Digital Commerce: How It Works and Trends

Since the days of the dotcom boom, online retail has gradually come to represent a significant portion of the global marketplace.

By 2024, ecommerce will comprise nearly 22% of global retail sales. But digital commerce (D-Commerce) encompasses so much more than the simple click of a button or researching a product online before making a purchase at a physical store.

What is digital commerce?

Digital commerce is the buying and selling of goods and services through digital channels such as the internet, mobile apps, and social media platforms. It encompasses online shopping, electronic payments, digital marketing, and customer data management to enhance user experience and business efficiency.

Digital commerce vs. ecommerce

Ecommerce is the selling of goods and services online, usually through a website set up and dedicated to those transactions—a customer purchases a product on a website and the website ships that product. Ecommerce is just one part of the customer buying journey, and therefore one part of the entire world of digital commerce.

Digital commerce includes all of the processes and technologies that contribute to a customer’s movement downthe marketing funnel, from acquisition to retention.

Think SEO optimization to help an ecommerce site rank on Google, retargeted advertising to market products to users after they’ve visited (and left) your ecommerce website, payment technologies, and the logistical engineering that gets a product from the warehouse to the customer’s house faster and more efficiently.

Digital commerce also encompasses the next generation of ecommerce, expanding the customer journey and buying experience beyond the click to purchase and into the world of augmented reality (AR) shopping, artificial intelligence, shopping assistants, and more.

How does digital commerce work?

Digital commerce begins the first time a customer encounters a brand or product online. They might see an ad on their social media feed, the brand’s domain name in their Google search results, or a product listing on a retail aggregator.

Imagine a customer shopping on a commerce platform Amazon, for example. Their site relies on a complex algorithm to show customers individualized search pages for any given item. The order in which items appear might be entirely different from one customer to the next, depending on records of customer behavior, geographic location, and any number of other variables.

Every purchase automatically informs marketing for the next—analytics are used to better inform how products are advertised, presented on a website, and even how support and customer inquiries are handled.

In this sense, digital commerce is less about the process of getting purchases from point A to point B and more about how customer data is collected and leveraged to continually optimize the online shopping experience.

Digital commerce examples

Digital commerce encompasses a wide range of online business activities. Here are four examples of digital commerce:

• Online retail: This involves selling physical products online, like clothes, electronics, or home goods. It’s easy to set up an online store with digital commerce platforms like Shopify.
• Digital products: Ebooks, software, mobile apps, online courses, and digital subscriptions (like streaming services) are intangible goods. Selling digital products is easy with platforms like Gumroad, Teachable, and Udemy.
• Online services: Businesses that offer services can sell their expertise online. There’s web design, graphic design, digital marketing, and consulting. Platforms like Upwork and Fiverr connect service providers with clients.
• Online marketplaces: Marketplaces connect buyers and sellers for an endless amount of products. There’s Amazon, eBay, and Etsy for physical goods, and Envato Market for digital assets like website templates.

Digital commerce trends

Much like the internet, the digital commerce experience evolves constantly. Some trends in the industry include:

Personalization

Cookies—little bits of code that enable websites to "remember" its users and thus personalize content for them—revolutionized the customer experience online. Today, customers expect an individualized experience, and 88% say they’re more likely to make a purchase from brands that provide customized experiences.

Interactive products

Digital retailers have begun to incorporate augmented and virtual reality as additional touchpoints throughout the customer journey. For example, online clothing retailers might use AR to create digital fitting rooms, where customers can try on clothing virtually.

Inventory control

Inventory remains a huge expense for digital retailers—a problem that technology has worked hard to solve. Today, large retailers like Target and Walmart use sophisticated programming to identify product inventories in brick-and-mortar stores nationwide, allowing them to utilize store supplies to fulfill online customer orders. This eliminates the need for separate in-store and warehouse inventories, which can result in expensive overhead. Alternatively, huge digital commerce retailers like Alibaba Express cut out the middle man by connecting consumers directly with suppliers, eliminating the need for significant warehousing.

Integrated marketing

Digital commerce—with its myriad channels—has created fragmentation in the customer experience. Integrated marketing is one possible antidote to this challenge: By unifying marketing creative across all customer touchpoints, brands can achieve a cohesive digital experience that meets customer expectations in a scattered digital world.

Automation

Automation is becoming more popular as retailers try to streamline operations and reduce costs. With automation in ecommerce, businesses can focus on more critical aspects like growth and customer experience by automating repetitive inventory, marketing, and support tasks.

API-based commerce

Create your digital commerce strategy today

Digital commerce essentially amplifies the ecommerce business model by expanding its opportunities for value and revenue generation.

By leveraging technologies that range from first-party cookies and personalization to AR functionality, brands can create a seamless shopping experience for customers.

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