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What is digital commerce?

In the simplest of terms, digital commerce is the successor to eCommerce (buying and selling online, usually on a website).

Digital commerce is the process of buying things online without human intervention. The difference is subtle, but if eCommerce were to be fully automated, right from marketing and sales to product delivery, it would be digital commerce. While full automation does seem like a stretch, some of the largest retail conglomerates in the world are already implementing this system.

Aspects of Digital Commerce

Digital commerce accounts for all of the elements of purchase decisions. All of these elements are significant, and the digital commerce experience would be woefully inadequate without them.

Usually, digital strategists work on mapping the entire consumer journey, whether product or service, determining how much importance to assign to each purchase milestone, and creating consumer journeys that provide a seamless experience to the end-user. The aspects of digital commerce include but are not limited to:

      • Content marketing
      • Product descriptions, images, and other media
      • Marketing as a function, promotional campaigns, social media engagement
      • Analytics
      • User experience mapping
      • Customer service
      • Order fulfillment and supply chain management

Digital Commerce Vs. eCommerce

Digital commerce and eCommerce have a lot of overlap in what they achieve. Typically, platforms limit eCommerce, and website sales fall under this umbrella. However, digital commerce is device agnostic, and can happen on a variety of platforms including websites, applications, virtual reality (VR), and augmented reality (AR).

The idea behind eCommerce is to sell. The success of an eCommerce venture is measured by the total revenue generated while keeping inventory costs low. In that sense, eCommerce is more transactional.

In digital commerce, value is assigned to engagement in the buying process. Digital commerce is driven primarily by content and mobile devices. The key metric of success is customer lifetime value (CLV), or the amount of revenue generated from the same customer over their brand lifetime. In retail marketing, this is valuable as more revenue is generated from the same customer, thus reducing marketing costs, even as the consumer is kept engaged throughout the buying process.

How Does Digital Commerce Work?

Automation is the core feature of successful digital commerce and is most successful when it is supported by data. Digital commerce works on fairly complex automation and on the availability of vast swathes of data, along with analytics capabilities.

Global supply chains are cost and time-efficient, but they also tend to be fragile, affected by everything from weather events, pandemics, political unrest, and much more. In such cases, data serves as the backbone for predictive analytics, allowing digital commerce retailers to foresee adverse events well in advance based on frequency, seasonality, and more.

Digital commerce is omnichannel and is present wherever the consumer is. This level of granularity is only possible when roadmaps are drawn for every possible scenario and supported by automation tools that control everything from inventory movement to customer satisfaction.

On a micro level, customers usually do not have to think about where their Amazon product is shipped from or how it might be packaged. Instead, the consumer focus is on urgency (how soon an order is delivered), quality (whether the product offers monetary value), and relevancy (how accurately the product delivered matches the product represented).

As a global retailer, Amazon fulfills a few thousand orders every second; the only way for the company to fulfill these parameters every single time is to use automation both at the supply level, as well as the warehouse level, making Amazon a true representation of digital commerce.

Digital Commerce in The Business Environment

Services are also delivered in the digital commerce model, and SaaS (software-as-a-service) applications are just one example of digital commerce’s utilization in business.

Broadly, digital commerce in the business environment works across four categories of business models:

      • Business to business (B2B model)
      • Business to consumer (B2C model)
      • Consumer to consumer (C2C model)
      • Consumer to business (C2B model)


B2B Model

In the business to business model of digital commerce, businesses sell products to other businesses that need them. These deals are usually larger but happen less frequently. Some businesses work around this limitation by providing monthly and annual subscription solutions that renew automatically.

The most common examples of B2B digital commerce are products and services bought without human interaction. Examples include collaboration tools such as Slack and Trello and automation software products such as HubSpot or Lightspeed.

B2C Model

Business to consumer digital commerce is quite similar to the first use case, except that the buyer is an individual consumer, purchasing for personal consumption. Most smartphone apps that require payment are an example of B2C digital commerce.

C2C Model

The consumer to consumer digital commerce model is harder to understand, but Etsy is the perfect example. Sales of digital products on marketplace platforms like Etsy happen through complete automation. The consumer makes a purchase, and the product is delivered to their email inbox.

This is C2C because the platform has no role to play in the actual transaction, except for facilitating it. Moreover, a consumer can be a seller as well as a buyer.

