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History of commerce

Money image with text on it

Definition

In the most basic form, commerce is a branch of business and is an essential part of our life today, and has been for thousands of years. 

It is said by some sources that the origins of commerce starts somewhere in prehistoric times. 

The word commerce comes from latin commercium (com – with, together + merx – merchandise) “trade, trafficking”.  

Today it drives a large portion of our lives – when you say holiday shopping and grocery shopping or shopping sprees with friends, everybody uses commerce in their daily lives.

However, commerce is not stagnant but a fluid, dynamic, and changing entity. Over the years, we have seen large shifts with how people partake in the commerce aspect of their lives.

In this post, we will take a look at the evolution of commerce, from brick and mortar storefronts to ecommerce and online shopping.

Commerce is now defined as the exchange of money for goods or services.

Even though the word “commerce” is applied today to any type of transaction when you ask, people understand by its large scale of buying and selling, this due to the fact that most transactions require product transportation across the globe and involves all institutions, functions and activities that require moving goods.

When it all started

We can go ahead and say that the history of commerce goes along with that of civilization. At the beginning man’s wants are simple and only limited to his physical existence, like food, clothing and shelter.

Apart from daily necessities, trading got to be a way of facilitating things for prehistoric people, they used to barter what they had, being goods or services, from each other.

This system was popular in ancient times where you could exchange the goods and services you had for otherʼs people’s goods and services based on their needs instead of paying through a monetary system that only developed later.

But as he becomes more intelligent a manʼs wants change and he requires more than the comforts and conveniences of life, he wants the luxuries too. 

We can now see that civilized man is never satisfied because no sooner is a want supplied than other ones take its place, so under this stimuli he goes and achieves conquests. 

Thus commerce is one of the ways by which certain people have at different times undertaken to supply their needs and it all started during the time of the ancient empires.

The ancient commerce of the world took place mainly on the shores of the Mediterranean. 

And it started on a bigger scale with the Egyptians who have cultivated the arts and sciences and built wonderful monuments. Even though they were considered industrious at home, they were not inclined to go abroad and engage in foreign trade. 

Not the same can be said for the Arabs and the Greeks because Alexandria became the great commercial metropolis of the world and the Greek have settled there in large numbers after Alexander the Great conquered Phoenicia. 

It is said that the Phoenicians were the first navigators and carriers of goods by water. 

They also founded cities like Tyre and Sidon and built a very profitable system of commerce.

Intelligence and diligence in business helped them discover the art of dyeing purple and writing by means of letters. 

They were also skilled in casting metals, weaving, architecture and others, with their oared barks they could navigate the coast and trade their own productions like spices, frankincense, oil, wine, wheat and slaves.

They reached as far as Cyprus where a colony was founded then to Greece, Egypt and South Africa. They also discovered Spain with its riches, all these helped them develop the resources of the country until they were conquered by the Greek empire. 

The Greek took the methods of the Pheonicians and due to conquering them also their trade. Thus they became the masters of the Mediterranean Sea and played a great role in elevating the standard of civilization and establishing a system of commerce. 

Being enterprising people they learned the use of gold and silver as money taken from the Babylonians and used them by stamping coins of both metals in all kinds of sizes and denominations.

This along with conquers in Asia, Africa and part of Italy helped them control half of the commerce in the Mediterranean Sea. 

But like they took over from the phoenicians, a greater and stronger power claimed leadership about 300 years before Christ because in Italy a new empire was born.

For almost five hundred years Rome grew stadily till it was strong enough to wrest the commercial and political supremacy of the Mediterranean from Greece.  

The Romans were more warriors than merchants. But the fact that small wars ended and provinces gave their independence for peace lead to unrestricted commerce and trade in all parts of the new empire.

Arts and science improved agriculture and thus manufactures spread among them and with them a large number of merchants and tradesmen. 

Because they were warriors and needed to facilitate their military operations, the Romans started building an extensive system of highways.

Beginning at the Golden Milestone, the central point of the Roman Empire, these roads went in all directions over Italy and reached France, Spain and west Britain, went through the mountains of Epirus and Macedon and to the principal seaports throughout Asia Minor, Palestine and North Africa. 

These roads remain as important highways of commerce to this day even if they were built for military purposes, in time they became instrumental in fostering and developing commerce as well as civilization in general.

On these roads Rome got its supplies from Athens (statuary, cloth), Corinth (bronze), Asia Minor (carpets, works of art in bronze, gold etc.), East-Persia, India and China (skaves, precious stones, silk), Egypt (wheat, barley, cloth), Africa (slaves, ivory), Arabia (perfumes, gold and horses), India (spices, pearls and silk).

