Few remember or have ever even heard of the Web retailer, but on Aug. 11, 1994, the college grads that founded NetMarket in Nashua, N.H., claimed they had conducted the very first secure retail transaction on the Web.
They said the first item purchased via a Web site protected by commercially available data encryption technology was the CD "Ten Summoner's Tales" by Sting, according to former NetMarket founder Daniel Kohn. One of Kohn's Swarthmore College classmates purchased the CD with his credit card for US$12.48, plus shipping costs, exactly 10 years ago on Wednesday, according to a New York Times article that chronicled the transaction and credited the company with making e-commerce history.
Kohn, now a venture capitalist at Skymoon Ventures in Palo Alto, Calif., said the online sale also landed him on National Public Radio and CNBC. "At the time, it was a huge deal," Kohn said. "It was our 15 minutes of fame."
The pedigree of e-commerce is not so clear, however. Though the media was quick to credit NetMarket for breaking new ground, recognition from peers in the field is harder to come by. The Internet Shopping Network, which started selling computer equipment on the Web in 1994, beat NetMarket by about a month, according Randy Adams, former Internet Shopping Network CEO.
"There are a lot of people who claim a lot of things," said Adams, now the chief executive of AuctionDrop in San Carlos, Calif. "We were out there on the edge. We did the first (secure transaction)."
Though they have their differences, Adams and Kohn both agree that in August 1994, online retailing was on the cusp of a breakthrough. Advances in Web security that year started the trickle that has become a significant chunk of the economy. But that didn't "solve" the problem of transaction security. Many data security battles are still being fought, against such foes as "phishing" and Trojan horse viruses.
Despite these dangers, US shoppers will spend $144 billion online this year, according to Forrester Research and Shop.org, a division of the National Retail Association for online merchants. That's 27 percent more than they spent online last year and 6.6 percent of total retail sales across the country, according to their joint study, released in May.
Blazing trails
In 1994, entrepreneurs eager to set up shop online faced plenty of obstacles. For one thing, the United States government still controlled some of the Internet's infrastructure. Under the rules of the National Science Foundation, commercial activity on the Internet was technically forbidden until the spring of 1995, when the agency relinquished all sponsorship of the Internet's network backbone. Federal export limits on strong encryption software also hamstrung early e-commerce efforts as companies grappled with a safe method to collect payments online.
A lack of standards for incorporating encryption technology into Web browsers presented another barrier. Both Adams and Kohn concede that without those standards, the mechanics for encrypting transactions were clunky and awkward by today's standards.
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