I hope you enjoyed our tour of shopping antiquity in the first part of this three part series on the history of Aggregators. In some ways I’m relieved to have dodged the clutches of Diogenes in the Agora and now we can get a little bit closer to modern times.
Today we’ll be looking at mail order — which has a surprisingly long history itself. We’ll also witness the rise of the internet, what it has meant for packaging and selling products to the masses and how the commercial model for affiliates came about.
It might be surprising to learn that the history of mail order significantly pre-dates the twentieth century boom in Sears and Littlewoods catalogues. Printer and publisher Aldus Manutius is credited with starting it all when he distributed a catalogue of his publications in 1498. An avid armchair classicist could consider enjoying the five-volume Aldine Press folio edition of Aristotle back in the fading years of the fifteenth century. Product convenience was not an innovation of a Seattle e-commerce magnate.
Mail order itself — the ability to remotely order commodities that would conveniently drop onto one’s doormat shortly afterwards — initially took hold in the mid 19th century. It could be considered a by-product of the emerging railway postal service Britain was pioneering in the 1840s. Welshman Pryce Pryce-Jones was the first to take advantage of the Penny Post. He could ship his Montgomeryshire wooly jumpers to any consumer, no matter how remote they were from the shops in his local town.
In the hands of the shopping public a catalogue could be considered the ultimate department store. You could order an automobile from the Sears catalogue in 1894 and pack its trunk with golfing apparel while you were at it. In 1940 you could mail order an entire house. Of course, product concentration and captive marketing were part and parcel of the catalogue shopping experience. It was this well established model that was so easily emulated in our digital world. Along with another pre-digital analogue — direct marketing — aggregating the shopping experience onto the printed page set us up for what we know so well today.
Early online shopping
British inventor, Michael Aldrich is widely credited with pioneering online shopping in 1979. He hooked-up a television with a computer and a phone line which he later called the ‘Teleputer’. The system allowed consumers or businesses with a Teleputer to connect to business information systems where they could place real-time orders for products.
The system was born from the idea of teletext, dreamed up in a brainstorming session at the BBC in 1970. In general these early teletext based services didn’t ultimately take off, though the French Minitel system which came about a little later become embedded, and is even touted as the reason behind sluggish internet adoption in France. Minitel allowed for electronic mail order, where the French telecom company would simply add the cost of purchases to users’ bills. The pre-internet system is credited with encouraging impulse shopping, which may sound eerily familiar to some of us today. It’s tempting to dismiss the commercial reach of this early system but it was e-commerce in the 1980s and 90s. It was limited to the French market, but the generated revenues were serious.
E-commerce as it is currently known began with The Electronic Mall in the US, which came online in 1984. This was the first large-scale online shopping service where users could place orders with department stores from a PC and modem connected to the CompuServe network. The interface was text based — imagine browsing with your terminal app. The marketing was all about time saving and avoiding queues and was targeted at double income families with limited leisure time.
The Electronic Mall was a homogeneous service which aggregated a wide range of products via a unified interface. Only later with the world wide web would independent retailers be able to present their own store fronts. Online shopping started with the aggregated model, which was essential for ease of adoption and gaining market share. Web browsers arrived in the early 90’s. It is possible to stretch the perspective of commercial aggregation to the web and browser themselves. These technologies delivered a single entrypoint for any purchase (just as they did for all other types of information). You’re probably using one now, to read this Brief History of Aggregators, thirty years after their invention. You might choose to see the web browser as the ultimate shopping aggregator.
Abracadabra, it’s Amazon
It would be difficult to complete a History of Aggregation without looking at the world’s most notorious electronic retailer. Most of the basics are well known: the name change, the bookstore, the world’s richest man, the legacy website UX that miraculously manages to avoid hindering the company’s growth. We all know it and the chances are there’s a delivery with a big arrow printed on the side droning its way to your doormat while you read this.
If anything can be said about Amazon, it’s the gross understatement that the theory of aggregation is a powerful engine for commercial growth. The under-one-roof analogy feels under stretched here with Amazon.com’s 12 million available product lines.
Indeed the non-retail arms of the Amazon organisation tell a familiar story. Take Amazon Web Services, a single, aggregated platform for web developers. Or one device on which you will consume all of your books (after kindling a nice toasty fire of your paperbacks that is). Or Alexa, the ubiquitous assistant, who will speak about and deliver you anything from a tin-can sized speaker in the corner. Or Amazon Prime video, warehouse delivery, robotics…
Product consolidation and singular experiences are the Amazon business.
The rise of affiliate schemes
Though many people assume they did, one thing Amazon didn’t invent is affiliate marketing — the revenue sharing system where suppliers pay a small cut of their sales to an aggregator who brings them a customer.
The proud accolade of ‘first internet marketer’ goes to an entrepreneur named William J. Tobin who in 1989 launched the first commission scheme for his online florist and gift shop. The advertiser was Prodigy, an early online services company and rival to CompuServe, who were paid a commission when they made Tobin a sale. Other services followed. Amazon’s ‘associates’ programme started in 1996.
Affiliate schemes are the great driver of e-commerce aggregation. They provide the incentive to package and present curated sales experiences without holding the stock or being in the supplier business. New e-commerce services can reach niche markets or broad market groupings through the bundling of products limited only by theme and without the complexities of logistics. Any logical product grouping can be bundled up and commercialised. The products might be physical goods or intangibles. You could be bundling those shoes with that dress, or a flight, some insurance and an excursion, all in one offering. Affiliate schemes are the commercial glue behind aggregated shopping, travel and financial services.
Mail order and its internet-enabled descendants all began in the fifteenth century. What legacy will this leave to us here and now in the present? And what about where things are heading next?
Next instalment: Part 3. Product comparison, today and in the future.
In the final part of our history we’ll look at the story of product comparison and where aggregated selling is at today. I also polish up my crystal ball and look at what we might expect in the future.