In the west side of Rome, Spain gave from its mines gold and silver, wool, oil, fruit horses etc. from France came oil, wine and cattles among others. 

Even though it developed greatly for 500 years, due to corruption, internal dissensions and wars in the middle of the fourth century the Roman power began to decline and with it so did the commerce of the empire. 

What came after that was excessive taxation, laws that had no value and the rise of semi-barbarous tribes of hunters and warriors.

Moreover the empire was divided in two, a capital in Rome and one in Constantinople, all these along with many waves of migrators destroyed for a period of time the old commerce and civilization.

In the next four to five centuries after the fall of Rome there is no trace of important manufactures except on a domestic level. The one that brings back industry and commerce is the king of the Franks Karl the Great also known as Charlemagne.

He made possible the revival of internal and foreign commerce meant to set almost two centuries later.

In the Middle Ages commerce developed by trading goods during trade fairs, later to make things easier and save time, wealth was converted into capital and the banking system was developed.

Monte di Pietà bank. One of the first banks in the world. It has been operating as a bank in Italy since 1472.
Monte di Pietà bank. One of the first banks in the world. It has been operating as a bank in Italy since 1472.

What we know today as global commerce began in the 16th century when big trading companies were formed in the main exploring countries like UK, Spain, Portugal and the Netherlands.

These nations traded with each other and because of being explorers they met with other civilizations in Asia and Africa, so naturally the trading route in place expanded  by connecting it to the one in place in those countries.

Along the way 

Closer to our time trading managed to expand from small stalls in fair and outdoor markets to supermarkets, stores and shopping malls, this type of trading is also known as brick and mortar, we will talk more about it later in the article.

The small sailing ship was to be replaced by steamships and further by railroads to get to planes and cargo vessels nowadays.

Old train at the beginning of railroads.
Old train at the beginning of railroads.

These new means of transportation changed the face of commerce from a process that could take months to one that can take only hours.

In time organizations have been created such as the World Trade Organization which helps control commerce and promote free trade by removing any barriers.

Screenshot of World Trade Organization website.
Screenshot of World Trade Organization website.

Moreover commerce is interwoven with the government because most countries have a form of organization that makes sure businesses do not monopolize or manipulate the market.

This system of global trade has helped to develop the worldʼs economy. Because every time a person trades something commerce is occuring at a small level and so the standards of living improve and the relations between businesses do too. 

Along with the development of transportation that of the means of payment evolved.

If early people traded animal skin, shells or beads as currency the development of metal coins originating somewhere between 700 and 500 B.C., has greatly simplified commerce.

First world coins - The Lydian Coin.
First world coins – The Lydian Coin.

Due to the fact that you could count them, not weighing them made trading easier. Later gold and silver coins were used to trade and thus nations that had more of certain goods could sell to other countries. 

Even though at its core commerce is the same, the evolution of technology transformed the way it is perceived.

Since then commerce started to include other industries too, like advertising, warehousing, banking, transportation and insurance.

Once the Electronic Data Interchange was developed in 1960 the groundwork for what we know today as ecommerce was set.

With it security tools for online trading were developed and services that processed online credit and debit cards emerged.

Verisign was the first to develop digital IDs that could verify an online business identity.

Screenshot of the Verisign website.
Screenshot of the Verisign website.

This type of trading has allowed people to buy from wherever they want and it has made international trading much easier because it is considered the most innovative type of commerce.

Due to the fact that the internet is on 24/7 ecommerce can happen at any time and as a result a business profit can increase greatly if they open an ecommerce site. 

Since the beginning ecommerce has evolved a lot and thanks to improvements in cyber security people are no longer wary of trading online and can even make large financial transactions without worry.

A lot of services moved from offline to online as well. New ones like those in the IT sector are mostly conducted online.

The development in the 2000s of services like Payment Card Industry Security Standards Council came as a way of ensuring that businesses follow the security requirements when it comes to financial transactions.

Screenshot of the Payment Card Industry Security Standards Council website.
Screenshot of the Payment Card Industry Security Standards Council website.

Even though brick and mortar is still the main player, ecommerce and online shopping is expected to grow fast as a way of buying and selling.

That is expected because ecommerce provides the ability to compare prices, read and leave products and business reviews, quick returns with minimized hassle from your part, gives a variety of options to choose from and the items chosen are delivered to your doorstep on the same day in some cases, all at the press of a button.

