History of online shopping | Global Encyclopedia

Summary

The COVID-19 pandemic has accelerated the adoption of online shopping, with internet sales skyrocketing to 30% in April 2020. Originating from early experiments like Jane Snowball's 1984 order via 'Videotex', the industry has evolved through innovations like NetMarket's secure transactions and Amazon's launch. Globalization and consumer behavior shifts played pivotal roles, with smartphones and internet accessibility propelling the online shopping revolution.

Takeaways

• 🛒 The COVID-19 pandemic has significantly increased online shopping, with many turning to e-commerce for essentials and non-essentials alike.
• 📈 Online sales have seen a dramatic rise during the pandemic, with statistics showing a jump from 2.8% to 30% in the UK within a few months.
• 🏡 The shift to online shopping has been a gradual process, with the roots of modern e-commerce dating back to the 1980s.
• 👵 The first recorded online shopping transaction was by a grandmother in England in 1984, using a remote control to order groceries via a 'Videotex' system.
• 🌐 The early 1990s saw the emergence of online marketplaces like NetMarket and the launch of major e-commerce players such as Amazon and eBay.
• 📈 Globalization in the mid-1990s played a significant role in the growth of e-commerce by enabling rapid scaling of production and meeting consumer demands.
• 📱 The widespread adoption of smartphones by 2017 facilitated a significant increase in online shopping, with many consumers making regular online purchases.
• 🌟 The success of e-commerce is attributed not only to technological advancements but also to a shift in consumer behavior and a desire for convenience.
• 🔍 The internet has empowered consumers with the ability to research products extensively, compare prices, and make informed purchasing decisions.
• 📊 The pandemic has accelerated the adoption of online shopping, making it a mainstream behavior and potentially shaping the future of retail.

Q & A

How has the Covid-19 pandemic impacted online shopping habits?

The Covid-19 pandemic has significantly increased online shopping as people relied on e-commerce for contact-free and fast delivery of essentials and non-essentials, leading to a spike in online sales.

What was the percentage of internet sales of total retail sales in the UK in April 2020, and how did it change from 2006?

In April 2020, internet sales as a percentage of total sales in the UK shot up to 30%, compared to 2.8% in November 2006.

What was the first item ever purchased online through a digitally secure transaction?

The first item purchased online through a digitally secure transaction was a Sting CD, retailing at $12.48 (£10), on NetMarket in 1994.

Which company was one of the early adopters of online sales, and what year did they start?

Pizza Hut was one of the early adopters of online sales, starting in 1994 through their 'PizzaNet' portal.

What was the role of globalization in the growth of online shopping in the mid-1990s?

Globalization in the mid-1990s played a significant role by enabling production to scale up quickly and significantly, making e-commerce a viable and highly profitable selling channel.

How did the consumer shift in behavior contribute to the rise of online shopping?

Consumers embraced online shopping as a democratized way to consume, conducting extensive research and evaluating price-to-value ratios before making purchases.

What was the approximate smartphone penetration rate worldwide by 2017, and how did it influence online shopping?

By 2017, smartphone penetration hit 80% worldwide, which greatly facilitated the increase in online shopping as more consumers had access to online platforms through their mobile devices.

Who was the first person to use a remote control to order groceries, and what was the technology used?

Jane Snowball, a 72-year-old grandmother, was the first person to use a remote control to order groceries using the 'Videotex' system developed by Michael Aldrich in 1984.

What was the original purpose of the Videotex system used by Jane Snowball?

The Videotex system was originally conceived as a social service for the elderly and disadvantaged, enabling them to order groceries and have them delivered to their homes.

What was the inflection point for online shopping as we know it today, and when did it occur?

A real inflection point for online shopping as we know it today could be traced to around 2017, when many Americans were shopping online as frequently as doing routine chores.

What percentage of Americans used a computer or phone to buy something online in 2017, according to the Pew Research Center?

According to the Pew Research Center, eight in 10 Americans used a computer or phone to buy something online in 2017.

Outlines

00:00

🛒 Rise of Online Shopping During the Pandemic

The COVID-19 pandemic has significantly increased online shopping, as indicated by a surge in online sales and a notable shift in consumer behavior. People have turned to e-commerce for everything from groceries to less essential items, leading to a rapid growth in the sector. Historically, online shopping has evolved from its early days in the 1990s with companies like Amazon and eBay, to a point where it now constitutes a substantial percentage of retail sales. The pandemic has accelerated this trend, with internet sales in the UK jumping from 2.8% in 2006 to 30% in April 2020. The script also recounts the first known online shopping transaction by Jane Snowball in 1984, which laid the groundwork for today's billion-dollar industry.

