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The history of online shopping

Online shopping has become pretty commonplace, but it wasn’t so long ago that buying anything online was considered risky and simply more hassle than just leaving the house and picking it up in-store. Here’s the story of how shopping online went from just a gimmick to dictating how retail operates in the 21st Century

While online shopping as we know it found its roots in the mid 1990s after the invention of the first ever web browser, ‘electronic shopping’ was thought up in 1979 by English inventor Michael Aldrich. He invented the earliest form of e-commerce, which allowed online transaction processing between business and customers (B2C), as well as between business and business (B2B). 

Aldrich’s system connected a modified domestic television to a real-time transaction processing computer via a home telephone line. He had a theory that the modified domestic TV technology that has a simple menu-driven human computer interface – which he called videotex – could enable not just transactions for products, but also for e-messaging and information retrieval (which later became known as e-business). 

In March 1980, Aldrich launched Redifon’s Office Revolution, which allowed consumers, customers, agents, distributors, suppliers and service companies to be connected online to the corporate systems and allow business transactions to be completed electronically in real-time. During the 1980s, he also designed, manufactured, installed and supported many online shopping systems using videotex technology. These systems, which also provided voice response and handprint processing, pre-date the internet and the World Wide Web, as well as the IBM PC and Microsoft MS-DOS. Aldrich’s technology was installed mainly in the UK by large corporations.

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The first World Wide Web server and browser were created by Tim Berners-Lee in 1989 and officially opened for commercial use in 1991. Thereafter, subsequent technological innovations emerged in 1994: online banking, the opening of an online pizza shop by Pizza Hut, and Intershop’s first online shopping system. 

The first secure retail transaction over the web was credited as being either by NetMarket or Internet Shopping Network in 1994. Immediately after, Amazon.com launched its online shopping site in 1995. eBay also followed suit and entered the scene in 1995.

These early adopter platforms were able to set up shop on the web after Netscape developed an encryption-based internet security protocol called SSL (or Secure Sockets Layer) in 1994. Online shopping was imminent after this development, because SSL makes it difficult or impossible for the exchange of information on the internet to be intercepted. Buying things online requires the purchaser to send private information like credit card details directly to the online shop; the emergence of SSL ensures that data is not stored by any crooked servers on transmission.

However, despite Amazon and eBay (then known as AuctionWeb) already selling things online, there was no reliable payment gateway until PayPal entered the online payment system niche in 1998. 

In the early years of online shopping, consumers’ high risk of fraud and lack of ability to inspect merchandise before purchase were big things that kept online shopping back as just a gimmick and only for the very tech savvy. In fact, the demographic of online shopping in the 1990s were men in their mid-30. The risk went both ways; merchants also risked fraudulent purchases if customers used stolen credit cards or fraudulent repudiation of the online purchase. Now, banks have put in place random identity checks in case a stolen, active card falls in the hands of the wrong person.  

SSL encryption sought to solve the problem of credit card numbers being intercepted in transit between the consumer and the merchant, but one still had to trust the merchant and their employees not to use the credit card information subsequently for their own purchases, and not to pass the information to others. 

While all of these are still risks today, products online now come with a lot more descriptions and pictures to help customers make informed decisions, VPNs started getting developed, and browsers began to get more savvy. That, and as online stores began popping up from reputable brick-and-mortar retailers, online shopping began to get an image uplift and was not considered to be as shady as it once was. 

At the turn of the 21st Century in 2000, Google launched Adwords, an advertising service that allows sellers to place adverts in Google search results related to viewers’ search preference. In other words, Google connected sellers to buyers on a greater scale. The system is based partly on cookies and partly on keywords determined by advertisers. Google’s service uses these characteristics to place advertising copy on pages that they think might be relevant. 

In 2004, online storefront service Shopify made it possible for low-capital sellers to set up their own online stores in a reputable and safe way. Though only a small and simple idea, Shopify has been credited as changing consumers’ perception of online shopping. Now, Shopify is to online stores what WordPress is to websites. 

As of 2020 – not surprisingly going hand-in-hand with a global pandemic – the entire internet can now be considered the largest shopping centre you’ve ever visited. People are now able to carry out trades and purchases on Instagram, Facebook, and even Whatsapp. 

Finally, in 2023, Google introduced Topics API, which allows targeted ads based on browsing history that is stored in the browser, to Google Chrome. Advertisers pay when users divert their browsing to click on the advertising copy. Adverts can also be implemented locally, nationally, or internationally.

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