From a 'Sting' CD to Cyber Monday: How e-commerce changed the world
From the early days of dial-up internet payments to the latest in smartphone virtual wallets, e-commerce platforms have come a long way in 25 years.
The sale of a Sting album, “Ten Summoner’s Tales,” on Aug. 11, 1994 is credited as the first online transaction.
American Dan Kohn, a 21-year-old entrepreneur, sold the CD to a friend, who used a credit card to spend US$12.48, plus shipping costs. That online sale was the first to be protected by encryption technology, according to online payment giant Paypal.
From the creation of eBay in 1995 to the creation of cryptocurrency Bitcoin in 2009, e-commerce has moved at blistering speed.
“The world’s biggest vending machine is now your mobile phone,” branding expert Tony Chapman told CTVNews.ca.
“Whatever your heart desires, experiences, services, merchandise, is a search and click away.
“It has also enabled the creation of the platform economy - Airbnb, Amazon, Skip The Dishes, Uber, Uber Eats, Booking.com, Facebook etc. – that now have a combined market capitalization of $7.1 trillion and connect buyers and sellers directly. They have eliminated the middle man and many do so without holding any of their own inventory. “
In 2018, e-commerce retail trade sales in Canada amounted to nearly $1.6 billion, according to Paypal.
Online businesses in Canada generated about $40 billion last year and that number is expected to jump to $55 billion by 2023, the payments company said.
The advent of high speed internet has been the number one catalyst for the advancements in e-commerce, according to Paypal Canada president Paul Parisi.
Last year, 87 per cent of Canadians made an online purchase, with almost half of those on mobile, Paypal said.
The secure online payment system started in 1998 and now has 7.1 million Canadian customers and more than 250 million account holders worldwide.
“The biggest advancements have been in mobile technology and will continue to be,” Parisi told CTVNews.ca.
“People want to use whatever device they have and we have to be able to give it however they want it.”
Advances in artificial intelligence and faster 5G internet speeds will push progress in e-commerce, Parisi added.
“Upcoming internet speed is 100 times faster than we have today,” he said.
Paypal employs 250 staff in research and development in Vancouver and 32 workers in Toronto.
E-commerce has also had a democratizing effect for “crowd sourced creations,” according to Chapman, where creators can seek buyers and conduct business on sites like Etsy.
In 2006 for example, Canadian blogger Kyle MacDonald bartered his way from a single red paperclip to a house in a series of fourteen online trades over the course of a year.
While some countries in Europe and elsewhere are moving towards a cashless society, e-commerce has also enabled a black market, Chapman added.
And data breaches are also a cause for concern for cashless consumers.
“Data can either be a positive for the consumer by only offering things they value or it can be a danger and exploited; change biases, motivate unwanted purchases, or identity threat,” Chapman explained.
“The one other major danger is Amazon. Half of America are now Prime shoppers - and loving faster, better and often cheaper.
“However with that much power they can dictate how you think, feel and what you buy. Too much power in the hands of one company is never a good thing.”
On Cyber Monday last year, American consumers spent US$7.9 billion, making it the biggest online shopping day in U.S. history, Paypal said.
While four out of five Canadians shop online, less than one in five Canadian small and medium businesses are using online payment tools such as electronic invoicing, online marketplaces, or e-commerce-enabled websites, according to PayPal data.
“Credit for inventing the worldwide web and the first web browser – essential for e-commerce – must be given to Sir Tim Berners-Lee, a British scientist at the European research center CERN,” Ian Lee, associate professor at Carleton University’s Sprott School of Business, told CTVNews.ca.
“But e-commerce required an entrepreneur who understood the revolutionary usefulness and benefits of the World Wide Web. His name was Jeff Bezos, who founded Amazon in 1994, because he understood the genius of Tim Berners-Lee and the historically unprecedented impact of the web.”
The web’s revolutionary power created a platform for anything to be sold to someone far away, Lee explained.
“Now consumers and users can sit in their pajamas in their bedroom and do banking or dating or buying anything online - virtually - without leaving their home,” he said.
“This is why Jeff Bezos is the richest person in the world today. And why Amazon is the largest publicly traded firm in the world today.”
Professor Michael A. Geist, Canada research chair in internet and e-commerce law at the University of Ottawa, said the “e” in e-commerce is becoming increasingly redundant.
“What started as a curiosity on computer desktops, is today a foundational part of commerce that is grounded in a mobile, wireless communications world,” he told CTVNews.ca.
“Virtually all commerce relies on technologies for sales, logistics, data and fulfilment. As it grows, we are seeing e-commerce increasingly rely on data, an evolution that offers opportunities, but also carries privacy, security, and competition risks due to concerns about misuse.”