Last month was the 20th anniversary of the first secure retail transaction on the Internet. As covered by the New York Times, on August 11th, 1994, a man sat down at his computer, logged onto the Internet, input his credit card data, and purchased Sting’s “Ten Summoners’ Tales.” Not only was the event accompanied by the popping of bottles of champagne, it also uncorked a new way for consumers to shop—and a fruitful way for entrepreneurs to make money.
Changing costs to launch an online store
A lot has changed in twenty years. A compact disc (known then as a “compact disk”) cost $12.94, plus shipping. The New York Times article had to explain what an algorithm was. And launching an online store required a lot of technical coding and high investment. In fact, when Amazon went live in 1995, Jeff Bezos bootstrapped it, spending around $300,000. And before Amazon went public in June of 1996, it had received an additional $8 million in venture funding. That’s a lot for a store that initially started out only selling books.
Even 15 years ago, the average cost to build an online store was about $100,000. Forget about drop shipping to save money; in addition to that initial $100,000 investment, merchants also had to factor in costs for purchasing bulk inventory, finding a warehouse space, and coordinating all the shipping logistics. Today, startup costs can be as low as $30 a month. Plus, thanks to innovations like digital marketing, apps, and drop shipping, many merchants can be up in a weekend.
While today most people wouldn’t bat an eye at purchasing online, it took a long time for consumers to adopt the new style of shopping. In fact, nearly eight years passed before fifty percent of the online population had bought merchandise online. It also took eighteen years, from 1994 to 2012, before ecommerce sales hit $1 trillion in consumer spending.
Ecommerce spending to reach $2 trillion in 2015
But all of that is changing. The market is growing at thirty percent a year. Ecommerce is the fastest growing segment within retail. And in 2014—just two short years after breaking the $1 trillion mark—online sales are going to hit $1.5 trillion, according to eMarketer data. Even more astounding, online sales are projected to surpass $2 trillion next year. That means that with its current growth rate, if ecommerce were a country, its GDP would be in the top 10. Can you imagine what sales will be like by 2020?
Right now is an exciting moment in history. We’re all a part of an historical moment in time where anyone can become a successful entrepreneur. As shown by Amazon, eBay, and Alibaba’s dominance of the market now, online retailers who get in early will have a larger share of the pie. Don’t wake up one morning to find yourself outmarketed and left behind by those who saw the trends and put the rubber to the road.
If you’re waiting to start selling online, do it now. If you’re a current store owner wanting to expand your store’s share of the market, now is the time to hone your niche, tighten up your marketing, and connect with your audience.
To get started, check out this report we created in partnership with outside research firm Sagence. It has a little more about the history of ecommerce and some of the trends we are seeing. And then tune in tomorrow for tips from Business Strategist Sramana Mitra on how you can prime your store for these future trends.