1982: Boston Computer Exchange - Pivotal Moments
Welcome to our third Pivotal Moments blog. If you follow us on social media, you'll know what this is all about. To paraphrase Confucius, it's only by knowing where we've been that we can understand where we're going.
“Study the past if you would divine the future.”
Confucius
Where would we be today without online shopping? It’s one of the most popular online activities, and it’s not hard to see why.
Shop at your leisure, in your pyjamas, and with the ability to shop around and find the best deal. These days, many online retailers even offer same-day and next-day delivery, so it’s instant gratification. Living without online shopping is challenging to understand these days. It’s made life more convenient, straightforward, and simple in more ways than it’s possible to count.
But once upon a time, it was a passing idea. A trivial thought that might not have gone anywhere. Yet it did. And here’s how.
Founder of Pivotal, Tait Pollack discusses the origins of Ecommerce with the great man himself: Professor Alexander Randall
What is E-Commerce?
Online shopping, or e-commerce, is precisely what it sounds like—buying and selling services via the Internet. You might have looked at the title of this post and thought, wait - we didn’t have the Internet in 1982. That's true, but it doesn’t mean e-commerce wasn’t possible.
E-commerce is a continually growing industry whose experts and players develop innovations and technologies yearly. However, this is possible due to the Electronic Data Interchanges that began in the 70s. And, of course, the Internet, with which the history of e-commerce is closely intertwined.
As we know it today, e-commerce wasn’t possible until the Internet became “a thing” in 1991. But the idea came much earlier.
In 1979, Englishman Michael Aldrich went on a walk with his wife and, as we all want to do, complained about the regular trips to the market they had to make. Surely it would be easier if you could order your shopping through the TV, he suggested. Well, yes. Yes, it would.
Since Aldrich also happened to be an inventor, it wasn’t long before he invented a system that advertised goods and services on TV. Viewers were presented with the option to call a processing centre that would place their order. Aldrich called this teleshopping – and just like that, e-commerce was born.
PHOTOGRAPH: ALEX RANDALL/BOSTON COMPUTER EXCHANGE
Black and white photo of workers at a busy Boston Computer Exchange in the 1980s
Pivotal Moment - The Boston Computer Exchange
Though Aldrich’s teleshopping was technically e-commerce, it’s still in a similar format today. We’re discussing something much closer to modern internet shopping, which came with the Boston Computer Exchange.
The Boston Computer Exchange (BoCoEx) was founded by Alexander Randall and Cameron Hall, who had plenty of qualifications in systems and economics. They shared an interest in creating a computerised marketplace, and in time, BoCoEx was born.
BoCoEx was launched in 1982 and was the first e-commerce company. First and foremost, it was an ‘online’ market that helped people to buy and sell old computers.
Though the company began as a paper database, it quickly adapted to a computerised database for convenience. Using the Alpha 2 database manager on a dual floppy IBM PC, the founders made a deal with the owners of an online service bulletin board.
BoCoEx could post its database on a public access system using this Delphi bulletin board. It was also posted on several searchable databases, including YellowData and Boston CitiNet. Later, they also had the first store on the Electronic Mall, which was opened by CompuServe in 1989.
The e-commerce store was similar to later online retailers like eBay or Etsy. Sellers uploaded their inventory, which buyers could browse. Since this was still pre-internet, buyers would order via telephone and pay the sellers.
Eventually, the Boston Computer Exchange expanded its platform and set up auction software. However, throughout the 80s, most e-commerce was still considered relatively niche and was a small service. But not for long.
How E-Commerce Evolved
With the rise of the Internet, the consumer shopping experience changed quickly. One of the earliest e-commerce stores to use the World Wide Web was Book Stacks Unlimited, a bookshop created by Charles M Stack in 1992.
Like BoCoEx, Book Stacks Unlimited began as a dial-up bulletin board before moving to the Internet as Books.com. Eventually, they were acquired by Barnes & Noble, but they are still known today for being the forerunners of Amazon—founded a full two years before the now household name.
After the restrictions on the commercial use of the Internet were lifted in 1991, e-commerce proliferated. By 1995, there were over 120,000 registered domain names; by 1998, there were 2 million. The more people logged online; the more budding entrepreneurs sought ways to monetise the Internet, which meant more e-commerce.
Online Shopping Giants
Given the popularity of online shopping, it’s perhaps not surprising that Amazon and eBay, as two of the first big companies to use electronic transactions, are still well known. Amazon began as an online bookseller in 1994 but quickly expanded into all other avenues, becoming an “A-Z seller”.
eBay, on the other hand, began that way. Founded in Pierre Omidyar’s living room in 1995, he built a bidding platform rather than selling directly, creating a platform that made it simple for anyone to sell online whether the thief had the know-how.
An early screen grab from Book Stacks Unlimited, the precursor to Jeff Bezos’s Amazon Books
By the late 90s, e-commerce was massive. New companies appeared regularly, selling almost anything you could think of, and investors began to throw vast sums of money at web-based companies. As the value of these companies reached unsustainable levels, the bubble burst in 2000, and many of them folded, unable to survive.
Some bounced back, including Amazon and eBay, of course. Many were bought out. But plenty failed altogether. The growth of e-commerce slowed for a while, but in 2004, several big credit card processors worked together to release the Payment Card Industry Data Security Standards (PCI DSS). Though a bit of a mouthful, it was a helpful outline of procedures and obligations around online payments and data storing, and it made e-commerce far more secure.
Samsung mobile with Amazon logo on-screen to demonstrate how easy it is to shop online nowadays
The Mobile Revolution
Of course, things were shaken up again in 2007. The release of the iPhone meant that potential customers suddenly had tiny computers to carry wherever they went. Purchases could be made from anywhere - these days, they account for more than half of all web traffic. E-commerce companies have had to adjust their digital strategies and focus on creating mobile-friendly sites and apps to keep their customers.
It seems fair to say that apps and mobile purchases will play an even more significant role in e-commerce in the future.
What do you think?
Do you prefer to shop online? How often do you shop on your smartphone?
This is a fascinating explanation of the first e-commerce store online, The Boston Computer Exchange. Video and explaination by Alex Randall.