Since the days of the dot-com 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 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 market research and customer acquisition, data analytics, and even supply chain management.
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 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. Headless commerce is a modern approach to digital commerce that separates the front-end user experience from the back-end ecommerce infrastructure. This trend enables businesses to provide more personalized and flexible customer experiences across various channels and devices.
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.
Ready to create your business? Start your free trial of Shopify—no credit card required.
Digital commerce FAQ
What does digital commerce include?
Digital commerce includes buying and selling goods and services online. It also includes marketing, customer service, pricing, checkout, and payment processing. It involves the use of new technologies and customer analytics to optimize and personalize the commerce experience.
What is the difference between ecommerce and digital commerce?
Ecommerce is a subset of digital commerce, focusing primarily on the buying and selling of goods and services online. Digital commerce is a broader concept that includes not only online sales but also the entire digital ecosystem that supports these transactions.
Why is digital commerce important?
Digital commerce facilitates global trade and gives businesses access to a wider audience. Customers can now easily compare products, read reviews, and make purchases from anywhere, even on mobile devices. Businesses can also gather valuable customer data through digital commerce, improving omnichannel marketing strategies and personalizing user experiences.
What are the 3 types of ecommerce?
- Business to consumer (B2C)
- Business to business (B2B)
- Consumer to consumer (C2C)