Ecommerce Trends 

The World Wide Web Powers Ecommerce
In 1990, Tim Berners-Lee created the first web client and server and thus invented the coding language (HTML) and transport protocol (http) that still power the web today. The relatively simple system he devised was later enhanced and extended to support millions of transactions daily. The HTML is a simple coding language that doesn't require a computer science degree to understand and use. The http protocol governs the transport of small packets of data between web servers and web clients or browsers. The https protocol makes secure transactions possible.

The Boom Years: 1994-1999
Although the Internet existed before the world wide web was conceived or implemented, ecommerce really got its start in the mid 1990s when browsers like Netscape and Internet Explorer made it possible to navigate the world wide web with ease.

Thousands of Internet companies came into being during this period but only a small number survived and thrived. Some like Amazon, Ebay, and Google transformed how business was done online and remain leaders in their industry segment today. Unfortunately, the boom years suffered from a severe case of unbridled enthusiasm. Many of the internet entrepreneurs of the period weren't interested in establishing businesses for the long term. They and their partners/funders wanted to cash-in and cash-out as fast as possible. Some had great ideas but had them too soon, others had plenty of hype but little substance.

Crash and Recovery: 2000-2005
In March 2000, the Nasdaq crashed and burned and took much of the Internet segment with it. One expert said the problem was that the stock market was driving the boom rather than the boom moving the stock market. Companies that had been valued on the basis of customers instead of sales or profits began to falter. Some failed completely, others merged with stronger companies, and still others managed to make it through a difficult period. It took a few years for the technology sector and surviving Internet companies to fully recover, but recover they did.

Web 2.0 and the Expanding Internet
In 2005, O'Reilly Associates hosted a conference about the face of the Interent: Web 2.0. Although Web 2.0 is more a collection of concepts and observations, below the hype is the reality of a drastically changed Internet. An Internet that belongs to the people who use it, that is interactive, that enjoys user-generated content, and is social to its roots.

At the same time there was a tremendous growth of Internet use in third world nations. China now has about as many Internet users as the United States. Social networks are as popular in India and Brazil as they are in Europe. The potential for ecommerce expanded exponentially as did the challenge.

Changing Internet Population Demographics

The profile of the typical Internet user is changing rapidly. Significant recent changes include:

The Internet, especially the World Wide Web, is now a consumer medium. A high level of technical skill is no longer required to use the Net effectively. Inexpensive computers and broadband connections are bringing the high speed Internet to more homes. Community centers, libraries, and coffee houses offer free or low cost broadband Internet access to all comers. The Internet and WWW is just a part of everyday life from home to school to workplace. Every medium is infused with Web news, links, and commentary. YouTube videos are featured on local and national news. Using the Internet to research a major purchase is becoming commonplace. Over 63% of home users use a broadband connection to connect to the Internet. High-speed access opens the way for media-rich online news, shopping, and entertainment. Wireless access to the Internet is increasingly popular in the United States as more people are interested in texting, capturing images and video, and sharing via the Net. The typical Internet user is as likely to live in Asia as in Europe or America — and may have a faster connection to the Net.

Ecommerce Statistics

According to a January 2008 Nielson Global Online Survey more that 85% of the world's online population has used the Internet to make a purchase. In 2006, 627 million had shopped online, in 2008, the number was 875 million. This was an astounding increase of 40% in only two years. Nielson reports that in the preceeding month more than half of global online users bought something online. Prolific shoppers resided in South Korea, United Kingdom, Switzerland, and the United States.

While global ecommerce statistics are hard to find, the US Census Monthly Retail Trade Survey tracks ecommerce sales as a component of total retail sales. It is important to note that the Survey does not include travel, ticketing, and financial services. The Census reports quarterly figures, but the table below aggregates that data to show the growth of ecommerce sales in the last few years.

U.S. Retail Sales

Source: Based on Estimated Quarterly U.S. Retail Sales (Not Adjusted): Total and E-commerce

While the percentages seem miniscule, the impact of Internet sales in certain sectors is much more significant. Internet sales of music, books, DVDs, electronic equipment, and airline tickets should not be underrated. For example, Apple Itunes has sold over 5 billion songs since 2003 and currently sells or rents 50,000 movies globally. It is not surprising that Apple Itunes is now the largest music retailer in the U.S.

eMarketer uses the Census estimates of retail sales to predict future growth and sees a slowing of ecommerce growth in the United States. eMarketer suggests that some additional growth may be fueled by underserved populations like seniors and Hispanics. Additional growth may come from global markets as well.

It is important to reiterate that the Census data does not include travel, ticketing, and financial services. All three are important components of ecommerce.