Digital commerce is showing signs of losing steam. After booming in 2020-2022,1 growth returned to near pre-pandemic levels. Now, though, with, global inflation reaching a 15-year high of 8.8% in 2022, digital commerce growth is in peril.2
Our research found that to retain and increase customers, companies need to go beyond high-quality products at competitive prices, and back them with superior digital experiences.
Our global survey of 2,500 companies across 12 industries analyzed the practices behind exceptional digital commerce outcomes. We considered 38 digital commerce capabilities across five stages of the customer journey: discovery, evaluation, purchase, after sales, and continuous engagement. We also examined critical aspects of digital commerce operations: organization structure, technology architecture, analytics, payments, system integration, and desired goals or outcomes.
The Infosys Knowledge Institute found that the necessary ingredients for optimal digital commerce are personalization, a flexible foundational architecture, and leadership involving sales and technology teams.
Our analysis indicates that the more digital capabilities a company implements, the better it performs on strategic, operational, customer, and financial outcomes.
However, each capability impacts only a few specific business outcomes. This means it is critical to understand which capabilities actually help organizations fulfill their goals most effectively.
Two personalization initiatives greatly improve performance: (a) personalized offers and pricing, and (b) personalized customer service and context persistence across channels. These capabilities increase a company’s likelihood of reaching the top-performing quartile performance by 13%. However, only a minority have implemented them — 18% have personalized offers and pricing, and 39% have personalized customer service.
For personalization to succeed, companies need to build a strategy for personalization, implement the technical pathways, and establish KPIs for success. Personalization requires both tech- and business-centric leadership.
Our data indicates that companies where digital commerce sits under chief revenue officers (CROs) or sales officers (CSOs) perform better.
However, just 5% of our surveyed companies have this organizational structure, while 38% have technology leaders driving digital commerce.
Currently, customer-facing leaders do not determine the vision for digital commerce capabilities like personalization. Instead, leaders such as chief marketing officers (CMOs), CSOs, and CROs, who focus on delivering value to customers, drive personalization strategies.
As customer-centricity increases in importance, this misalignment in leadership will create a bigger deficit in digital commerce performance.
Technology is clearly the foundation of digital commerce. But our research shows that technology is more effective with business vision and customer insight.
Businesses should bring sales, marketing, and technology leaders together to drive the best outcomes.
We see a shift toward microservices-based and Application Programming Interface (API) first architectures that facilitate third-party integrations and provide the flexibility to handle continuously evolving technology and customer preferences.
Half (51%) of the companies we surveyed have already adopted microservices-based and API-first architecture in some form, and around 95% plan to do so by the end of 2024.
Although monolithic digital commerce platforms continue to be effective, fewer companies consider them because they are less adaptable to new capabilities. These traditional platforms include fully customized all-in-one solutions and monolithic systems with predesigned features. In contrast, microservices and API-first capabilities give companies the flexibility they’re looking for – its open stack enables businesses to build their own microservices or integrate third-party microservices through APIs.
Companies need to rebuild their digital commerce initiatives to align with their goals. This requires a holistic review of six aspects — organizational structure, technology architecture, digital capabilities, system integration, payments, and analytics. To effectively sail through the ongoing wave of digitization, turn the page for our four recommendations for businesses.
