Digital Commerce Explained: Fixing 4 Key Issues

While digital commerce was rising continuously since its conception, the last couple of years have seen unprecedented exponential growth. The question is, how can a business succeed in a hyper competitive market? Is there any way to fix all 4 major issues that digital commerce businesses face?

A quick look at digital commerce

Looking at recent years, there is no arguing how fast digital commerce has been growing. Digital sales have been growing at a considerably faster rate than overall company sales. According to Forrester, in 2020 digital sales grew an average of 49% YOY (year over year), while overall sales experienced a 15% YOY growth. The same report mentions how despite the fast rate of growth in digital commerce, it is still obviously “challenging to manage”.

We all also know how the COVID-19 pandemic pushed consumers to buy even more products online. Just as an example, in 2020, 50% of shoppers reported products that they have never bought online before. In the same year, 83% of executives reported double-digit growth in digital revenue - an incredible increase from the previous year (pre-pandemic) with only 9%. One year after these reports in 2021, Gartner still points out how “Investments in digital commerce continue to grow as companies adapt to new business models and sales processes prompted by the COVID-19 pandemic.

Finally, a quick look at the most recent forecasts tells us that while the rate of growth will slow down for the upcoming years (as a consequence of the sudden explosive rise during the pandemic), share of the market will only continue to grow for the foreseeable future.

Digital commerce vs eCommerce

Digital commerce and eCommerce may sound similar, but there's actually a pretty significant difference between the two: scope.

When someone talks about eCommerce, it usually only refers to the sales process. This includes things like managing stock and handling payments. By contrast, digital commerce refers more to the overall strategy and process involved. For example, the following activities are all unique to digital commerce:

• Examining consumer analytics
• Making multiple touchpoints accessible
• Creating content to facilitate marketing objectives
• Choosing technology that supports sales goals

While both aspects are important to the success of your site, understanding that digital commerce is more far-reaching than eCommerce is essential to forming a holistic and effective long-term strategy.

Where is the problem?

It is not surprising to see that this incredible growth has caused exponential tightening of the market competition. Retailers started their own online shops, those with an existing online presence doubled down on digital commerce, and thousands of new companies established with an exclusively online presence. In a recent article, Harvard Business Review claimed “Almost overnight, eCommerce strategies shift from a perpetual top priority on every retailer’s three-year plan to a desperately needed lifeline that could enable them to survive”.

Just because there are more potential consumers available online, it does not mean that selling your product is also going to be easier. In fact, as technology moves forward, capabilities which would have been “nice to have” before, are now considered to be absolutely essential. Just a few examples:

• 81% of shoppers believe that seamless cross-device digital commerce experience is critical (source).
• As page load time goes from one second to 10 seconds, the probability of a mobile site visitor bouncing increases 123% (source).
• 45% of US millennials use voice-assistance somewhere in their shopping journey (source).
• 73% of prosumers and 56% of mainstream consumers want curated choices when shopping online (source).
• 78% percent of consumers want the website and the app to be fast above all (source).

A quick look at the satisfaction rate, either on the consumer side or the company side, also shows that many are clearly struggling with the challenges of modern digital commerce. With content being a central player in most online businesses, a recent survey of executives reported 29% of them having no further success in their content strategy in the span of one year. Another survey claims that 38% of marketers judge the performance of their online content strategy to be average and/or below. This is a huge problem, as roughly 50% of consumers would pay more for a better online experience! Additionally, 79% would change retailers if they had a poor shopping experience.

At this point, we should be asking ourselves: what is causing the struggle for companies when it comes to digital commerce?

Depending on who you may ask, there can be many reasons - however, in essence most of them point out to the same fundamental issues:

The 4 key issues affecting digital commerce

By combining all the points raised by different sources, we would end up with a shortened list that includes all the key aspects. So let’s take a look at each one and discover how they affect digital commerce:

1. Personalized omnichannel experiences

This could be considered the most important issue, with almost two-thirds of CEOs worldwide planning to improve it in one way or another. Looking at customers, they also seem to care about it significantly: Harvard Business Review reports that 73% of people use more than one channel during a single shopping journey - while another study claims that 75% are more likely to buy products from a company that offers them personalized recommendations.

