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E-Commerce Year in Review: 2005
By Devin Comiskey

January 9, 2006


2005 marked quite a year in e-commerce. We saw billions more dollars spent online than ever before. eBay users revolted - and then sulked quietly as life returned to normal. Comparison shopping Web sites and toolbars blossomed. eBay competitors came and went. And phishing became one of the most popular sports on the Web.

Today, ECommerce-Guide.com picks the top five stories in 2005, which had a significant impact on the world of e-commerce. If you agree or disagree with our picks, be sure to give us a shout in our forums. Our picks are in chronological order.

1) Thank you, sir. May I have another?
It happens every year or so. eBay raises its listing fees, people scream and shout and the noise dies down after a couple of months when people realize there is no other viable venue to auction goods online. 2005 was different, though. Faced with a falling stock price and slow growth, users and Wall Street analysts couldn't see why eBay would choose to raise listing fees and Store subscriptions - as it did in January - at a time when the user community was already unhappy. Users were unhappy with the level of "support," random site outages, increased fraud, a poorly run feedback system and falling sales. To be charged more added insult to injury, according to what people told ECommerce Guide.

The complaints were so rampant that eBay gave Store owners a free month and the company eventually improved its support structure by mid-summer. However, as time passed, it became quite clear that eBay's 100 million-plus users stuck with the site and have continued to do business as usual.

2) Waggle-Flop
Which brings us to our second top story of 2005. While most eBayers swallowed the new fees, others bolted from the site to set up shop somewhere else. The exodus also led to the spawning of several new online auction sites with the intention of appealing to disgruntled eBay users. The one site that generated the most hype and interest - and inevitably had the hardest fall - was Wagglepop.

Developed by former eBay seller Ed Romeo over the course of three years, Wagglepop was designed to appeal to sellers tired of eBay's policies and dwindling sales. "eBay is in kind of a unique position. They've grown beyond what they originally intended," said Romeo. "They're more global and less concerned with seller unhappiness in general in relation to their bottom lime. They don't seem as responsive (as they used to be). Their general attitude is that they think sellers are undeserving of an explanation about the fee increases."

With much fanfare, Wagglepop opened to users on Feb. 17. A week later, it was gone for good. "This whole idea started simply because of people, and my faith in them, and my desire to make a difference. Now, it's people that have left me no other choice but to shut it down. What started out as an interesting challenge has instead become the most painful, personal few months of my life, and my confidence in what I believed about faith and humanity are shaken and shattered... perhaps forever," added Romeo.

ECommerce Guide contacted Romeo about the shutdown and he attributed his decision to a combination of "denial of service attacks, public disinformation campaigns, and personal harassment." Romeo said he was "done" with the online auction business.

Several other auction sites debuted in 2005, but none of them matched the promise - or hype - of Wagglepop.

3) E-Commerce Grows Up
By May, the numbers were in and the future of e-commerce seemed bright. Shop.org and Forrester Research released "The State of Retailing Online 8.0," which showed a 24 percent growth in e-commerce transactions over 2004 and predicted a further 22 percent jump by the end of 2005.

Every category tracked in the study experienced growth. Health and beauty increased 58 percent. Sporting goods shot up 43 percent. Computer hardware and software tied auto and auto parts, both growing by 13 percent, the study revealed.

"On the demand side, we continue to see more new shoppers coming online," said Scott R. Silverman, executive director of Shop.org. "And the new shoppers that have been online continue to get more comfortable."

Even with a rise in online crime, it appears e-commerce is only going to gain in popularity for the foreseeable future.

4) Shoppers Get More Tools
Most people shop online not only for the convenience factor, but also to pay the lowest price possible on any given item. However, unless you have a lot of time on your hands, comparison shopping can be a bear. Step in: Vendio. In August, a long-time eBay tools developer Vendio introduced the first comparison shopping Web browser toolbar called Dealio. No longer do shoppers have to go to a comparison shopping Web site. They now have a full-time shopping companion.

This leap in shopping technologies automatically scours the 'net for the best prices for almost any given item a shopper is looking for. You could be on Circuit City's site looking for a plasma TV. All of a sudden up pops the Dealio toolbar with 25 other sites selling the same TV. ECommerce Guide tested the initial version of Dealio and it worked as advertised. The only drawback is that Vendio hadn't released a version for Firefox or for Mac users.

As with most Internet technologies, competitors and copycats soon followed, like toolbars from SquareTrade and NexTag No doubt, 2006 will see more comparison shopping toolbars available for eager shoppers.

5) Pay Up!
After a long run of relatively tax-free shopping online, it looks like the US is starting to get serious about imposing stricter tax laws on interstate e-commerce transactions. In November, Connecticut began mailing out delinquent tax notices to consumers believed to have purchased goods outside of the state but did not pay the appropriate sales or "use" tax. And just before New Year's, two bills aimed at leveling the taxation playing field for all in-store, catalog and online retailers was back on the table in Congress.

"This bill is not a disguised attempt to increase taxes or put a new tax on the Internet. Consumers are already supposed to pay sales and use taxes in most states for purchases made over the phone, by mail or via the Internet," Congressman Mike Enzi of Wyoming said. "Unfortunately, most consumers are unaware they are required to pay this use tax on purchases the retailer does not choose to collect sales tax on at the time of purchase."

Devin Comiskey is the Managing Editor of ECommerce-Guide.

Do you have a comment or question about this article or other e-commerce topics in general? Speak out in the SmallBusinessComputing.com E-Commerce Forum. Join the discussion today!

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