The early pioneers of online commerce focused on business-to-consumer and business-to-business sales. Despite the Internet's ongoing growth, many entrepreneurs shunned its vast possibilities. Instead, they tried and failed to develop proprietary shopping networks that they could control and get others to use. Those who used the Internet and succeeded realized the right merchandise could attract buyers from all over the world to a Web site. So, they built their business models right on top of the Internet and the World Wide Web's almost unlimited interconnections.

OnSale Sets the Tone

In 1993, a veteran of online business startups teamed up with a venture capitalist to try a new approach. The two men would offer an interactive shopping service using the Internet and an online auction format. Jerry Kaplan and Alan Fisher created OnSale in 1994 and put a wide array of merchandise up for bid in May of 1995, including watches, wines, and sports memorabilia, as well as computer hardware and electronics devices. Kaplan and Fisher quickly discovered that their business model needed a narrower focus. Many of their customers were technically proficient males who worked with computers and other electronics devices by day and pursued computer and electronics hobbies on the side. OnSale zeroed in on those two categories, and sales took off.

In 1994, Jeff Bezos founded a company called Amazon in a garage in Bellevue, Washington, a suburb of Seattle. His idea was to use the Internet to sell books online. He launched the Amazon.com Web site in July 1995, and soon was getting book orders from all over the world. Amazon was more than just a digital bookstore, however. Bezos also created an innovative online community where readers could post their thoughts about particular books. This feature quickly became popular with computer users who wanted more information and opinions of titles they were considering buying. Now they didn't have to rely simply on advertisements, professional book reviewers, and word of mouth. They could sample an array of opinions from other readers.

Just two months after Amazon's appearance, an upstart called Auction Web was quietly added to the World Wide Web. Its creator, Pierre Omidyar, a French-Iranian computer programmer living in San Jose, California, initially operated Auction Web as a hobby that would help him get more Internet programming experience. When Auction Web started bringing in more money each month than he was paying to have a Web site, Omidyar realized that people-to-people online auctions could be a good business. He renamed his Web site “eBay,” and it quickly took off. Within five years, eBay was a giant in e-commerce, and Amazon.com and other e-commerce sites began setting up online auction sites in an effort to keep up and compete.