When you shop online firstly you can compare the features of the product which is difficult to do in a store with features like “Compare product” that most ecommerce websites offer today. 

Features like this will help you make quick decisions in the buying process by comparing technical data(digital devices), product composition(for clothes for example) and so on.

Think how hard and time consuming it will be to go to an offline shop and start to verify all labels on clothes.

Many big brands that have offline stores and a presence online noticed these types of issues. 

To make it easier for the customers to find out information about a product they’ve started adding digital devices with touch screens inside they’re offline shops that display either the online shop or custom software created for these types of experiences.

Shopping online gives you the power to compare products prices easily without having to go from store to store.

This makes the shopping experience less time consuming and much cheaper from an energy point of view since you do not have to drive from store to store, though money spent on gas can be put aside to buy more products.

The buyer can read other peopleʼs opinions about a product in the form of reviews or testimonials. In this way the customer gets an idea about the quality of the product and the shop owner can sell more products if he has stellar reviews.

Worth to mention that ecommerce will save both the owner and the customer money, time and have a stress free shopping experience.

There are online shops that allow you to order a couple of sizes and colors from a product so you can test them at your house, on your time and terms. Once you decide which one you like, you keep that one and return all other items at no cost.

You can do all of this from the comfort of your own home.

The other side of commerce – The silk road

Over the past years, electronic trading platforms have emerged in the depths of large enterprises.

These days there is nothing that cannot be ordered on the Internet from shoes, furniture to consumer electronics and so on.

But the consumption on the net also has dark sides like bogus orders, fake websites, illegal purchases, fake reviews, dishonest refunds requests, chargebacks, that have become more frequent.

In one word for most people it is much easier to fake something on the internet, but this is not only ecommerce related. We can see the same stuff happening on social media, YouTube and so on.

Some people go much further than that going into dark ecommerce. 

One such example of the dark side of the Internet is the Silk Road. The name Silk Road comes from a trade route started between Europe, India, China and other Afro-Eurasian landmass but in todayʼs internet era Silk Road is known as the online black market or the first dark web market.

This platform was best known for selling illegal drugs and other illicit products online.

The website was launched in 2011 and even if at first there were a limited number of sellers the platform developed quickly.

Silk road is said to have facilitated until his closer transactions in value of $1.2 billion.

It was shut down 2 years later by the FBI but there are still a number of other similar marketplaces that can fill the void. 

AlphaBay known as „the Amazon of the dark web” and Hansa were also closed down in 2017 but Dream Market and The Wall Street Market took their place and run a popular and profitable drug market on the dark web.

AlphaBay was facilitating transactions in value of $600,000-$800,000 per day.

None of them managed to gain the trust of the Silk Road and because of that the law enforcement thinks these markets can be brought down permanently.

Brick and mortar

A brick and mortar store in Cyprus, Greece.
A brick and mortar store in Cyprus, Greece.

One type of commerce that is still used on a large scale is brick and mortar.

Brick and mortar stores – a way of shopping that still takes up to 85% of the market these days is happening in physical stores – in the commerce industry are one and the same.

These types of stores have been around for decades and are the oldest and most common way for people to buy and shop for what they want and need.

It is still important because most of the customers like to see the item, touch it and feel the texture of it and mostly experience the process of buying from an actual store.

Sure having such a business implies concerns like shop visibility, foot traffic, great interior design, rent etc. but this physical presence played a crucial role in providing goods and services.

One good example of such a business is McDonald’s, a company that was first a small restaurant and now is a worldwide name and plans to expand even more thus showing the importance of physical presence on the market.

It is also important for small businesses like diners or family owned small shops which are limited to this brick and mortar type of commerce. 

Even though with the rise of online shopping many said that this type of commerce is dying because many businesses decided to combine the two of them for maximum profit.

And some of them found a way by using the new trend in online shopping, food delivery services.

As a response to the new technology and as a way of gaining more customers and to stop the huge impact on the dine-in restaurant business food delivery services appeared and started to take restaurants and owned family dinners to a new level. 

Because food delivery retail is based on courier service, that means that a restaurant, store or other independent food company delivers food to a customer.

Now the concept of food delivery is not new but over the past years it has become like a magic ingredient.

This type of order is made either through a website, phone, app or through a food ordering company.

Due to the development of smartphones and apps food delivery has brought various restaurants to the comfort of homes.

This new way of ordering has altered the food business and changed the perspective of restaurants because you no longer have to go to a restaurant to enjoy its food. 

