c-suite

Digital trend I: 

Cracking the next billion— expand digital markets into digital ecosystem

insight
March 11, 2024
9 min read


Authors

kanchan


Kanchan Ray, Chief Technology Officer (CTO) at Nagarro, leads innovation topics and helps customers transform their business.

 


Rahul Mahajan is Chief Technology Officer  (CTO) at Nagarro. He pushes the boundaries of what is possible for the customers.


Digital ecosystem for business growth 

Growth is at the top of the priority list for all CXOs as they look for business opportunities to bet on. Businesses need to increase market share and improve efficiency across the value chain using the various emerging tech levers.  
 
By expanding the marketplaces and portals into a digital ecosystem, businesses can gain access to a larger customer base and better utilize the resources and functionalities. This reduces development costs and time and maximizes the use of capital. Furthermore, the interconnectedness of the ecosystem encourages innovation and collaboration, leading to the development of higher-value products and services. Ultimately, by expanding into digital ecosystems, businesses can achieve powerful synergy effects: greater reach, optimized resource allocation, and innovative offerings, all of which contribute to significant market share gains, better capital utilization, and, ultimately, higher profits.  

Reach expansion & new revenue streams

 

Digital ecosystem

In this trend, we explore how businesses can create new digital revenue streams and build new digital sales and distribution channels. Businesses with eCommerce assets and marketplaces should explore integrating their extended partners and suppliers (B2B and B2C) into a broader new digital ecosystem. In this new digital ecosystem, businesses can offer extended services and products across digital markets. This will help them tap into new areas, including first-party marketplaces, first-party e-commerce, third-party marketplaces, and social marketplaces. 

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For a business that wants to expand its home renovation/home decorating product catalog and services, it is very expensive to develop all kinds of solutions and apps to serve a large customer segment. By setting up a marketplace and inviting other service partners and products into the marketplace, new customers can be reached and better opportunities for up-selling and cross-selling can be found. In this example, – they can open up new service and product opportunities with newer personas such as interior designers, home architects' construction builders and create new product catalogs for homeowners, renters, etc. 

Digital ecosystem example

Imagine a CPG company that sells consumer nutrition focused products, like protein bars and also has digital solutions to orchestrates a user’s entire wellness journey. If it manages to create an ecosystem and involve other partners, its app will not only track the user’s steps but could become a health coach, guiding the user through a maze of experts, services, and products. This is the power of building a digital marketplace versus an eCommerce portal. It allows the company to control the narrative, shape the experience, and gain the loyalty of an entire community. 

Man scrolling on his mobile

What’s the need?

Checkmark
Adapting to changing consumer expectations

Changing consumer expectations now go beyond traditional e-commerce models. Customers are looking for integrated, holistic solutions that go beyond simple product transactions and can cover large parts of their product/service journeys. Companies need to adapt to these changing expectations and consider offering access to an entire ecosystem.

Growth icon
Expanding business
scope

To remain competitive and capture new markets, companies recognize the need to go beyond first-party e-commerce. This expansion includes marketplace platforms and third-party channels to offer their customers a wider range of products and services.

People
Customer-centric approach

As consumers demand more than just products, businesses need to take a customer-centric approach. It's about creating digital ecosystems that offer products and the right value-added services and connect customers to a wider network of partners and services.

The opportunity

 
Enhanced customer engagement and loyalty

The opportunity lies in improving user retention and reducing customer churn. By offering comprehensive digital ecosystems, businesses can create a more engaging and personalized customer experience, fostering loyalty across an expanded catalog of products and services. 

 

Next-level business transformation

The shift to connected ecosystems provides an opportunity for the next level of business transformation. Companies can introduce new distribution channels, explore cross-border trade/sales, and leverage ecosystem connectivity to drive innovation and growth. 

 

Extended loyalty across the ecosystem

The opportunity extends to building extended loyalty. Businesses can create a network effect where customer loyalty is not limited to individual products or brands but extends to the entire ecosystem, providing a competitive advantage in customer retention. 

The shift

A woman holding a bulb

Transformation shift to service providers

This is about creating integrated digital ecosystems that go beyond traditional e-commerce. For example, a home décor and hardware retailer could develop apps that connect customers with a network of professionals, from interior designers to contractors, to provide a one-stop solution for home improvement needs.

Man looking at a computer screen

Digital shift towards ecosystems

Businesses are transforming into more than just product providers. One example of this concept is the evolution of CPG businesses into wellness service providers that connect users with health experts via apps that track health metrics and provide personalized recommendations.

Man working on his laptop

Tech shift to composable experience apps

The concept relies on technology enablers such as microservices, micro frontends, APIs, data-analytics and cloud-based architecture patterns, with the goal to ensure interoperability and scalability required to create and maintain interconnected digital ecosystems. Pluggable analytics pipelines enable faster data-driven decisions for companies and partners.

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