Business

How ecommerce was born, the history: the first steps of Amazon, eBay and Alibaba

The advent of the Internet and electronic commerce

When we talk about ecommerce, electronic commerce, eBay and Amazon online stores immediately come to mind . They are certainly the platforms most used by users to make purchases of various kinds. However, the two US companies were not the first to enter this new world . We have to go back, to be precise to the 1960s , to encounter a first example of an e-commerce operation, understood however as the exchange of information digitally, from one computer to another. It can be said, in fact, that the development of electronic commerce goes hand in hand with the advent and diffusion of the internet . What made the first experiments possible was Electronic Data Interchange (EDI) , a data exchange system that replaced the sending of documents by post and fax. To find something similar to the operations that we carry out practically every day, we have to wait until 1979, when the English inventor Michael Aldrich connected a television to a computer for transaction processing, via the telephone line: thus the first teleshopping experience, on which ecommerce as we know it today is based. In this way, Aldrich was able to enable business-to-business (B2B) and business-to-consumer (B2C) communications and related operations. An invention that in 1984 gave Jane Snowball the opportunity to order groceries comfortably from home, thanks to her own TV and the videotex system, similar to our teletext. The same technology powered Minitel, in France , starting in 1980: it was a commercial network, promoted by the state postal and telecommunications company, which allowed you to make online purchases, book trains, check stock prices and search for a number in the telephone book. Subsequently, when the ARPAnet network, the US military project and embryonic form of the Internet, implemented the Transmission Control Protocol and the Internet Protocol (TCP/IP), a technology that still powers the Internet today, the spread of e-commerce accelerated.

The first digital purchase

We are in 1990 when Tim Berners-Lee developed the idea of ​​a web based on hypertexts, with reading tools such as browsers. It is at this moment that the foundations of the modern Internet were born, which – combined with the development of digital payment systems – favor the growth of e-commerce. The examples cited previously, in fact, still provided for cash payment on delivery, while the first credit card purchase dates back to 1994 : the entrepreneur Dan Kohn , via the Net Market portal, sold Sting’s CD – Ten Summoner’s Tales – to a friend for $12.48. It was the first secure digital transaction , because in the same year, Netscape, a browser that included the SSL (Secure Socket Layer) security protocol, was launched. It is a standard capable of encrypting personal information such as name, address, credit card number – incoming and outgoing – during an online transaction.

The birth of Amazon

We couldn’t talk about ecommerce, as we know it now, without mentioning Jeff Bezos and his creation, Amazon . In 2019 the US company celebrated its first 25 years of activity : the foundation, in fact, dates back to 5 July 1994, even if the site went online in 1995. At the beginning the objective of Bezos, whose first office was his garage in Seattle, was to sell as many books as possible, becoming the largest online bookstore, capable of attracting customers not only from the United States, but from all over the world. A result achieved over time, as demonstrated by the most recent data: Amazon is one of the few companies to have reached one trillion in capitalisation . A growth made possible not only by the sale of books, but by the marketing of various products and services that have allowed ecommerce to enter every market sector, thus able to satisfy the different needs of users . Of course, one wonders whether the success would have been of this magnitude if Bezos had followed through with his idea of ​​calling the online business he founded Cadabra. One of his lawyers, in fact, pointed out to him that the name chosen initially recalled the word “cadaver”, or corpse: not a good way to attract clients. Bezos, therefore, changed his mind, opting for Amazon for a twofold reason : starting with the letter A, the name would more easily appear at the top of search lists; finally, the term chosen would have recalled the Amazon River, an imposing river, just as his online activity should have been impressive. The diversification of the products and services offered, for example, were fundamental in resisting the consequences of the Coronavirus: with the spread of the pandemic, the company – at the end of the first quarter of 2020 – recorded a profit of 2.5 billion of dollars .

The birth of eBay

Similar to Amazon, eBay also went online with its site in 1995, to be precise on September 3, even if its name was different. At launch, it was called AuctionWeb and was founded by Pierre Omidyar : the first item sold was a broken laser pointer for $14.83. The founder was amazed by such an unusual purchase and contacted the buyer to ascertain whether he had understood the nature of the product: at that moment it was discovered that the user was a collector of defective laser pointers. In 1997 the company changed its name, although the initial idea was Echo Bay, a domain already chosen by a gold mine. The choice, therefore, fell on eBay which, unlike Amazon, was born as an online auction platform, capable of providing space for sellers and buyers of different kinds. The growth, since the early years, has been impressive to the point that in 2002 the company decided to purchase PayPal, then made independent in 2015, to exploit its digital payment and money transfer services via the Internet . However, the e-commerce platform offers the possibility of buying products instantly without the auction mechanism, thus guaranteeing buying and selling operations in different product areas: from technology to clothing, from DIY to sport, finishing with objects for the home and garden. As with Amazon, the diversification of products and services has helped reduce the negative impact of the Coronavirus: e-commerce, in fact, has often been a lifeline during the quarantine. According to financial data, at the end of the first quarter of 2020 , eBay’s profits amounted to $485 million.

Pierre Omidyar, the founder of eBay

Pierre Omidyar, the founder of eBay

The birth of Alibaba

Amazon and eBay paved the way for the many companies that, in the late 1990s and early 2000s, chose to go online, taking advantage of the advent of the Internet and new digital technologies. One of these is certainly Alibaba , a Chinese company based in Hangzhou, founded in 1999 by entrepreneur Jack Ma . It is made up of numerous companies that operate in different sectors, from e-commerce to cloud computing services and payment and trading platforms. Thanks to this group of companies, which includes Alibaba, AliExpress, Alipay, AutoNavi, Taobao, Tmall, in 2012 the company obtained 170 billion dollars from sales , more than Amazon and eBay combined: the Asian e-commerce giant has achieved this result by being able to count on the vast user base present in China. Like its other competitors, product diversification is one of its strong points and allows the platform to satisfy every type of user desire. It is no coincidence that by communicating the financial data as of March 31st , a date which in China also corresponds to the end of the fiscal year, Alibaba has demonstrated that it has achieved positive results, despite the impact of Covid-19. In fact, in the 2019-2020 financial year, the profit was 149.26 billion yuan, the result of the purchases of 960 million active users around the world .

The advent of social networks and mobile devices

With the arrival of smartphones and tablets on the markets, e-commerce has also changed in its usability . In fact, there are dedicated applications for the different services, which guarantee better use even from mobile. Furthermore, there is the growth of social networks , which allow various companies to come into contact with customers more directly. Platforms such as Facebook and Instagram, for example, favor the meeting between supply and demand with the advertising of sponsored posts . The various businesses, whether small or large, can create their public page to make themselves known to users and offer their goods. Not only that, Facebook has also created a section for buying and selling between users called Marketplace. Ultimately, times and methods change, but the ecommerce phenomenon continues to grow, thanks to the ability to adapt and new technologies. As documented by a report by Casaleggio Associati , in 2019 the e-commerce turnover in Italy was 48.5 billion euros, up 17% compared to 2018 . These figures, therefore, also include the operations carried out during days dedicated to shopping and organized by the e-commerce platforms themselves. Amazon, for example, has established Prime Day since 2015 , one or more days of celebration, during which subscribers to the service of the same name can enjoy exclusive offers and discounts on their purchases. eBay, in 2019, entered into even greater competition with Amazon, thanks to Crash Sale : a series of discounts valid during the month of July. Similarly, Alibaba organizes Single Day every year in November, a day similar to the better-known US Black Friday

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