Now since apps have become a mainstream utility on mobiles and GPS being available to everyone it is no longer difficult to deliver food.

An UberEats delivery guy.
An UberEats delivery guy.

And with platforms like UberEats, GrubHub, Just Eat, Takeaway and others it is even easier because they aggregate data from multiple restaurants and provide their services to the app users and so the customers have access to thousands of restaurants and millions of dishes.

So practically with these types of services you can order now from a multitude of restaurants, fast foods, patisseries and whatever merchant is registered with the app from the comfort of your home or office.

Ecommerce

Another type of commerce that has become more popular these days is ecommerce, short for electronic commerce.

That means you are able to buy or sell products or services online. 

As I have mentioned above, ecommerce is growing every year due to its 24/7 presence and plethora of goods and services just one click away.

The market penetration of ecommerce these days is only 15% and growing yearly and because of that now is the time to build your online store presence. A way to make your business noticed is using platforms like Shopify. 

This platform provides a way for setting up an ecommerce site and offers online retailers services like payments, marketing, shipping and customer engagement tools that will make it easy for small merchants to run an online store.

Using Shopify you will be able to create a fully customized site with themes and apps that will improve your customer’s experience. 

It also has integration tools that can help you sell more by using stores or platforms like Facebook, Instagram or Pinterest.

The possibilities are various with this platform and continues to change as they develop new features.

The ones that are said to have changed the face of commerce are Amazon and eBay which sell exclusively online and are today the most known online shops.

Ten years before Jeff Bezos left New York to start selling books over the internet one of the most innovative ideas of the last 30 years was born due to necessity.

All happened when Michael Aldrich, an english investor, innovator and entrepreneur invented online shopping in 1979.

He did that by connecting a domestic television by telephone line to a real time transaction processing computer and called it teleshopping.

This type of shopping made possible transactions between consumers and businesses or between two businesses.

Now we call it online shopping, ecommerce or e-business and consider it the new era of doing business.

Thanks to this invention Amazon and eBay were able to start a new era in trading.

The first started by selling books and getting personalized recommendations and reviews while the other gave people a way to open their own online stores.

Because of their founders we now have a new sector and enjoy trading online.

Amazon logo.
Amazon logo.

Amazon.com, Inc. is one of the most famous ecommerce companies, was founded in 1994 by Jeff Bezos and considered to be the first american ecommerce business to sell products on the Internet.

Today there are more than 800,000 stores online and more than 50% of those with internet access shops online at least once a month.

Ecommerce types and branches

Ecommerce like any other commerce has more types. We are going to start with the most used one, Business to Consumer (B2C). Which means that online business sells to individuals in an indirect way.

Another type is Business to Business (B2B), this model states that the buyer and the seller are two different entities. You can say that it is like when the manufacturer is issuing goods to a retailer or wholesaler.

The third type is Consumer to Consumer (C2C) and is defined as a person selling a product, usually used, to another person, directly.

Fourth type of ecommerce is Consumer to Business (C2B), that means the consumer sells their products or services to a business. There are two more types of ecommerce not so popular, namely Business to Administration (B2A) and Consumer to Administration (C2A).

The first one refers to transactions between companies and public administration in fields like social security, employment, legal documents.

The second one refers to transactions between individuals and public administration. Some examples of such transactions are in education, health, taxes etc.

Other ways ecommerce manages to ease the road of products from production to consumption is through these types of branches, which are:

Trade – is the way through which goods are passed from producer to the consumer and involves buying and selling of goods. 

Transport – is the way to provide goods to consumers from the producer, from low demand places to high demand ones. It is mainly made through road, rail, sea and air.

Distribution – because there are so many consumers manufacturers use another party like wholesalers, retailers, brokers, middlemen and other agents to sell and distribute their products to the consumer. 

Insurance – due to the risks involved during the transportation of goods a state of fear of losses appeared, fear of fire, theft or damage of products. To cover these losses insurance is used to provide security to all the trades.

Communication or advertising – because the consumers are all scattered over great distances they may not be aware of the availability of goods so various communication channels exist between buyers and sellers. To prevent this absence of knowledge of products communication or advertising is used to notify the consumer of the availability of a product.

Warehousing – because usually a manufacturer sells its products in large quantities the wholesalers need to have an equally big space to store those products. This problem is solved by using warehouses.

Banking – due to the time lapse between the production and the sale of goods money is needed to support the company. So commercial banks and other scheduled banks play a key role in mitigating financial crises that may appear.

Ecommerce – where is it now

iPhone detects QR code.
iPhone detects QR code.

