The Story So Far

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In a broad sense, electronic commerce - doing business by sending messages across a network - is almost a century old. In 1910, 15 florists banded together to exchange out-of-town orders for flower arrangements. Their Florists' Telegraph Delivery group, now FTD Inc., may have been the first real e-commerce network.

But for e-commerce that links computers, one key requirement is standardized business documents, so computers on each end of the wire can understand each other. That has its roots in June 1948, when the Soviet Union - which controlled eastern Germany - cut off road, rail and barge access between western Germany and the parts of Berlin that were controlled by the U.S., England and France after World War II.

The result was the Berlin Airlift. During the next 13 months, more than 2 million tons of food and other supplies were flown into West Berlin by air. But tracking the cargo, which had to be loaded and unloaded at top speed, was next to impossible with shipping manifests in different forms and, sometimes, different languages.

To solve the problem, U.S. Army Master Sgt. Edward A. Guilbert and other logistics officers developed a standard manifest system that could be transmitted by telex, radio-teletype or telephone. They tracked thousands of tons of cargo per day until the roads to Berlin were reopened in 1949.

Guilbert didn't forget the value of standard manifests. In the early 1960s, while working for Du Pont Co., he developed a standard set of electronic messages for sending cargo information between Du Pont and a carrier, Chemical Leahman Tank Lines. In 1965, Holland-America Steamship Line began sending trans-Atlantic shipping manifests as telex messages that were then converted into paper tape and input into the company's computers.

By 1968, so many railroads, airlines, truckers and ocean shipping companies were using electronic manifests that they formed the Transportation Data Coordinating Committee (TDCC) to create cross-industry standards - and in 1975, the TDCC published its first electronic data interchange (EDI) specifications.

The grocery and food industry began an EDI pilot project in 1977. By the early 1980s, Ford Motor Co. and General Motors Corp. required their suppliers to use EDI. Big retailers such as Sears, Roebuck and Co. and Kmart Corp. also demanded EDI.

But while EDI saved large customers money by doing away with all that paper, EDI was expensive for suppliers. It required using costly software and value-added networks (VAN) - and often a different EDI system for each big customer since no one used exactly the same subset of EDI standards. But if a huge customer demanded EDI, the choice was simple: No EDI, no sale.

By 1991, about 12,000 U.S. businesses were using EDI. That was also the year the U.S. government lifted restrictions on commercial use of the Internet, and the year Tim Berners-Lee at the Swiss research lab CERN created the first Web browser. A new kind of e-commerce - business to consumer, on the World Wide Web - was about to explode.

In 1994, the Netscape Navigator Web browser included support for "cookies," tiny data files stored on a user's computer that made it practical to create Web stores and identify customers, collect data about them and personalize sales pitches to them.

Moving Online

While new online superstores such as Amazon.com Inc. sold products online at bargain prices and without keeping goods in stock, existing brick-and-mortar businesses frantically worked to build their own presences on the Web. An entire infrastructure grew up to support the dot-coms: United Parcel Service Inc. and FedEx Corp. handled shipping, third-party companies offered credit-card processing, and electronic cash systems, and American Express Co. even launched Blue, a "smart card" designed specifically for online shopping.

The Internet was revolutionizing business-to-business e-commerce, too. EDI across the Internet was much cheaper than VANs, and big EDI users were developing their own online exchanges based on Web-like markup languages instead of rigid EDI documents. In 2001, a version of XML designed for electronic business, dubbed ebXML, was officially standardized, and user groups today are working to merge the best elements of EDI and ebXML to make e-commerce even more frictionless.

And now, on with the story . . .

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Early 1960s: Edward A. Guilbert develops EDI-like messages for sending cargo information between Du Pont and Chemical Leahman Tank Lines.

1965: Holland-America Steamship Line sends shipping manifests as telex messages that are automatically converted into computer data.

1968: The Transportation Data Coordinating Committee is formed to merge industry-specific manifest standards for the air, motor, ocean and rail transportation industries.
Early 1960s: Edward A. Guilbert develops EDI-like messages for sending cargo information between Du Pont and Chemical Leahman Tank Lines.
Early 1960s: Edward A. Guilbert develops EDI-like messages for sending cargo information between Du Pont and Chemical Leahman Tank Lines.

1977: The grocery and food industry launches a pilot EDI project.

1982: GM and Ford mandate EDI for suppliers.

1991: The National Science Foundation lifts restrictions on commercial use of the Internet.

1994: Netscape Navigator 1.0 introduces “cookies.”

1995: Amazon.com, led by Jeff Bezos, launches an online store for books and music.

1999: American Express introduces Blue, a smart card with integrated Web payment and online wallet, and gives away card-reader peripherals.

2000: The Big Three U.S. automakers (Ford, GM and DaimlerChrysler) form the Covisint B2B exchange.

2001: The ebXML 1.0 standard is approved.

Special Report

E-Commerce Grows Up

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