000 put a damper on ecommerce for a while. Sites such as Pets.com had bet too heavily on Americans’ desire to buy everything online. But the world of commerce would never go back to the way it had been. In 2004, the Payment Card Industry Security Standards Council (PCI) was formed to ensure online businesses complied with financial transaction security requirements. This added security helped make online shopping appealing even to those who had formerly feared it.
According to data from BI Intelligence, some 40% of men aged 18 to 34 say ideally, they’d like to buy everything online! While young men are among the heaviest online shoppers, today women, Baby Boomers and even seniors are also highly active online shoppers. Millennials spend both the biggest dollar amount (an average of $2,000 annually) and the biggest percentage of their income (9%) online. As Millennials get older, their familiarity with ecommerce (after all, they’ve never known a time when it didn’t exist) will shape the future of commerce.
Beginning in 2011, sales of e-retailers surpassed sales of brick-and-mortar retail chains for the first time, comScore reports. That gap has continued to widen, with sales of web-only retailers growing at a much faster pace than those of brick-and-mortar sites. E-commerce sales are expected to reach more than $400 billion in the next several years, with Forrester Research projecting $414 billion in sales in 2018 and eMarketer estimating $491.5 billion in sales.
However, a new countertrend is beginning to occur in which formerly web-only retailers are launching brick-and-mortar locations to take advantage of consumers’ desire to see, test and touch physical merchandise before they buy. NastyGal, Warby Parker and Bonobos are among the successful online-only retailers branching into physical commerce. In fact, a study by Accenture last year reported that 65% of online shoppers planned to “webroom” during the holiday shopping season—in other words, research products online but then go to a physical store to buy. The desire to avoid shipping costs (47%) and being able to touch and feel merchandise (46%) are consumers’ biggest reasons for webrooming. Of course, the opposite trend exists, too. Many consumers “showroom,” or visit physical stores to touch and examine merchandise, then seek the best prices online.
To take your retail store or website into the future, it’s important that your website be optimized for mobile use. Think of those Millennials—they’re tomorrow’s customers, but their habits today should shape how your website prepares for the future.