Due to its fast growth and new technologies the industry of ecommerce keeps evolving and for those that want to stay ahead that means mobile commerce and personalization, these are the two most important trends in todayʼs online shopping.

In other words every online store has to be mobile friendly and offer the user a way to purchase the products by browsing on smartphones and tablets.

And because those Silicon Valley gurus have thought of everything we can use our voice to do the browsing by utilizing voice search.

Amazon’s Alexa device.
Amazon’s Alexa device.

Now voice search has been around for quite some time making our life easier by using our voice command to search the internet, open an app or navigate on a website. To accomplish that we can use assistants like ”OK Google”, Amazon’s Alexa, Apple’s Siri or Microsoft’s Cortana.

Voice search is an element of the future of ecommerce and it’s a part of Artificial Intelligence(AI) since it will help AI understand your needs and habits.

Voice search can’t replace an image and because of that it will be used in most cases for reordering items or inexpensive items that a user already purchased.

All these have created what is known as ”commuter commerce” (more than 50% of drivers used voice assistants while driving).

And to spice things up you now have voice shopping too waiting to go mainstream because there is already data showing that home assistant sales are rising every year.

Having so many mobile devices and voice search at hand M-commerce started to develop.

M-commerce is a subset of ecommerce and is defined as buying and selling goods through  wireless handheld devices like smartphones and tablets.

This comes as a result of the continuing growth of m-commerce applications and wireless handheld devices.

So people began using mobile devices instead of cash, credit or debit cards to pay for things and since digital wallets like Apple Pay, Android Pay or Samsung Pay have been developed everything is even easier.

Apple Pay logo.
Apple Pay logo.

Ways of doing m-commerce include in-app purchasing, mobile banking or bill paying.

To take things even further a subcategory of mobile shopping emerged and that is app commerce, a way of transacting through a native app.

This means that a software program was developed to be used only on a certain platform or device. An example of this is Apple Wallet.

A payment with Apple Wallet.
A payment with Apple Wallet.

Beside this it is also important to offer a personalized experience so users are inclined to stay online and buy from your store.

To accomplish this brands use personal online data such as search queries, page visits, chat and purchase history to best serve the customer.

So being an e-shop keeper is a challenge because it requires planning, managing and lots of other small tasks to do. As such you have to have an outstanding strategy to survive in the ecommerce competition.

As an afterword lets just say that those companies that have the ability and the vision to invest in features like data management (because privacy is important), personalization along with physical presence and agility (since AI is more of a presence and robots might become the next users) will for sure be put next to Amazon and take commerce into the next stage.

And to take things further we have more help to achieve that by using the new toy of the technology world, augmented reality.

Augmented reality or AR means creating an interactive experience of a real world environment where objects of the real world are enhanced by computer generated perceptual information, in real time.

The images thus created usually take shape as 3D models, videos and information. Its purpose is to create a system where you cannot tell the difference between real and virtual.

Augmented reality is used in commerce in shop mirrors by creating a 3D virtual fitting room with realistic cloth simulation. Customers can see how a piece of jewelry, eyewear or clothes look without actually having to try them on.

You can also place furniture or objects inside your house to see how they look via apps through your mobile phone.

For example Ikea has created their own augmented reality app called IKEA Place. Through this app IKEA lets you virtually place true-to-scale 3D models in your own space of their furniture.

Sephora’s Virtual Artist app lets you try out different lip colors, eyelash thickness, eyeshadow and cheek colors before making a purchase. 

This augmented reality experience is much better than the in-person one where you’d have to apply and remove makeup until you’ve found one you like. 

Testing beauty products through augmented reality is faster for the customer and cheaper for the merchant because you no longer have to provide tester products for free.

The Quiver App combines physical coloring with augmented reality technology to bring to your children an extraordinary experience.

Having augmented reality integrated in your ecommerce business will drastically increase sales because the customer can check the products in his own house to see how much space they will take and if the color matches without the need to drive to the store to ask for certain details.

Augmented reality will also reduce the rate of returns because customers can make an idea of the product before they buy, thus they will no longer order products just to test them and if they are not a fit send them back.

Beside ecommerce augmented reality is used today in many aspects of our life like entertainment, military training, engineering designs, manufacturing or robotics, just to name a few. 

We can easily say that AR has come to be a powerful aid for the ecommerce industry and the general public.

Ready to move your store from offline to online or maybe you want to keep your offline presence and build next to it an online one and combine them for maximum profits. Drop me a line via my contact page to talk about your project.