It’s been a while since the first ever ecommerce transaction took place. The history, however, appears to be inconsistent. According to NetMarket’s founder Daniel Kohn, the first ecommerce transaction occurred in August 1994; Kohn’s classmate from Swarthmore College had purchased Sting’s fourth solo studio album ‘Ten Summoner’s Tales’. Other reports say the first ever ecommerce transaction was a drug deal. In 1972, long before the advent of eBay or Amazon, students from Stanford University in California and MIT in Massachusetts conducted the first ecommerce transaction. Using the ‘Arpa-net’ account at their artificial intelligence lab, the Stanford students sold marijuana to their fellow classmates.
Regardless of the origin, ecommerce has come a long way. eMarketer data shows worldwide ecommerce sales will hit $1.5 trillion this year. In the Democratization of Ecommerce report, Australian software company Bigcommerce makes a prediction that global B2C (Business-to-Consumer) ecommerce revenues will reach US$2 trillion in 2015, with US SMB ecommerce revenues expected to exceed both eBay and Amazon combined (estimated $100 billion in 2015).
Bigcommerce assessed the ecommerce compound annual growth rate (CAGR) from 2005 to 2009, which stood at 13.5 percent, five times faster than retail. Based on current trends in online shopping, mobile payments and growth in SaaS platforms adoption, Bigcommerce predicts the annual growth rate to be 25 to 30 percent in 2015. These predictions are based on research conducted across Bigcommerce’s more than 55,000 clients, combined with third-party research from Sagence, Inc.
Unsurprisingly, Bigcommerce credits much of the growth of SMB ecommerce to SaaS platforms that have empowered SMBs to compete with large, enterprise merchants for significantly lower costs. Ecommerce, while it was still in its infancy, was merely a way for well-established, bricks-and-mortar retailers seeking to establish new revenue streams. It was inaccessible to small businesses, who would have to pay as much as $100,000+ to set up the technology behind their ecommerce store. Now an ecommerce store can be set up in 30 minutes for the cost of a coffee a day.
“As recently as 10 years ago, starting an ecommerce business required significant capital, as well as an army of technical, marketing and financial experts to build the necessary infrastructure,” says Eddie Machaalani, co-founder and CEO of Bigcommerce. “Today, business owners can create an online store in 30 minutes and compete against brands 100 times their size, at a fraction of the cost.”
Next year, total ecommerce spending is expected to eclipse the gross domestic product of all except the top 9 countries. According to World Bank (2013), the top 10 countries by GDP are:
- United States (US$16.8T)
- China ($9.24T)
- Japan ($4.9T)
- Germany ($3.63T)
- France ($2.73T)
- United Kingdom ($2.52T)
- Brazil ($2.25T)
- Russia ($2.1T)
- Italy ($2.07T)
- India ($1.88T)
Australia is currently sitting in 12th position (US$1.56T), behind Canada ($1.83T).
What does this mean? It doesn’t mean that ecommerce is an easy industry to crack, though it has plenty of potential. Australian companies like Milan Direct is delivering around $15 million in annual revenue, whilst Showpo is on target to achieving $6 million this year. The former has a great internet marketing strategy and great furniture products backed up with a slick delivery model. Showpo on the other hand has a social media strategy that has eclipsed its competition. The company has a Facebook following of over 400,000 people and an engagement level where at any one time at least 60,000 are talking about the brand.
Stylerunner is also doing exceptionally well in the ecommerce space. With a killer content marketing strategy using their own blogs The Runway and The Locker Room, the business engages potential customers with a range of fashion, health and lifestyle content. Startup Daily estimates revenues for 2014 to exceed $2 million for Stylerunner.
Ecommerce is certainly an interesting space, and there are a number of startups trying to take a decent portion of the trillion-dollar market. But it’s also becoming increasingly crowded. Standing out is one hell of a task.