How to accelerate performance in digital commerce
Companies pursue digital commerce initiatives to drive business outcomes: to deliver new experience to customers; to improve financial performance; to position themselves strategically; or to bolster their commerce operations.
Regardless of what outcomes companies prioritize, the more digital commerce capabilities adopted the better companies perform. Specifically, companies can find the most performance gains through personalization capabilities.
But adopting capabilities is not enough. Our study found that good digital commerce performance requires ownership across sales, marketing, and IT. It is critical to have IT leadership that creates the technical backbone and sales and marketing leadership that guides customer-centric capabilities like personalization.
Digital commerce apps and use cases evolve exponentially. This requires a technical architecture that supports rapid evolution. We found that a microservices and API-first enabled architecture, fully customizable, will keep pace with rapidly evolving digital commerce applications and use cases.
We recommend a four-pronged approach to accelerate digital commerce performance:
Implement more capabilities.
Prioritize personalization experiences.
Integrate IT, sales, and marketing leaders.
Adopt microservices and API-first architecture with open stack integrations.
Only the top 30% adopters of digital commerce capabilities show a performance difference from the rest (Figure 2). Companies need to experiment and adopt a wide range of capabilities across the five stages of customer journey, as well as those pertaining to the past, present, and future horizons. Through H1 to H3 as well, the performance increases linearly but not significantly — indicating that it is good to adopt capabilities across horizons but more important to get the ones implemented to work better irrespective of their level of advancement.
The beauty of MACH commerce platforms is that you can pick and choose industry proven capabilities to be deployed either to gradually strangle your monolith, or to drive a complete migration off your legacy platforms. Integration is simpler, cleaner, and easier to maintain,with business logic fine-tuned via microservice configurations in the orchestration layer.
Companies should prioritize the following capabilities, which capabilities correlate more strongly with performance.
Verified reviews (H1).
Self-service chatbots or voice bots for customer assistance (H1).
Personalized customer service and context persistence across digital channels (H2).
Personalized offers, and pricing for up-sell and cross-sell (H2).
Co-browsing to help customers experience products and services remotely (H2).
Targeted automated (programmatic) ad buying (H3).
Personalization of customer service with context persistence across digital channels, and personalized offers and pricing for up-selling and cross-selling, have a significant positive correlation with overall performance on business outcomes. We discovered the following on the implementation of these two and other personalization capabilities:
Personalized offers and pricing lead to an 8% higher probability (each) of significantly improving both customer retention rate and traffic to digital channels.
Personalized customer service provides a 9% higher probability (each) of significantly improving both supply chain and inventory management metrics, and payments capabilities and infrastructure.
Personalized product- or service-specific content similarly lends an 8% higher chance of significantly improving cart-to-order conversions.
Clearly, multiple aspects of personalization are effective at driving better outcomes. However, few companies have reported the implementation of these capabilities.
Digital commerce is still very much a technology endeavor, but it also requires the strategic focus of business leaders. Our study indicates that CROs and CSOs drive better digital commerce performance. These leaders correlate with a higher likelihood (15% higher than CTOs) of driving their organizations into the top tier of performance on desired business outcomes. These leaders correlate with a 12% higher average performance score compared to CEOs, who lie at the bottom in leading digital commerce effectively (Figure 5).
Businesses must now re-evaluate their strategic vision with the monetary aspects in focus. This is expected to clarify the goals that a business must set for itself, and the capabilities to be implemented to achieve them. With just 5% of the companies currently having CROs or CSOs leading digital commerce, it is difficult to define what best practices do they employ compared to those with technology leaders (CTOs, CIOs, or CDOs).
Undoubtedly, the technology leaders play a key role in building the entire ecosystem containing everything that matters —architecture, capabilities, analytics, system integrations, and payments. Therefore, it is critical for organizations to have their technology units and sales leaders work in tandem toward a common strategy that drives the right decisions, especially if leadership changes need to be undertaken.
Microservices and API-first architecture is the way forward for future digital commerce platform designs, as the flexibility to rapidly integrate or adopt various capabilities becomes the prime objective of the underlying architecture. While most firms are yet to adopt microservices and API-first functionalities into their commerce architectures, 95% do aim to get there gradually.
However, most microservices and API-first commerce vendors only provide limited flexibility, scalability, and technical agility through APIs, making those solutions good when used as-is or as-delivered. But the ongoing digital evolution requires more flexibility to handle unknown expectations that would most definitely emerge after the deployment of a solution. Moreover, the lack of mature business tooling is a key problem with typical microservices and API-first solutions. To tackle this, we recommend a futureproof approach called MACH-X.
MACH-X stands for microservices, API-first, cloud- native, and headless with extensibility, which provides greater flexibility for companies to incorporate the fundamentals of Agile DevOps and Continuous Integration/Continuous Delivery (CI/CD) and enable the extension or overriding of any microservice capabilities that need to be resolved. It also allows companies to plug in their own or third-party microservices. This extensibility is achieved via an open stack that divides API layers in a way that separates customizations from the core, which in turn enables companies to add capabilities without having to go down the significant update path.17
Digital Commerce Radar 2023, the first of its kind by Infosys, sought to identify what elements of digital commerce matter to companies, customers, and employees, and how they impact business performance. We identified six key elements of digital commerce operations: organizational structure, technology architecture, digital capabilities, system integration, payments, and analytics.
We found that each element is crucial for the success of a company’s digital commerce operations. When companies get them right, they perform better than their competition. Across industries, businesses must evaluate their practices and initiatives and align them with best practices to thrive in the next wave of digitization.
To download this report, click here.
Jitesh Gera | Infosys Knowledge Institute, Bengaluru
Dylan Cosper | Infosys Knowledge Institute, Dallas
Isaac LaBauve | Infosys Knowledge Institute, Dallas
Pragya Rai | Infosys Knowledge Institute, Bengaluru