C2B Model

The consumer to business digital commerce model is best illustrated by review systems. On Amazon, review requests are generated automatically by the platform, and consumers are rewarded with badges and cashback points for useful reviews. The transactional value is extracted from the customer because a detailed review can generate more revenue for the business. The value transfer is happening from the consumer to the business, making it C2B.

The Need for Digital Commerce

Digital Commerce amplifies the benefits of eCommerce by generating value and revenue over a longer period. But why should businesses adopt digital commerce?

To Drive Visibility

Today, the buying journey is completely channel-agnostic. Consumers prefer seamless transactions regardless of the platform. For businesses, this means multiple opportunities to become visible to consumers such as social media, market places, brand websites, apps, and more. This, in turn, leads to multiple sales opportunities.

To Build Legitimacy

Both small and large brands can perform well as long as they are considered genuine and authentic to their brand. Some research reports that nearly 70% of online consumers look for social proof. Digital commerce helps companies gain authenticity through social media, reviews, and relevant content.

To Generate More Sales

With omnichannel strategies, digital commerce drives more sales with increased visibility. Businesses that leverage trends in online buying (and provide specific, customized purchase options) see an increase in sales.

Digital Commerce Trends

In the online world, everything is in a constant state of evolution, and digital commerce is no different. While earlier, it may have been sufficient to be present on multiple channels, the need to go further than that is ever-present. Here are a few digital commerce trends:

Personalized Commerce

Who wants to be a statistic? The answer is “no one.” Retail businesses are massively scalable, but consumers still like to be treated as individuals.

Some avenues to personalized commerce are data-driven product suggestions, product bundling, gift hampers, and more. Some businesses are going even further by giving consumers a complete agency of choice. They can now mix up their own shampoo, decide what goes into their weekly grocery basket based on a meal plan, and even customize the proportion of fruits in their smoothies.

Interactive Products

Augmented reality and virtual reality work well in retail, and brands are already jumping on the wagon. Furniture brands use these technologies to show how their products fit into homes and offices, while filter effects are used by beauty brands to showcase their makeup and hair products.

Using this information, consumers can make requests for personalized products, while businesses learn about consumer preferences without actually stocking up on a single item of inventory.

Better Inventory Control

Even with the advent of digital commerce, inventory remains to be the greatest expense in retail. Businesses are solving this problem with data: the very cornerstone of digital commerce.

Today, apparel brands can counter inventory dumping by using “phygital” stores–empty physical store locations that are populated virtually using each consumer’s individual preference. Consumers can even try on products using augmented reality-powered mirrors and place an order online, removing the checkout process.

After receiving the order, the product is manufactured and delivered to the consumer while staying true to values of sustainability.

Benefits of Digital Commerce

There are many benefits of digital commerce, and they cover all aspects of the business from strategy, revenues, expenses, and much more. Here are some advantages that cause most businesses to move to a digital commerce model:

Seamless Processes

Nearly every potential consumer journey is mapped out in advance and supported by specific content. In many ways, digital commerce is marketing automation at its best, as it can predict a consumer’s next logical need and answer that need to lead customers to purchase.

This process significantly reduces buying time, particularly in the B2C space where most purchases are considered impulsive.

Less Manpower Utilization

Digital commerce is heavily automated, reducing the need for expensive workforces. It also frees up time for the human workforce to focus on abstract challenges while data effectively takes care of the repetitive processes.

Easier to Scale

Since most digital commerce applications are automated, the business model is far easier to scale. Typical challenges of scale include hiring, performance management, managing multiple geographies, and consolidating sales; data can eliminate these challenges through digital commerce.

Better User Experience

Consumers expect a personalized experience that digital commerce can deliver. Because every process is optimized to lead to a satisfying consumer experience, consumers keep coming back for more, leading to increased revenue.

Challenges in Digital Commerce

While there is a great need to adapt to digital commerce, there are still some challenges. Digital commerce has one major pitfall—a complete lack of consumer contact, which can ultimately turn customers into statistics. Digital commerce is not a plug-and-play system where the same consumer journeys continue to work forever, and companies need to remember that their customers are more than just data.

Savvy business leaders take the time to review their digital commerce strategy often, use social listening to understand what their consumers think and feel, and always keep one ear trained to the online ground. Constant review and monitoring is the only way to ensure that businesses do not die a slow death as they adopt digital commerce.