Early e-commerce Ventures and Their Limitations

Last week, I started off by describing how e-commerce removes many of the headaches that physical stores have. Yet despite the opportunities offered, it is important to remember that early e-commerce ventures did not have many of these luxuries that we take for granted today. The industry has transformed itself dramatically in the last 15 years.

The earliest e-commerce ventures are now also the most famous – at least those that still exist. Although the World Wide Web was introduced in 1990, it was not until 1995 that two of the best known sites today were launched: Amazon.com and Craigslist. EBay followed a year later.
All three of these early e-commerce sites represent very different types of online commerce. Amazon.com follows a more traditional store format, with set prices and one major seller (although Amazon Marketplace allows small time sellers to advertise their offerings on Amazon’s product pages). EBay provides regulation and a meeting space for buyers and sellers to come together, with most sales taking place in the auction format. Craigslist is the least involved, offering little more than a community message board where people can buy or sell directly from one another.

If you shopped online in the early days of e-commerce, you know that the experience was very different from what you experience today. E-commerce websites were much more limited in what they could do in graphics and appearance as well as in coding and programming. Fewer sellers offered conveniences such as the ability to place and order instantly with their credit card, or buyer accounts that stored payment settings and purchase history. SSL encryption was introduced in 1999, enabling some online stores to offer secure transactions, but the technology was not as common – or as expected – as it is today.

In general, it was very difficult to engage in e-commerce in the early days as there simply weren’t many options available and the process was difficult. Fortunately that has changed. There has been an explosion of digital services companies that have lowered the barrier an increased the ease to enter and operate an e-commerce store and organizations like Webgistix have played an important role streamlining the physical back end processes. I will write more about in my next post.

The Promise of E-Commerce: More Than A Decade of Transition

According to research by VeriSign, e-commerce was born on August 11, 1994, when a CD by Sting was sold by NetMarket. Now, almost exactly 15 years later, let’s take a look back at where the industry came from and where it may be going to. The reality is that today, online stores have come a long ways from the mid-nineties, when major companies such as Amazon and eBay entered the playing field.

In the early 1990s, opening a store meant renting commercial space, buying merchandise and business equipment (such as shopping carts and cash registers), paying employees to keep the store open during business hours, and buying a service that enabled customers to pay via a credit card.

Launching an online store today means pretty much the same thing, although the virtual storefront has changed the nature of these steps and combined several into one. Online store software single handedly eliminates the need for a well-located commercial real estate (now simply a URL), 99 percent of business equipment, cashiers and a separate credit card service. Online stores are far less capital intensive than traditional retail and have the potential for wider reach.

The truth is that e-commerce didn’t develop into this miracle over night. It took years of visionary programmers and enterprising entrepreneurs to bring us the world of online shopping that we know today. Over the next few weeks, I want to share some of the lessons we can learn from this evolution and the opportunities that exist as we look forward.

Great Business Systems Beat Lipstick Every Time

When you are outsourcing your order fulfillment you are buying systems. These systems will affect the success or failure of your company. Make sure you buy a great fulfillment system.

When I look at many of the offerings out there, the infamous “lipstick on a pig” cliché comes to mind. Specifically, there are numerous old-school warehousing companies that are now trying to pass themselves off as e-commerce fulfillment providers. In reality, they're just putting a software layer on top of antiquated warehousing systems. It's a slow, inefficient way to fill orders, and it's prone to the same human errors that have plagued warehouse operations forever.

Then there is the other extreme, which is represented by one Silicon Valley software startup. This company has focused all its effort on software development and doesn’t even own or operate any warehousing systems. In other words, it's selling fulfillment services without controlling any of the actual fulfillment process. The firm is outsourcing its outsourcing!

From the first day of operation back in 2000, Webgistix’s online and offline systems were designed and built for the real-time world of the Internet. The front end of our system, SmartFill, is fully integrated with our internal warehousing and shipping software systems all of which are accessible in a secure Cloud and are fully integrated with our physical warehousing, customer service, and administrative operations. This makes for a very powerful order fulfillment system that we believe gives our customers a true competitive advantage in the marketplace.

Because we built the system for the Web from day one, we can operate the company in real time on a global basis and scale it with relative ease. More importantly for our customers, they get a seamless real-time order fulfillment solution. Because we have an integrated Web based system, we can confidently guarantee every order will ship with 100% accuracy within 24 hours. Smooth and seamless order fulfillment is the result of powerful well designed systems.

May We Live in Interesting Times

At Webgistix, we have a front row seat to observe and assist hundreds of e-commerce companies meet the global challenges of selling physical products online. I am continually amazed at the creativity, ingenuity and vigor our customers used to overcome these challenges. I am also amazed at the breadth, depth and uniqueness of products they are selling online.

The sheer volume and variety of the global marketplace becomes clear to me through the eyes of the hundreds of online retailers who have built successful businesses. Our position in the e-commerce value chain gives us a unique perspective on global issues affecting the industry. I hope to use this blog to share my thoughts and insights on this and other topics of interest.

E-commerce is growing and changing rapidly. This is truly a very exciting and interesting time to be involved in global commerce. Welcome to the journey.