Historical Development of Electronic Commerce

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The meaning of the term “electronic commerce” has changed over time. Originally, “electronic commerce”

meant the facilitation of commercial transactions electronically, usually using technology like

Electronic Data Interchange (EDI, introduced in the late 1970s) to send commercial documents like

purchase orders or invoices electronically.

Later it came to include activities more precisely termed “Web commerce” — the purchase of goods

and services over the World Wide Web via secure servers (note HTTPS, a special server protocol

which encrypts confidential ordering data for customer protection) with e-shopping carts and

with electronic pay services, like credit card payment authorizations.

When the Web first became well-known among the general public in 1994, many journalists and pundits

forecast that e-commerce would soon become a major economic sector. However, it took about four

years for security protocols (like HTTPS) to become sufficiently developed and widely deployed

(during the browser wars of this period). Subsequently, between 1998 and 2000, a substantial number

of businesses in the United States and Western Europe developed rudimentary Web sites.


Although a large number of “pure e-commerce” companies disappeared during the dot-com collapse in

2000 and 2001, many “brick-and-mortar” retailers recognized that such companies had identified valuable

niche markets and began to add e-commerce capabilities to their Web sites. For example, after the

collapse of online grocer Webvan, two traditional supermarket chains, Albertsons and Safeway,

both started e-commerce subsidiaries through which consumers could order groceries online.

As of 2005, e-commerce has become well-established in major cities across much of North America,

Western Europe, and certain East Asian countries like South Korea. However, e-commerce is still emerging

slowly in some industrialized countries, and is practically nonexistent in many Third World countries.

Electronic commerce has unlimited potential for both developed and developing nations, offering

lucrative profits in a highly unregulated environment.