05:02

🌐 The Evolution and Global Impact of E-Commerce

The narrative continues by exploring the evolution of online shopping, emphasizing the role of globalization and technological advancements in making e-commerce a profitable channel. The mid-1990s saw a significant shift with companies like Amazon, eBay, and Rakuten paving the way for a diverse and accessible online marketplace. The script highlights how the internet empowered consumers to research, compare, and purchase goods, leading to a democratization of consumption. A pivotal moment in the growth of online shopping is identified around 2017, with smartphone penetration and a marked increase in the frequency of online purchases among Americans. The paragraph underscores the consumer-driven nature of this shift and the transformative impact of the internet on shopping habits.

Keywords

💡Ecommerce

Ecommerce refers to the buying and selling of goods or services using the internet, and it is a central theme of the video. The script discusses how the Covid-19 pandemic has accelerated the adoption of ecommerce, as people turned to online shopping for essentials and non-essentials alike. The video also traces the history of ecommerce from its early days to the present, highlighting the growth and impact on consumer behavior and retail sales.

💡Contact-free delivery

Contact-free delivery is a method of delivering goods to customers without any physical contact between the delivery person and the customer, which became particularly important during the Covid-19 pandemic. The video mentions this as one of the reasons for the spike in online sales, as people sought safer ways to receive products without the risk of virus transmission.

💡Panic buying

Panic buying is a consumer behavior where people rush to purchase essential goods in large quantities due to fear of shortages or price increases, often in response to a crisis. The script refers to panic buying as a stress-induced response to the pandemic, which affected buying habits and contributed to the surge in online shopping.

💡Online sales spike

An online sales spike refers to a sudden and significant increase in the volume of goods sold online. The video uses this term to describe the dramatic rise in ecommerce during the Covid-19 pandemic, with examples such as the UK's internet sales jumping from 2.8% to 30% within a few months.

💡Digitally secure transaction

A digitally secure transaction is an online purchase that is protected against unauthorized access or fraud. The video mentions the first digitally secure transaction as a milestone in the history of ecommerce, marking the beginning of a more secure and trustworthy online shopping experience.

💡Globalisation

Globalisation is the process by which businesses and other organizations develop international influence or start operating on an international scale. The video discusses how globalisation in the mid-1990s played a significant role in making ecommerce viable and profitable by enabling rapid scaling of production and offering consumers a wide variety of products at different price points.

💡Consumer behavior shift

Consumer behavior shift refers to changes in how consumers make purchasing decisions and interact with the market. The video highlights the shift towards online shopping as a democratized way to consume, driven by consumer preferences for convenience, extensive research, and the ability to evaluate price-to-value ratios.

💡Smartphone penetration

Smartphone penetration is the proportion of the population that owns a smartphone. The video notes that by 2017, smartphone penetration reached 80% worldwide, which facilitated the increase in online shopping by making it more accessible and convenient for consumers.

💡Videotex

Videotex is an early online service that allowed users to interact with a remote database through a television set. The video recounts the story of Jane Snowball, who used Videotex to order groceries, showcasing the origins of modern ecommerce and the concept of shopping from home.

💡NetMarket

NetMarket was one of the first online marketplaces, launched in 1994. The video describes it as a pioneering venture in the realm of ecommerce, marking the first digitally secure transaction with the purchase of a Sting CD, which symbolizes the beginning of secure online shopping.

💡PizzaNet

PizzaNet was an early online ordering system used by Pizza Hut in 1994. The video mentions PizzaNet as an example of how even traditional businesses like fast-food chains adapted to the emerging trend of ecommerce, allowing customers to order pizzas online through a simple website interface.

Highlights

The increase in online sales during Covid-19 has significantly changed consumer buying habits.

Online shopping has become mainstream only recently, despite its existence for decades.

In the UK, internet sales as a percentage of total sales jumped from 2.8% in 2006 to 30% in April 2020 due to the pandemic.

In May 2020, US non-store retailer sales were up 30.8% from May 2019.

Early online shopping was a novelty, with people buying unique items like records or action figures on eBay.

The first recorded online shopping transaction was in 1984 by a grandmother in England using a remote control to order groceries.

The early online marketplace NetMarket in 1994 marked the first digitally secure transaction, selling a Sting CD.

Pizza Hut was one of the early adopters of online sales, starting with their 'PizzaNet' portal in 1994.

Globalization in the mid-1990s played a significant role in making ecommerce a viable and profitable channel.

Consumers' shift in behavior towards online shopping was a key factor in its growth.

The inflection point for modern online shopping can be traced back to around 2017 when it became a regular activity for many Americans.

Smartphone penetration reaching 80% worldwide by 2017 greatly facilitated the increase in online shopping.

Amazon, which started in the mid-'90s, and eBay, which followed in 1995, provided platforms that set the stage for the online shopping transition.

The connected world enabled quick scaling of production for products at various price tiers, meeting consumer demands.

The internet provided consumers with tools to research extensively, evaluate price-to-value ratios, and purchase items.

Transcripts

How many times have you clicked ‘check-out’  to buy something in the last few months?  

