And what lies ahead for the next chapter of retail innovation.
This week, the internet turned a vibrant 42 years old.
January 1 is widely considered the official “birthday” of the internet, because this was the day in 1983 that the Transfer Control Protocol/Internetwork Protocol (TCP/IP) was launched. The launch of TCP/IP meant that, for the first time, networks had a standard way of communicating with each other using one universal language.
At the time, few could have predicted the internet’s profound impact on the world, and this is especially true for retail. As late as 1999, innovation consultant Langdon Morris wrote, “Given the character of face-to-face retail commerce, even the idea of online retail commerce is problematic.”
Yet from local shops to online-only storefronts, over the past four decades, businesses have harnessed the internet’s capabilities to expand their reach, engage with consumers and shape the future of commerce.
Here are some of the transformative tools and innovations the internet has enabled for the retail sector and how they started:
E-Commerce Platforms
E-commerce platforms are ubiquitous now, but few could have imagined their scope when the internet became more accessible in 1991 as Tim Berners-Lee opened the World Wide Web to the public. The Web allowed people to access information on the internet through websites for the first time.
By 1995, Amazon became one of the first e-commerce sites in the U.S. to start selling products online. Known at the time as AuctionWeb, eBay also launched in 1995; one of the first items sold was a broken laser pointer for $14.83 (worth a whole lot more now!). Pizza Hut also revolutionized food retail in the 1990s, allowing customers to order pizza online through its “PizzaNet” platform.
Today, e-commerce doesn’t just provide businesses with a global reach. It also enables consumers to research products quickly from anywhere in the world. For small businesses, platforms like Amazon, Walmart, Shopify and Etsy have leveled the playing field, making it easier to compete with larger retailers and for independent sellers to grow their customer bases and build thriving businesses.
Fun Fact: Amazon was initially intended to be named Cadabra.
Payment Systems
We take it for granted now that we can pay for an item online with just a click, a thumbprint or the tap of our card, but the ease and security we expect today in our online transactions have been decades in the making. In a book about the rise and fall of apparel retailer J.Crew, author Maggie Bullock described employees’ initial skepticism of e-commerce: “Most could not imagine their customer going online, punching in her credit card number – what if some hacker stole it?! – and pressing ‘Submit Order.’”
Online payment systems actually began to emerge as early as the 1990s. In 1994, Netscape introduced SSL (Secure Sockets Layer) encryption, which made it possible for data to be securely transmitted over the internet. Microsoft then integrated SSL encryption for its Internet Explorer web browser, and there was wider adoption of this standard across the Web for the transfer of secure information. While other companies tried to create online payment systems in the years after that, PayPal was the first widely successful one, launching in 1998 to facilitate payments for eBay.
In the 2000s, most major e-commerce sites began integrating credit card processing directly into their websites. Google Wallet launched in 2011, and Apple Pay in 2014. By allowing users to make purchases with the touch of their smartphones, they enabled digital payments in brick-and-mortar spaces.
Another market disruptor emerged around that time—the introduction of Bitcoin by an anonymous creator in 2009 represented the first decentralized method of online payment that didn’t rely on traditional financial institutions. This led to a boom of cryptocurrency and blockchain technology development globally, which continues today.
Fun Fact: The first secure “online purchase” happened in 1994 with the purchase of a Sting CD through NetMarket. This purchase set the stage for modern e-commerce shopping.
Digital Marketing
The rise of online shopping platforms soon enabled the emergence of digital marketing. The first digital marketing ad appeared in 1994 on a site called HotWired.com (the original online version of Wired magazine), advertising AT&T. An incredible 44% of viewers clicked on the ad – an unthinkable percentage today.
Early search engines like Yahoo! and AltaVista were introduced in 1995, and businesses began to optimize their content to appear in search results, laying the groundwork for SEO. In 2000, Google launched AdWords, its pay-per-click advertising platform, which allowed businesses to create targeted ads and appear at the top of search results.
Today, online services like Instagram, Pinterest, TikTok and Facebook have also become significant channels for retailers. And data play a huge role in the evolution of digital marketing. Retailers now have access to analytics tools that can analyze consumer behavior, predict future shopping behavior and personalize the shopping experience.
Fun Fact: The first digital marketing ad for AT&T said: “Have you ever clicked your mouse right here? You will.”
Social Commerce
We often take it for granted today that we can shop directly through posts, stories and livestreams. But social commerce is a revolutionary development.
Social commerce began with Facebook’s “brand” pages, which allowed businesses to engage directly with audiences. Pinterest introduced “Buyable Pins” in 2015, but when Instagram introduced shoppable posts in 2016, it revolutionized the e-commerce industry by making visual content into a shopping experience. In the last few years, TikTok has emerged as a powerhouse for social commerce, using short-form videos to attract customers.
The success of social commerce lies in its ability to create personalized, engaging and convenient shopping experiences – while giving consumers a sense of community.
Fun Fact: The first shoppable posts on Instagram in 2016 featured Kate Spade handbags, Warby Parker and JackThreads. This marked the beginning of Instagram as a social commerce hub.
Looking Ahead: The Internet’s Next Chapter in Retail
Emerging technologies like artificial intelligence (AI), augmented reality (AR) and the Internet of Things (IoT) are poised to further reshape e-commerce past our current internet experience. As we look to the future, AI-powered virtual shopping, AR experiences that let you “try before you buy,” and IoT-enabled smart shelves that automatically restock inventory will likely be in the mix.
But brick-and-mortar shopping isn’t leaving the scene; in fact, it’s integrating these technological advancements. For years, analysts predicted that in-person shopping would disappear, but that hasn’t been the case at all. Humans crave the immediacy, experience and social interaction of shopping in person, and brick-and-mortar retail remains an essential and irreplaceable part of the shopping landscape.
Storefronts have used many digital tools for the in-store buying experience, including aisle markers and in-app maps for products that consumers find online that they want to buy in person. Brands have also turned their stores into destinations, showcasing immersive technology and experiential retail experiences.
Retail is poised for continued growth, bridging offline and online shopping experiences into omnichannel venues. From click-and-collect services to mobile apps, retailers are continuing to innovate so customers can have a more convenient, personalized and streamlined shopping experience to build brand loyalty.