Why You Shouldn’t Ignore Digital Commerce
The digital commerce industry is a diverse one, encompassing a bewildering array of tools, systems, and data for both buyers and sellers as well as covering everything from online payment encryption to mobile shopping and beyond.
Enterprises with online presence usually make use of a digital commerce platform or store to conduct both sales and online marketing activities and oversee fulfillment and logistics. With the rising dominance of digital commerce, the retail industry is undergoing a seismic paradigm shift. Digital commerce platforms and marketplaces are transforming the way people purchase items, becoming the more preferred method of shopping for consumer markets in U.S., Europe, and Asia.
The continuous growth of digital commerce
Over the years, the digital commerce industry has become synonymous with continuous growth, with the last 14 years seeing the massive growth of digital commerce companies across the board. This has been even more spectacular for merchandise lines such as beauty and clothing products, which averaged a remarkable 25 percent growth in compound annual growth rate (CAGR) between 2000 and 2014.
Statistics show that in 2016, shopping on digital commerce platforms accounted for 11.7 percent of overall retail sales, totaling a whopping $394.86 billion. This represents approximately 42 percent of all growth in the year 2016, with the digital commerce industry showing a 15.6 percent increase from 2015 figures.
The massive shift from traditional retail shopping
In the U.S., this massive shift from traditional retail shopping to digital commerce platforms has been fuelled by a number of factors, one of which is the increasing popularity of flash sale event days such as Black Friday. In 2017, sales from Black Friday totaled nearly $5.03 billion, and this massive success led to its adoption by other countries such as India, the Netherlands, the UK, et cetera. Although impressive, sales from Alibaba’s Double 11 festival in China was even more spectacular, raking in an unprecedented $25.3 billion in 2017. This trend shows no signs of slowing down.
Massive potential for improved revenue generation
Projections show that overall digital commerce revenue in the U.S. will exceed $638 billion by 2022, with the sale of accessories, footwear, and apparel expected to surpass $123 million. Retail sales worldwide are predicted to exceed $4.058 trillion by 2020, while reports from eMarketer indicate that the number of digital buyers may exceed 2.14 billion by 2021.
Also, the Quarterly Retail digital commerce Sales report released by the U.S. Department of Commerce shows that when compared to 2017 figures in the same time period, the first quarter of 2018 recorded a 16.4 percent increase in digital commerce sales. It is indeed clear that now is the best possible time for enterprises to tap into the power of the digital marketplace and grow their digital commerce businesses.
In 2015, the global digital commerce platform market was valued at $4.44 billion. A recent study carried out by Transparency Market Research indicates that the global demand for these platforms will increase by 14.8 percent, reaching an estimated $15.30 billion by 2024.
Growing demand for digital commerce platforms
The growing demand in the global market for digital commerce platform is driven by the all-pervasive nature of internet connectivity and the continuous rise in the use of consumer electronics. These factors contribute to both the growth of digital media and the digital commerce sector. The increasing demand for digital commerce platforms worldwide can also be attributed to the evolving nature of cloud computing services, making it much easier for consumers to access digital content.
However, more progressive growth is restricted by numerous factors including the growing security and safety concerns with regards to malware and spyware as well as lack of marketing skills shown by major players in the market.
Currently, North America holds the leading position in the global digital commerce platform market in terms of revenue generation and demand volume. This has been attributed to the massive base of digital media users, the attendant high use of smartphones and devices as well as high-speed internet services and data networks. North America’s retail segment is already a major source of revenue for market players in the industry, while its B2B segment is showing phenomenal growth within the digital commerce platform market.
The dominance of digital commerce platforms
Businesses can no longer ignore the increasing importance/dominance of digital commerce platforms as a sales vector. The everyday demands of modern life mean that there is less and less time for people to spend on nonrevenue generating activities such as shopping, meaning that more and more people will come to appreciate the ease and stress-free nature of online shopping. To stay relevant and competitive, businesses must look for ways of exploiting this trend to improve customers’ shopping experience and protect their customer base.
Increasing popularity of PaaS as a deployment model
Unlike their predecessors, however, the new generation of digital commerce marketplaces will become more localized and industry-specific. Companies want digital commerce platforms that will enable them to solve particular problems for a specific region and/or target customer demographic. As such, they require a digital commerce platform solution that is easy to develop, deploy, use and scale, thus ensuring success and profitability in the long run. Currently, the deployment models for digital commerce platforms are segmented into open source, fully managed Platform as a service (PaaS) and on-premise.
Although each deployment model comes with its advantage and disadvantages, cloud-based PaaS solutions are becoming increasingly popular due to a low total cost of ownership (TCO), capability for Payment Card Industry compliance and security, launching speed, easy integration, and process automation as well as reduced downtime.
UltraServe’s PaaS – SmartStack
The UltraServe digital commerce solutions offers 18 years of industry experience, a 24/7/365 global support team and our leading PaaS solution, SmartStack.
Deploying in 25% of the time, SmartStack controls your AWS Cloud while enabling your data and application (SAP Hybris, Magento, or Adobe Experience Manager). This combination allows for a decreased, risk, time, and money.