The advancement of technology and the internet have had a direct connection with the growth and evolution of e-commerce. How has e-commerce revolutionized the world? During the last decade, the e-commerce industry has seen a boom, with the internet becoming the preferred medium for marketing, promotion and selling products, compared to the traditional way of in-store shopping. In the early days of e-commerce, online transactions were made through basic online forms or email. As the internet started to gain more prominence worldwide, online marketplaces like Amazon and eBay started to emerge in late 1990s and 2000s, which revolutionized and completely changed the way people see shopping, where people would buy and sell products online, check-out on the platform and pay the required amount, and the product would be delivered to their destination within the designated timeline. E-commerce, short for electronic commerce, has grown and changed significantly since online retailers began opening their doors in the early 1990s. Back then, online shopping wasn’t a part of everyday life; it was as new and unfamiliar as email, instant messaging, and MP3 files.
As internet service providers like AOL connected tens of millions of homes to the internet, e-commerce boomed. As investors poured money into internet firms between 1998 and 2000, excitement peaked. The dot-com bubble, which characterized this time period, is notorious for its numerous promising but ultimately unsuccessful internet businesses. Boo.com
, a notorious online retailer of clothing, blew through $185 million in just 18 months before declaring bankruptcy. Although the bubble burst in 2000, a strong digital infrastructure was left behind, which laid the path for contemporary e-commerce.
The Five Stages of E-commerce
E-commerce has emphasized convenience during the past two decades as a response to shifting consumer expectations and behavior. Instead of having one computer at home (if we were lucky), we now carry around palm-sized devices. We have gone from having a simple user interface on a black and white screen to interactive e-tailers giving services like a real-life sales clerk thanks to the digital revolution. A recent timeline of the five stages of e-commerce evolution and its trends is stated below:
- 2000-2005: Optimizing Search Functions
- 2005-2010: Encouraging buyers to spend online and working on click-to-conversion strategies
- 2010-2015: Increasing order value and providing incentives to the buyer
- 2015-2020: Creating brand loyalty and retaining customers
- 2020-Present: Maintaining brand value and working towards sustainability to encourage buyers for targeted buying, using Artificial Intelligence, Big Data, Analytics and trends to gather audience as per the categories and market timelines
Multiple E-Commerce Platforms
With the passage of time, e-commerce has started to evolve, with the advent of social media, mobile commerce and omnichannel commerce. As of today, there are thousands of online platforms where people buy and sell products through mobile devices, social media/social commerce involves the use of social media applications like Facebook, Instagram, WhatsApp Business to list and promote their products and sell them online. Omnichannel commerce includes creating a seamless user experience by integrating products across multiple channels like online stores, social media, and mobile applications. With the first two decades of evolution being a transition phase, and creating e-commerce fundamentals, the last 3-4 years have been very critical to its growth and its user feasibility and accessibility has become ubiquitous.
Online shoppers, once at the mercy of dial-up connections, can now shop anywhere. Amazon, Walmart, and eBay remain the largest e-commerce companies, but the way they conduct business is far more refined and sophisticated than it was in the early days of e-commerce.
Innovation and Technology
Recently, the e-commerce industry has been influenced by emerging and innovative technologies like Blockchain, Artificial Intelligence, virtual reality and data analytics. These technologies have completely transformed the way we shop, by making our experiences more immersive, precise and secure, as we receive ads, updates and suggestions to buy products as per our imaginations, latest searches and recent trends.
Effect of the COVID-19 Outbreak
Since the COVID-19 outbreak in November 2019, businesses started to shut down and start the trend of working from home. Restaurants got shut down. Cinemas, malls, and entertainment parks were closed and people were stuck in their homes. During this time, the e-commerce industry went through the most significant transformation since its inception. The future trends changed completely and online businesses like Amazon, eBay, Shopify, Noon recorded record profits in that timeline. E-commerce sales amounted to more than $4.9 trillion in 2021, and it is expected to increase by more than 50% by 2025. This explosive growth has been fueled by increased access to high-speed internet and the spread of smartphones, which are owned by over 5 billion people globally.
The development of ecommerce has been fueled by technological advancements, and a number of enabling technologies have been essential to this development. Here are a few illustrations:
As more people started to purchase online using their smartphones and tablets, the growth of mobile devices has had a big influence on ecommerce. Many e-commerce businesses have created mobile applications and optimized their websites for mobile use as a consequence.
Shopping online has become simpler and safer thanks to payment gateways like PayPal, Stripe, and Square. These systems enable users to quickly and securely save their payment information and make purchases.
Chatbots and customization engines driven by AI are becoming more widespread in e-commerce, enabling businesses to offer individualized customer service and purchasing experiences. AI may be used to analyze client data, improve pricing, and improve marketing plans.
