The Convergence of Physical and Digital Commerce: The Past

Today we’re going to kick off our examination of the merger of physical and digital commerce by taking a look at the evolution of point-of-sale technology, beginning with the creation of the barcode and the cash register, progressing through to the adoption of modern e-commerce solutions.

The first research into automatically interacting with products was undertaken  by Bernard Silver and Norman Woodland beginning in the late 1940’s. Over the next decade Silver and Woodland worked on a solution that resulted in the patenting of the first barcode in the late 1950’s (see Figure 1 below).  It then wasn’t until 1966 when the barcode was first used commercially, though its widespread use didn’t come until IBM’s George J. Laurer invented the UPC code in 1973—standardizing the barcode used in much of the world today.

Around the same time as the creation of the UPC code, the first networked point-of-sale system arrived on the scene. Point-of-sale technology was formally introduced through the use of electronic cash register devices in the early 1970’s. In 1973 IBM released the first POS system—basically a mainframe computer that could control up to 128 different cash registers. Shortly thereafter in 1974, McDonalds underwent one of the first implementations of such a system, featuring Brobeck registers with giant numbered buttons to indicate food choices (see image below).  With the creation of barcodes and networked point-of-sale technology, commerce began to transform into an invisible process handled through electronic communications.

The next major milestone that would change the way we shop forever was the advent of e-commerce. “Online” shopping was actually first created in 1979 by the British inventor Michael Aldrich. He designed the first e-commerce system by connecting a television to a transaction processing computer via telephone lines. His intention was to revolutionize telecommunications by turning the television into a communication medium, and instead it was used a solution for corporations to handle networked transaction processing. It was years later when the telecommunications revolution Aldrich envisioned truly arrived.  In the early 1990, Tim-Berners-Lee created the first web browser, hitting the gas pedal on the digital revolution. By 1995, secure transaction processing was implemented with Internet browsing, and Jeff Bezos rocked the world of retail by introducing Amazon.com. In just fifty years we went from age-old methods of commerce to creating a digital world that holds nearly unlimited possibilities for the virtualization of the marketplace.

It’s interesting to consider that although developed over 50 years ago, barcodes still exist as the standard means of product interaction in today’s world. In looking at the historical progression we’ve discussed, one might wonder if the barcode and the creation of POS systems are simply stepping stones to a completely virtualized solution? Or is it possible that the new virtual landscape is simply an adjunct to already well designed solution? We think the latter. POS terminals aren’t going away, rather every computing device can now serve as a POS terminal. Similarly, barcodes aren’t going away, they’re just much more useful because so many more devices are capable of interacting with them.

In our next post we’ll take a look at the present changes the world of shopping is undergoing, as brick-and-mortar retailers adapt to the new environment by creating virtual extensions of their physical stores, and mobile devices serve as access points to the digital marketplace. Stay tuned!