Just 20 years ago, the first ever documented e-commerce transaction was made – someone in the US bought a Sting Ten Summoner’s Tales CD in August 1994.
Amazon was founded the next year in 1995.
By the end of 1998, annual online retail sales had hit $8 billion and the very next year in 1999, they skyrocketed, doubling to $16 billion.
20 years on, where is e-commerce headed?
As e-commerce celebrates its 20th birthday, Aussie software company Bigcommerce is predicting that global B2C e-commerce revenues will reach US$2 trillion in 2015.
Bigcommerce made the prediction in its recently released Democratisation of Ecommerce Report which is based on research conducted across its more than 55,000 clients, and combined with third-party research from Sagence, Inc.
It is worth noting that while it took 18 years (1994 to 2012) for online sales to get to $1 trillion, it took only another two years (2013 and 2014) for them to hit $1.5 trillion.
Furthermore, next year, total e-commerce spending is expected to eclipse the gross domestic product of all but the top 10 countries. Let that sink in for a minute…
Anthill spoke to Bigcommerce President, Steve Power about their prediction for the future of e-commerce and his insider insight into the industry. Below is what he had to share.
To what factors do you attribute the rapid growth you predict for e-commerce within the next 10 years?
Over the past five years, we have seen the barriers to entry to start an e-commerce business come crashing down.
Around the time early e-commerce businesses began to emerge in the late ‘90s, the average cost to start an online business stood at an enormous $112,000 AUD – and that was just development costs, not to mention up-front investments to build a product portfolio and secure warehouse space.
Today an entrepreneur can start an online business in less than 30 minutes and for less than the cost of a cup of coffee per day.
Another factor driving the explosive growth of e-commerce is a fundamental shift in consumer behaviour and expectations regarding shopping.
The pioneers of e-commerce differentiated the online shopping experience from the physical in-store experience through innovations like free shipping and returns and personalised recommendations.
These are now the norm and physical retailers are trying to fill the gap to keep pace.
How are small businesses excelling at e-commerce?
Small businesses are often great competitors because of their ability to focus on the customer experience and use of best-of-breed technologies.
In many cases, they are able to monitor behaviours more closely and offer a more personalised experience than some large, national retailers.
According to a recent survey from ZenDesk, 85 per cent of customers would pay up to 25 per cent more to ensure a superior customer service experience.
Regardless of whether you are selling online or on Main Street, providing a good product and great customer experience is timeless.
Moving forward, I suspect that we will see more and more fast-growth, e-commerce companies serving specific niche markets, either by selling speciality goods or marketing themselves to a specific audience.
One of our clients, The Bearded Chap, is a great example of how businesses can differentiate in a crowded market by focusing on a niche.
What challenges does this rapid growth of e-commerce present for businesses and how can they overcome them?
As the market rises, so too will the level of competition.
As merchants grow their businesses, drop-shipping and just-in-time manufacturing can be useful to help control costs while also testing new products and categories.
Online retailers of all sizes now have access to a wealth of data and analytics through e-commerce platforms like ours; it’s important for merchants to leverage this to create a personalised customer experiences.
As the adage goes, the focus should be to “make a customer, not a sale.”