If the spike in online sales  amid Covid-19 is any indicator  

(or, perhaps, the list of merchants on your last  credit card statement), it’s probably a lot. 

Groceries, books, beauty supplies, inflatable  children’s pools as the pandemic persists,  

we have relied on ecommerce  to get things to our doors,  

contact-free and fast. These things range  from essentials to not-so-quite essentials:  

in Canada in April, online shoppers trapped  at home were scooping up canned quail eggs,  

sitar strings and trampolines for the kids. From panic buying and hoarding, we already  

know that the stress of the pandemic can  break our brains and morph our buying habits.  

However, even though online shopping has been  around for years – actually, decades – it’s  

only become truly mainstream recently.  Amazon has been around since the mid-’90s,  

but by even 2010 in the US, online shopping only  made up just more than 6% of all retail sales. 

And now? Internet sales as a total  percentage of sales in the UK  

rocketed from 2.8% in November 2006 to 18.9% in  February 2020 – and then shot up again to 30%  

in April 2020 because of the pandemic. In May  2020, sales from “non-store retailers” in the  

US were up 30.8% from May 2019. Before Covid-19,  

relying on the internet for shopping hadn't  been so ingrained in our day-to-day lives.  

A couple of decades ago, online shopping was a  novelty, just as the internet itself still was.  

Most people were only buying hard-to-find  records or obscure action figures on eBay. 

So how did we get to the point where  online shopping became a way of life?  

And where will it guide us  in the post-pandemic future? 

In 1984, in Gateshead, England, a 72-year-old  grandmother named Jane Snowball sat down in her  

armchair and used her television remote control to  place an order of margarine, cornflakes and eggs. 

She used the ‘Videotex’ system developed  by English inventor Michael Aldrich,  

says Jonathan Reynolds, associate professor  in retail marketing and deputy dean of Oxford  

University’s Saïd Business School. Aldrich took  her TV and turned it into a computer terminal:  

she used the Videotex technology to  generate a shopping list on her TV screen,  

and her order was phoned in to her local Tesco.  The goods were then sent to her door, like magic. 

“It was originally conceived as a social service  

[for the elderly and disadvantaged],”  says Reynolds. “The system, which  

pre-dated the public Internet, relied upon the  development of a closed network of computers.”  

Little did Aldrich or Snowball know that their  nifty tech experiment laid the framework for an  

industry now worth £118bn ($186bn) in the UK. Following this early grocery service,  

the next major innovation in the online shopping  space is said to have occurred in 1994, when a  

computer whiz called Daniel M Kohn, then aged 21,  set up an online marketplace called NetMarket. It  

was not only dubbed a “new venture that is the  equivalent of a shopping mall in cyberspace”,  

but also marked the first digitally secure  transaction. The first purchase? A Sting CD,  

retailing at $12.48 (£10). From then, the early internet – with  

its screeching dial-up sounds – trickled its way  into people’s homes. And while today virtually all  

big corporations are online, in the early days  only a few committed to an ecommerce strategy. 

One of those was Pizza Hut. In 1994, the US  chain started selling pizzas online through  

their early ‘PizzaNet’ portal – a flat, grey  website that looks as ancient as you may expect,  

with fields only for a customer’s  address and phone number. 

But 1994 was also a watershed year  for online shopping: it’s the same  

year Amazon launched – which, at that time,  sold mostly books. eBay followed in 1995.  

Rakuten, Japan’s biggest ecommerce site that’s  expanded into Western markets the past few years,  

launched two years later. China’s Alibaba,  in 1999. These companies were setting the  

stage for an online shopping transition:  a wide variety of offerings, consumer  

accessibility and innovative technology. Mid-1990s globalisation was also a major  

catalyst that “made ecommerce a viable  and highly profitable selling channel”,  

says Thomaï Serdari, adjunct professor at New  York University's Stern School of Business.  

The connected world enabled production  to scale up quickly and significantly,  

for products at many price tiers. “Consumers  were eager to find either the best or the most  

acceptable quality product at the prices they  could afford. The internet gave them the tool  

to conduct extensive research before purchasing  an item. It also gave them the insights on how  

to evaluate the price-to-value ratio  and finally the means to purchase.” 

While early trailblazers such as Amazon and eBay  – which dominate the industry today – provided the  

platform for online shopping, Serdari  says it was really the consumer shift  

in behaviour that led to online shopping  taking off. “It was actually consumers  

who embraced this type of marketplace as  a democratised way to consume,” she says. 

A real inflection point for online shopping as  we know it today could be traced to around 2017.  

By the end of the prior year, many Americans  were “starting to shop online as often as  

[they] take out the trash”;  according to the Pew Research Center,  

eight in 10 Americans used a computer or phone  to buy something online that year – as opposed to  

the just 22% who did so in 2000.  More phones in consumers’ hands  

helped facilitate the jump as smartphone  penetration hit 80% worldwide by 2017.