In order to fully understand ecommerce, let’s look at its history.
In general, businesses can be classified into six main types of ecommerce:
Now let’s take a closer look at each type of electronic commerce.
1. Business-to-Consumer (B2C).
In B2C ecommerce, a business conducts transactions with a consumer. In the context of ecommerce, B2C is one of the most popular sales models. If you buy shoes from an online shoe retailer, that’s a business-to-consumer transaction.
2. Business-to-Business (B2B).
B2B ecommerce refers to the sale of goods or services between businesses, such as a manufacturer and a wholesaler or retailer. B2B is not consumer-facing and takes place only between businesses.
Often, business-to-business sales revolve around raw materials or repackaged products.
3. Consumer-to-Consumer (C2C).
C2C was one of the first forms of ecommerce. The sale of a product or service between customers is called customer-to-customer. For example, those on eBay or Amazon are C2C selling relationships.
4. Consumer-to-Business (C2B).
Consumers make their products or services available to businesses, reversing the traditional ecommerce model.
iStockPhoto, for example, allows you to buy stock photos directly from photographers online.
5. Business-to-Administration (B2A).
Businesses and administrations transact with each other through B2A transactions. For instance, legal documents, social security, etc., are examples of products and services.
6. Consumer-to-Administration (C2A).
The C2A model is similar to B2B, but consumers sell online products or services to a company. C2A could include online education consulting, online tax preparation, etc.
With the assistance of information technology, B2A and C2A are aimed at increasing government efficiency.
Ecommerce: A Brief History
In its earliest form, ecommerce was introduced about 40 years ago.
The eCommerce timeline
1969: CompuServe is founded.
Early CompuServe technology was created using a dial-up connection by electrical engineering students Dr. John R. Goltz and Jeffrey Wilkins.
From the 1980s to the mid-1990s, CompuServe introduced some of the earliest forms of email and internet connectivity to the public.
1979: Michael Aldrich invents electronic shopping.
Electronic shopping was invented by English inventor Michael Aldrich, who connected a modified TV over a telephone line to a transaction-processing computer.
Using this technology, closed information systems could be opened and shared by outside parties for secure data transmission – and this was the genesis of modern e-commerce.
1982: Boston Computer Exchange launches.
It was the world’s first ecommerce company when Boston Computer Exchange launched.
In a nutshell, it served as a marketplace for people looking to sell their used computers online.
1992: Book Stacks Unlimited launches as first online book marketplace.
Book Stacks Unlimited was launched by Charles M. Stack as an online bookstore. Originally, the company offered a dial-up bulletin board service. The site switched to the Internet in 1994 and operated from the Books.com domain.
1994: Netscape Navigator launches as a web browser.
Netscape Navigator was created by Marc Andreessen and Jim Clark as a web browser. In the 1990s, Netscape Navigator was the primary web browser on Windows platforms before modern giants like Google emerged.
1995: Amazon launch.
Amazon was founded primarily as an ecommerce platform for books by Jeff Bezos.
1998: PayPal launches as an ecommerce payment system.
PayPal, originally known as Confinity by its founders Max Levhin, Peter Thiel, Like Nosek and Ken Howery, made its debut on the ecommerce stage as a money transfer tool.
The company merged with Elon Musk’s online banking company in 2000, launching its rise to fame and popularity.
1999: Alibaba launches.
With more than $25 million in funding, Alibaba Online became an online marketplace. The company was profitable by 2001. In time, it grew into an important B2B, C2C, and B2C platform that is widely used today.
2000: Google introduces Google AdWords as an online advertising tool.
As a way for ecommerce businesses to advertise to people using Google search, Google Adwords was introduced.
Retailers began using the tool in pay-per-click (PPC) contexts by using short-text ads and display URLs. Unlike SEO, PPC advertising is separate from organic search engine optimization.
2004: Shopify launches.
As the result of an unsuccessful attempt to open a snowboarding equipment shop online, Tobias Lütke and Scott Lake established Shopify. POS systems and online stores can both use this ecommerce platform.
2005: Amazon introduces Amazon Prime membership.
As part of Amazon Prime, customers get free two-day shipping for an annual fee.
Additionally, the membership came to include benefits like discounted one-day shipping, access to streaming services like Amazon Video, and exclusive events like “Prime Day.”
This move increased customer loyalty and encouraged repeat purchases. Among the most common requests of online consumers are free shipping and speedy delivery.
2005: Etsy launches.
The Etsy marketplace enables crafters and smaller sellers to sell products online (including digital products). This led to the makers community going online, allowing them to reach a 24/7 audience.
2009: BigCommerce launches.
Mitchell Harper and Eddie Machaalani founded BigCommerce as a 100% bootstrapped ecommerce storefront platform.
With headquarters in Austin, San Francisco, and Sydney, the company has processed more than $25 billion in merchant sales since 2009.
2011: Google Wallet introduced as a digital payment method.
Google Wallet is a peer-to-peer payment service that allows users to send and receive money using a mobile device or desktop computer.
By linking the digital wallet to a debit card or bank account, users can pay for products and services through these devices.
As of today, Google Pay combines Google Wallet with Android Pay.
2011: Facebook rolls out sponsored stories as a form of early advertising.
Facebook’s early advertising opportunities were offered to Business Pages through sponsored stories. With these paid campaigns, ecommerce businesses can reach specific audiences and appear on the news feeds of different target audiences.
2011: Stripe launches.
Originally built for developers, Stripe is a payment processing company. The company was founded in 2004 by John and Patrick Collison.
2014: Apple Pay introduced as a mobile payment method.
In response to an increasing number of online shoppers using mobile devices to pay for products or services, Apple introduced Apple Pay.
2014: Jet.com launches.
Marc Lore (who sold his previous company, Diapers.com, to Amazon.com) founded Jet.com with Mike Hanrahan and Nate Faust.
It competes with Costco and Sam’s Club, catering to people seeking the lowest prices for long shipping times and bulk orders.
2017: Shoppable Instagram is introduced.
Using BigCommerce as an ecommerce partner, Instagram Shopping launched. As a result, the service has expanded to other ecommerce platforms and now allows Instagram users to immediately click an item and go to the item’s product page.
2017: Cyber Monday sales exceed $6.5B.
Online sales on Cyber Monday broke $6.5 billion, up 17% from the previous year.
2020: COVID-19 Drives Ecommerce Growth.
Global COVID-19 outbreaks drove consumers online to an unprecedented level. A 77% increase in ecommerce transactions happened by May 2020, reaching $82.5 billion. Based on traditional year-over-year increases, it would have taken four or six years to reach that level.
Food and household items, apparel, and entertainment are some items that consumers are buying online rather than in physical stores. Many consumers say they’ll continue to use online storefronts until a COVID-19 vaccine is available.