Depending on where you look, you may find even more surprising numbers. One study [reports](https://www.omnisend.com/ resources/reports/omnichannel-marketing- automation-statistics-2020/) that 33% of consumers who ended their relationship with a company, did so because their experience was not personalized enough. It is universally accepted that personalized journeys are what usually make or break a purchase.

With the explosion of channels, it is obvious that omnichannel becomes more important with every passing day: by 2020, 50% of the global traffic was coming from mobile devices. With the ever-growing popularity of voice assistants, IoT, digital signage, and smartwatches, there is no doubt that omnichannel is already a key factor in digital commerce.

The problem is that many companies rely on legacy systems and content structure, which in turn limits their ability to both personalize user journeys, and seamlessly publish their content across different platforms and devices. Many companies are stuck with legacy solutions which eventually force them to incorporate multiple content silos (you really don’t want to do that). These systems usually tie the frontend and backend together, which can completely hinder your ability to customize your content.

With personalized journeys and omnichannel experiences going hand in hand, lacking the ability to offer either of them in a satisfying way, is without a doubt the biggest problem digital commerce companies face today.

2. Quick response to market trends

With the competition growing massively, it is critical for companies to easily respond to every market trend - be it by offering the right content in the right way, or simply having the possibility to integrate a new technology quickly.

For many companies, the problem is that they rely on a legacy content structure that requires platform-specific coding, which eventually leads to a series of co-existing code dependencies. In other words, unnecessary technical complications start acting as barriers and make things more complicated than what they should be. As a result, adding new features (to the web shop, the app, etc.) will be a time consuming and complex process that requires extra effort from developers, designers, and even marketers.

Even when it comes to updating content that already exists, many companies are forced into time-consuming maintenance work or alteration of huge databases - with some changes even requiring the modification of their whole system.

When it comes to integrating and adapting new technologies, many companies are held back by what is usually called an all-in-one architecture. While these technology solutions offer most of the capabilities in one single package, they also severely limit your flexibility and specially your ability to freely update your tech stack. In short, all-in-one solutions force companies to pay for tools that they may not even need, while potentially limiting their access to newer technologies that they may desperately need. All-in-one solutions are NOT future-proof.

In addition to future-proofing, technological flexibility is also important when it comes to scaling. As your audience grows, so will the demands on your system. Being able to switch to technology that can support it or expand on existing tools is an essential part of a successful digital commerce strategy.

3. SEO and shorter load times

No matter how personalized your content and how great your products are, you still have to be at the right place for your target audience to find you. Coupled with the exceptional growth in recent years, SEO is a critical factor in digital commerce.

One of the most important criteria in SEO is your website’s loading time. Google puts a lot of emphasis on load times when ranking search results, which is understandable according to their research: 40% of users exit a website if it takes more than 3 seconds to load. Additionally, Google has also announced that security is another “top priority”.

While almost everyone is aware of these two factors, many companies struggle to keep up with their competitors. So what’s the problem here?

Speed and security are huge topics, each requiring their own articles, or rather books. It is not possible to come up with a single reason behind their problems. Anything and everything can affect the performance of a website. However, since we already talked about legacy content solutions before, we can at least tackle one possible reason here.

The aforementioned all-in-one content solutions can also have a negative impact on both security and performance. This is again a direct result of the tight link between the frontend and the backend. In terms of security, since both ends are connected, any potential risk at one end, also threatens the other end. Also, since every tool is offered in one suite (usually called monolithic), they also run the risk of causing a domino effect.

When it comes to performance, the connection of the frontend and the backend means the traffic on one side would also affect the other. This can have huge impacts on the website's loading times - which not only negatively affects your SEO, but also the general user experience.

4. Taking advantage of the latest technologies

This is another broad category: anything from support for smartwatches, AR headsets, and IoT devices, to specific tools in a company's technology stack. So let’s take a look at some numbers:

• Speaking of AR: mobile augmented reality is estimated to reach 1.73 billion users by 2024 (source).
• Visual commerce is on the rise, with 78% of marketers saying that video directly increases sales (source).
• Voice-content is expected to play a bigger role in the near future. In terms of digital commerce, there is an estimated $40 billion voice-driven shopping waiting to happen in 2022 (source).
• AI is already a key differentiator. When it comes to chatbots, Business Insider predicts that by 2024, around $140 billion digital commerce transactions will be conducted through them (source).
• The global market for end-user IoT solutions stood at around $248 billion at the end of 2020 and is forecasted to reach $1.6 trillion by 2025 (source).
• Gartner reports that the wearables market will reach $93,858 million in 2022 (source).

