Here’s a question I bet you don’t know the answer to.
What was the first ever item bought online?
Groceries? Pizza? Marijuana?
It’s actually a hard question to answer.
But luckily e-commerce software company Shopify recently gave it a go.
The trail starts with the ARPANET.
This was an early version of the internet, set up by the US Department of Defence in the 60s. Later, Ivy League universities started experimenting with the ARPANET too.
The result was, of course, typical student shenanigans…
In 1971 a bunch of computer scientist students at Stanford and MIT used the ARPANET to arrange a meet-up to buy some pot.
Not exactly Nobel prize winning stuff. But was it the first internet purchase?
Technically it doesn’t count as online shopping. No money changed hands online. Only the meet up details.
That leads us to contender number two…
In 1984 a 74-year-old British Grandmother used Videotex — basically a TV connected to the phone lines — to order margarine, eggs and cornflakes from her local shop.
A mundane order of everyday staples was humanity’s introduction to the world of e-commerce, then?
Like all good Grannies, she paid the bill from cash in her purse. She probably made the deliveryman a cup of tea and some biscuits too!
So not exactly e-commerce, but a decent contender all the same.
The first true e-commerce transaction actually happened in 1994.
11 August 1994, to be exact.
Dan Kohn, was a 21-year-old entrepreneur who ran a website called NetMarket.
On that fateful day he sold a Sting album to a friend.
This time both the purchase and the payment were all online.
It was one small purchase for Dan’s friend. But one giant leap into the world of e-commerce for mankind.
A US$12.48 plus shipping costs leap.
As always with technology, the real innovation is in the unseen.
You see, it was a completely encrypted transaction.
Kohn told Peter Lewis of the New York Times in an article the following day, ‘Even if the NSA was listening in, they couldn’t get his credit card number.’
23 years later, e-commerce is huge. And it’s still growing. Some figures out this week are truly staggering.
What’s love got to do with it?
On Saturday, Chinese shoppers celebrated ‘Singles Day’.
This is a uniquely Chinese phenomenon that started in the 90s. Students at Nanjing University decided to celebrate being single.
The date chosen, 11/11, was of course symbolic. The solitary ‘1’ of the individual.
And what better way to celebrate being single than buying yourself a little treat?
Chinese e-commerce sites have jumped on the bandwagon in recent years.
It’s now a money-making extravaganza.
Lured by discounts and deals, Chinese shoppers have fallen in love instead with online shopping.
And ‘Singles Day’ is the biggest online shopping day of the year.
This year online e-tailer Alibaba [NYSE:BABA] sold over US$25 billion worth of goods. At one point it got over 325,000 orders per second.
Let me try and explain just how huge that is.
Take Amazon [NASDAQ:AMZN] as a comparison.
‘Singles Day’ this year was 25 TIMES bigger than Amazon’s equivalent, Prime Day.
Prime Day brought in a ‘paltry’ US$1 billion.
Once again, the scale of the Chinese opportunity is evident.
Which begs the question…
Are we witnessing the start of a transfer of power? A shift from American consumers to Chinese ones as the engine behind the world economy?
But within the next decade or two it’s certainly a possibility.
With this battle raging on, it makes Amazon’s foray into Australia look like small potatoes in comparison.
It’s forthcoming Aussie ‘invasion’ looks more like a minor skirmish.
But the press are eagerly talking it up. Every day there’s a new story faithfully reporting on a part of Amazon’s huge PR drive.
Headlines scream every move, every executive thought bubble and every press release.
Yesterday, analysts from Citibank said they expect a launch date of 24 November. This will coincide with the Black Friday sales day.
I expect to see wall to wall coverage.
Look, I’ll admit Amazon will stir the pot a bit in Australia’s retail landscape.
And I’ve no doubt the initial buzz will generate strong short-term interest. Retailers like JB HiFi [ASX:JBH] and Harvey Norman [ASX:HVN] are right to be anxious.
It will be very interesting to see how it all plays out.
But from an investment point of view, I think the talking heads are focusing on the wrong areas.
Let me explain…
Think outside the box
Whether or not Amazon disrupts the local retail scene as much as they have elsewhere remains to be seen.
But there’s no doubt now they’re here, they will give it a good nudge.
Maybe instead of worrying over what Gerry Harvey’s saying or how JB Hi Fi will fair, the smart thing to do is to look at who Amazon needs to compete?
As big as Amazon is, it will still need help from on the ground partners.
Whether this is labour hire companies, couriers, drone companies, online advertisers, logistics partners, technology partners…
My colleague Sam Volkering thinks he has identified an ASX-listed company that will be key to Amazon’s success here.
In fact, he states that they are almost essential to Amazons operations. And not just here.
You’ve probably never heard of them.
If you want to try and make some serious money from Amazon’s arrival, you must read this report today.
Editor, Money Morning