For decades, the global economy has thrived on the internet, and for the better part of that time, it has been subjected to a centralised system. While the world is yet to fully transition to web 3.0 and a more decentralised system, major e-commerce giants like Amazon, Walmart, and Alibaba, to mention a few, have dominated the internet commerce industry in the existing web 2.0 iteration.
Notably, this set of corporations have enormous influence across most aspects of online commercial experience and have gained major grounds over the years. The reason for this, however, is not far-fetched, considering that the existing internet iteration – web 2.0 – provides a conducive environment for monopoly to thrive.
However, with the latest web 3.0 iteration, which is open, trustless, secure, and decentralised, this is going to change. Before we look forward to the future of e-commerce beyond the existing heavyweights, it is important to take a step back to understand the evolution of web technology.
Understanding the evolution of web technology
Every generation-spanning innovation has one thing in common: they passed through a transformative phase that made them more time-relevant and, ultimately, fit for the present world. Typical examples of such innovations include the transition from locomotive trains to electric bullet trains, monochrome television to smart television, and even down to the internet.
Talking about the internet, Tim Berners-Lee coined the term “Web 1.0” to describe the first iteration of the internet, which appeared in 1989. Since then, the internet has had two major transitions – first, to web 2.0, and subsequently to web 3.0.
Notably, each iteration of the internet was created to solve existing challenges associated with the previous or outdated version. For instance, web 1.0 was majorly a ‘read/text-only’ internet and, as such, lost its appeal after a while.
On the other hand, Web 2.0 ushered in a much more entertaining and interactive way of exploring the internet. Specifically, this version of the web allowed users to send images, videos, and other media files, while also enabling seamless interaction among users.
Web 3.0 is the most recent iteration of the internet, ushering in a more decentralised and open internet where users and creators have equal input in the decision-making processes. Similarly, the web 3.0 iteration eliminates central authority and the high expense of communicating with middlemen or gateway services, among other things. Now that we have an understanding of web iteration, how has online commerce fit into the respective web iteration?
How e-commerce is evolving with each web iteration
Each web iteration introduces a unique online commerce experience. With web 1.0 comes commerce 1.0, while commerce 2.0 and 3.0 is applicable to web 2.0 and 3.0 iteration respectively.
The first commerce experience happens to be a hybrid of text and physical stores. Then, because of the boring nature of the internet, only a few people had access to commerce online, and those that do were limited by the kind of activity they can do online. For instance, they could send text, and make reservations for a product in the physical store, but can not necessarily complete a purchase online.
While big brands like Walmart and Costco were the biggest winner in this era, they leverage their chain of physical stores and were able to reach customers residing in the immediate communities. Ultimately, the first commerce experience can be classified as a centralised retail experience.
Commerce 2.0, on the other hand, ushers in a new era of centralised e-commerce, as well as a more interactive online shopping experience.
According to various industry analysts, this iteration of commerce thrived on a low-cost, high-scale model, implying that there is a low entry barrier, coupled with a seamless onboarding process.
Sadly, one of the drawbacks of this era of commerce is that it concentrated power in the hands of a few players (Walmart, Alibaba etc), making it nearly impossible for small firms to prosper.
The major killer for commerce 2.0 is a monopoly which, on the other hand, thrives on centralised authority. This also means that this era of commerce is largely based on “first come first serve policy” where the people who arrive earliest get served or treated with high-level preference before the people who arrive later.
Interestingly, the narrative is about to change with commerce 3.0 on the third iteration of the internet which is decentralised. In its own case, commerce 3.0 wants to re-engineer the overall online commerce experience.
Specifically, by eliminating central authority, and lowering the extra cost of interfacing with middlemen or gateway services, Commerce 3.0 aims to build an open economy for creators and ensures alike.
While an open economy thrives on trust, transparency, and borderless exchange, it also creates a conducive atmosphere for buyers and sellers to interface directly with one another without any form of restriction or third party interference.
Ultimately, the future of e-commerce is far from monopolisation and while the existing commerce model is favourable to few, the future o e-commerce is favourable to all.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.