What Is Digital Commerce? Learn How Digital Commerce Works

Digital commerce

Since the days of the dot-com boom, online retail has gradually come to represent a significant portion of the global marketplace. By 2023, ecommerce will comprise nearly a quarter of global retail sales. But digital 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 end-to-end process of selling goods and services through digital channels. The term encompasses not only the transactions that happen online but also everything that happens before and after. This includes processes like customer research and marketing, data analytics, and even logistics.

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 down the 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 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, digital 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 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 past purchases, 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 information is collected and leveraged to continually optimize the online shopping experience.

Innovations in digital commerce

Much like the internet, digital commerce 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 experience that creates better recognition and affinity in a scattered digital world.  

Final thoughts

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, brands can create a seamless shopping experience for customers.