Virtual and Augmented Reality
Consumers will soon be able to try on clothing, see things in their homes, and more thanks to virtual and augmented reality technology.
By offering a decentralized ledger of all transactions, blockchain technology has the potential to increase the security and transparency of e-commerce transactions. By doing so, fraud may be reduced and customer and seller trust may rise. One example of blockchain is cryptocurrency, which has gained a lot of prominence amongst the general audience and a lot of people worldwide have made huge amounts of money trading online via cryptocurrency, a type of currency which works on the phenomena of blockchain, and many countries have legalized this currency, where banks are basically rendered useless, and started to adopt it as a mode of payment on various platforms.
Big Data and Analytics
The implementation of Big Data and analytics is helping eCommerce business owners stay ahead in the market competition. Big Data is a huge collection of data that companies can use to figure out which product or service, price, and advertising is best to increase their business profits. Ecommerce analytics involves the process of collecting useful data from multiple channels that impact your eCommerce store. You can even use this valuable data to understand shifts in user behavior and online shopping trends. Big data resources help in optimizing logistics, supply chain management, inventory, and business operations. This results in enhanced performance and significant cost reductions.
Ecommerce has come a long way from its introduction in 1948-49, to transforming the world in 2023. It has faced various ups and downs, from gaining huge prominence during the covid time to normalizing after the post-covid era and the yearly increments are not that significant compared to the 2 years of covid. Many more powerful technologies are yet to come in the next few years, which will further strengthen the e-commerce industry. The mobile integration and omnichannel commerce strategies will continue to increase, as these tools and technologies will shape the future for our generations to come.
- As of May 2023, the ecommerce market is worth $6.3 trillion globally
- Global E-commerce sales are predicted to reach $6.39 trillion in 2024, and exceed $7 trillion in 2023 (Worldwide sales were a little over $1 trillion in the not-so-distant-past of 2014)
- The ecommerce market is set to expand by 10.4% by the end of this year
- Projected social commerce sales are expected to hit $2,900 billion by 2026
- Singapore’s market had a growth rate of 36%, the largest compared to any other country, in 2022
- Fashion is the highest-grossing ecommerce sector, with $871.2 billion in ecommerce sales in 2022
- Food is the fastest-growing ecommerce sector, with $244 billion in ecommerce sales in 2022, generating an increase of 16%
- 4.11 billion people purchased goods online in 2022, 8% more than the total online purchase in 2021
- As of January 2023, 57.6% of worldwide internet users buy something online at least once a week.
- In 2022, 60% of ecommerce purchases happened on a mobile device
- As of March 2023, 29% of internet users make an ecommerce transaction on their phones at least once a week
- Shoppers order 2.5 items with free shipping, compared to 2 items with paid shipping
- Product photos are very influential in the buying decisions of 75% of ecommerce shoppers.
- 40% of shoppers will pay more for products from a trusted brand
- 43.1% of internet users visited any brand website each month in 2022.
- The probability of an ecommerce brand selling to an existing customer is 60-70%, compared to the probability of selling to a new customer, which hovers around 5-20%
- Extra costs at checkout causes 48% of abandoned carts
- The top conversion incentive, by a considerable margin, is free shipping. 49.4% said free delivery would encourage people to complete a purchase. The top 5 purchase drivers in 2023 are listed as follows:
- Free shipping - 49.4%
- Coupons and discounts - 37.9%
- Reviews from other customers - 31.6%
- Easy returns policy - 30.4%
- Good user experience and easy checkout process - 28.2%
- The world’s biggest ecommerce markets at the end of 2022 are listed below:
- China - $1,538 billion
- United States - $875 billion
- Japan - $241 billion
- Germany - $148 billion
- UK - $143 billion
- South Korea - $118 billion
- India - $97 billion
- France - $96 billion
- Indonesia - $59 billion
- Canada - $59 billion
- The top 10 countries for 2023 whose percentage of internet users purchase an item online at least once a week, are listed below:
- Thailand - 66.8%
- South Korea - 65.6%
- Turkey - 64.6%
- Mexico - 64.5%
- Chile - 62.7%
- Indonesia - 62.6%
- India - 62.3%
- UAE - 62.3%
- China - 61.9%
- Malaysia - 61.3%
- Here’s the highest-ranking channels online shoppers picked for brand discovery:
- Search engines (30.6%)
- Ads on TV (30.2%)
- Word-of-mouth recommendations (27.4%)
- Ads on social media (26.6%)
- Brand and product websites (23.3%)
- This is how some of the most popular ecommerce tools rank in terms of the number of websites using them:
- WooCommerce - 6.1 million live websites
- Shopify - 4.1 million live ecommerce sites use this platform
- OpenCart - used by 335,00 live websites
- PrestaShop - 264,000 active stores
- Adobe Commerce - 148,000 live websites
- BigCommerce - 46,885 live websites