As more and more businesses start to expand their online presence, keeping up with the latest technologies and adapting a future-proof architecture becomes more important. However, many companies struggle with keeping up. Where’s the issue?

Obviously, the first answer is going to be the budget. For many, the main reason why they cannot take advantage of the latest technologies is that their resources are simply not enough - either the budget or manpower. For others, the answer could be a lack of vision, which is again a manpower issue - although in a different way.

But even if the budget and overall vision are not issues, some companies still struggle. In other words, there are companies that both have the resources to integrate new technologies, and are eager to do so, and yet they struggle. What’s the problem here then?

While we can look for an answer from different angles, one important one is again the question of content infrastructure and solutions. This is going back to the all-in-one legacy systems that I’ve mentioned earlier. In these cases, companies are simply held back because their solution vendors are either not willing to incorporate the new technology in the suite, or are doing so with a slow pace (as a result of their monolithic structure). Being stuck in an all-in-one suite means a company may end up paying for tools that they never use, and simultaneously missing out on other tools that they may desperately need.

Interestingly enough, the link between the frontend and the backend which is present in most legacy systems, is also playing a role here. By tying these ends together, at the very least, you are potentially adding multiple time-consuming barriers that work against you when trying to integrate a new technology/tool.

What is the solution for digital commerce?

This question is obviously the logical next step - Is there a feasible solution to these issues? If yes, then what can we do to make sure it really works?

Well, the good news is that all these problems stem from the same root cause: A faulty content solution that relies on legacy architecture. The monolithic nature of these systems that ties the frontend to the backend, causes a myriad of problems across the board. While these systems worked perfectly fine in the past, they are crumbling under the pressure of modern demands like omnichannel, hyper-personalization, and short loading times.

This means, by fixing the root problem, most companies can easily get rid of all these issues very quickly.

Breaking the link between the frontend and the backend

By going against the legacy architecture of traditional systems, you can easily let your frontend and backend function separately from each other. In recent years a new architecture has been replacing the older one: a headless approach to content.

Why is it called headless? Well exactly because it’s breaking the link between the two ends. Think of it as a body (backend) which instead of having a single fixed head (frontend), can have as many heads as you may like. Plus, you can simply add or remove heads as you like. While simple in theory, this one change can bring so much to the table. For example, in terms of performance and SEO, you never have to worry about the traffic/security threat of one end affecting the other one. Any threat to your frontend would be isolated there, and will not in any way harm your backend - and vice versa.

If you remember, the other core problem was the all-in-one approach that many legacy systems advocate. Fortunately headless systems also get rid of that by replacing it with a best-of-breed architecture. Here, instead of having all the tools coming in a single package, the company has the complete freedom to choose their own individual tech stack. This has some major consequences:

• You only end up paying for the tools that you really need
• You have the complete freedom to change your stack at any moment
• You can easily and quickly integrate the latest technologies and tools
• You can use the tools and frameworks that your team is already familiar with
• You never have to worry about updates coming in huge chunks for everything at the same time

By getting rid of these 2 root causes, you can give yourself a pretty strong base and future-proof your digital commerce. But of course, making the decision to change your content solution can be a pretty complex task. There are many variables to take into account.

Should you really change your legacy content solution?

There is no simple answer to this question, as each individual case has its own story. You should always consider your specific needs and evaluate your options. However, to make things a bit easier for your, here’s a quick comparison table between a typical legacy system and a typical headless one:

And just to make things even easier, here’s a free RFP template that you can download and see how things look like on your end:

Still on the fence? Find a free demo and get some hands-on experience

If you are still not sure what to do, remember that many headless systems offer a free trial where you can experience them firsthand. In this case, you can signup for Storyblok’s free demo (no card needed) right here.