Online Payments Started a Tech Revolution
Last week, Etsy and Macy's made an announcement. The online marketplace and enterprise retailer will be joining forces to bring Etsy to brick-and-mortar with a new pop-up shop. The story got me thinking about just how far online retail has come in the past few decades, and how important it's been to the advancement of the retail industry as a whole.
Legend has it that the first ever computer-aided exchange, now referred to as e-commerce, was the sale of marijuana between a group of students at Stanford and MIT in the early ‘70’s. From those sketchy beginnings, e-commerce has come a long way to bring us things like the Etsy/Macy's partnership, or the entire world of FinTech.
E-commerce is the industry that was born out of the ability to safely transfer money over the internet, and PayPal was the first to make this happen in a big way. When PayPal launched in 1999, it brought online payments and e-commerce into the mainstream and galvanized a shift in power from retailers to consumers. With secure, easy and trustworthy online payments, consumers could now shop smarter, compare prices, do research and safely spend their money online; they were no longer confined to the brick-and-mortar stores nearby. Even more revolutionary, any individual had the power to become an online retailer.
This initial power transfer signaled the first step in a change that has been moving through the industry ever since. Before the opportunity that e-commerce provided, one could only compete in retail if one had access to the capital needed to cover the massive overhead costs that come with brick-and-mortar sales.
E-commerce is now so influential that a store is considered untrustworthy if it doesn’t have a website, inconvenient if it doesn’t sell online and not doing enough if it’s doesn’t have a robust, on-brand and compelling social media presence. According to a survey by RetailNext, 84% of consumers believe that retailers should be doing more to integrate their online and offline channels and 22% of consumers spend more at a store if digitally influenced. Online and mobile payments are so advanced they merit their own nickname of FinTech.
Unsurprisingly, the small guys are thriving in this ecosystem. POS technology platform Shopify announced in 2015 that they were being used by over 100,000 online stores. The blog post that accompanies the announcement recounts the mission of Shopify: to make it possible for any individual mom-and-pop store to grow and flourish.
And then there’s Amazon. This year, Amazon beat out Walmart to be the biggest retailer in the world. Amazon has leveraged cutting edge technology, a great product array, secure online payments, low prices and the fastest online delivery (facilitated by excellent supply chain management) to shoot to the top of the industry. In contrast with some of the original benefits of e-commerce, Amazon has an extremely robust infrastructure, and lots of overhead. They are also the epitome of how the retail industry has evolved with technology, and their use of tech extends far beyond payments and e-tail.
When it comes to the retail industry as a whole, online payments and the resulting e-commerce were the first dominos to fall, but not the end of the technology’s influence. Online payment launched an avalanche of changes and advancements and it shifted the power from few to many, which was the spark that ignited a technology revolution throughout the industry.