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Sink or Swim: How Digital Transformation will Determine Company Success (or Failure) in 2025

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As we move into 2025 and reflect on the learnings of the 2024 holiday season, customer loyalty – and the risks of losing it – are at the top of every business leader’s mind. Speed, consistent uptime and outstanding UX have emerged as non-negotiable elements for survival in today’s fast-paced market.

73% of retailers report that downtime during high volume moments would have serious consequences for their business. As we kick off the new year, businesses clinging to outdated legacy ecommerce platforms will be sure to feel those consequences, unless they take the opportunity to get serious about digital transformation. Otherwise, they risk being left behind.

The rise of AI, cloud technology, and composable architectures leaves no room for complacency. According to a commercetools and Master B2B report, 94% of survey respondents say their CEOs are now backing digital transformation efforts. That’s progress — but the real question is, why has it taken so long?

Digital Transformation: Not New, but Urgent

We’ve seen waves of digital transformation for years, but this one is different. Why? Because AI is at the forefront, and technology lifecycles are shrinking. From 2018 to 2022, companies that embraced digital leadership saw average annual shareholder returns of 8.1%, compared to 4.9% for those that didn’t, proving that businesses stuck in the past aren’t just losing out on efficiency — they’re putting their bottom line at risk.

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We’re not talking about minor inconveniences. The average tenure of a company on the S&P 500 has dropped from 32 years in 1965 to less than 20 today. The market is ruthless, and there’s no more room for businesses to drag their feet. Just look at Bed Bath & Beyond — once a retail giant, now a case study in what happens when companies don’t evolve fast enough.

That said, embracing new technological capabilities isn’t just about avoiding catastrophe – it’s also about gaining the competitive advantage. While generative AI may be the media darling, standard AI can offer huge tangible benefits: 91% of retailers utilizing AI report improved forecasting accuracy, avoiding costly stockouts or overstocks, and 94% have enhanced their fraud detection capabilities in response to rising online threats. As AI continues to prove its worth in critical areas like inventory management and security, the pressure to adopt these technologies also is mounting. Whether by carrot or stick, all signs point to upgrading.

The Driving Force of Customer Experience

Much of this urgency comes from the pressing need to improve customer experience (CX): 79% of executives are investing heavily in technologies that elevate CX, which is the bare minimum in today’s omnichannel world. Features that were once cutting-edge, like buy online, pick up in-store, are now table stakes. Consumers demand immediacy, particularly among younger generations, and savvy business leaders like Ulta and DoorDash are listening, prioritizing the patronage of the shoppers of the future.

But delivering a great customer experience hinges on more than just strategy—it requires seamless user experiences (UX) at every touch point. We know that smart, strategic UX can boost conversion rates by 400%. But the flip side? A poor UX can drive 89% of customers to your competitors. Retailers are losing customers not because of lack of product, but because they’re technologically deficient.

Why isn’t Every Company Moving Forward?

One major holdup to mass adoption? Poor leadership structures. There is a long tradition of companies being held back by outdated attitudes in the C-suite. Many executives come from backgrounds where they simply don’t grasp the urgency or nuances of digital technology. They defer, delay or worse – choose the wrong tech because they rely on faulty advice.

There’s another related issue at play here: fear. Large enterprises are complex, and no executive wants to be the one to touch an aging IT system and knock down the house of cards. It’s easier to accept cushy perks from legacy providers and punt the problem to the next CIO.

The reality is that a true digital transformation requires a level of foresight and investment many leaders are simply unwilling to embrace. Anyone tuned into the business landscape can see the tides are shifting toward composable commerce and that one-size-fits-all models are on their way out. Risk-averse actors might be waiting until they have a “sure thing,” at which point they will be irreparably behind those who have proactively met the moment by embracing digital transformation head on.

The Solution: Incremental Progress, Not a Big Bang

Transformation doesn’t mean ripping out entire systems overnight. One of the biggest misconceptions is that digital transformation requires a massive, all-or-nothing revamp. That thinking is outdated. The future is composable — an incremental, modular approach that allows businesses to evolve without reinventing the wheel.

According to a recent study, 91% of businesses already use or are considering using composable commerce solutions. But for those that fear the cost or complexity of digital transformation, the good news is that modular, composable solutions are more accessible than ever. You don’t need to write a massive check to start — you can begin with a modest pilot and scale up. This is not a giant leap into the unknown, but rather the first in a series of steps with intention.

Smart companies aren’t necessarily making sweeping changes — they’re solving specific problems with solutions that last. Whether it’s upgrading search functionality or launching a new CRM, the key is starting small, piloting new technologies and iterating rapidly. The era of once-a-year updates is in the past.

The Stakes: Innovate or Face Extinction

2025 will be a defining year for many. Business leaders who continue to rely on outdated technologies risk not only their company’s market position but also their own careers, as organizations increasingly seek skills in modern, flexible technologies.

Organizations that fail to modernize are at risk of extinction, with more agile, digitally native competitors disrupting entire industries. In companies that recently migrated to a composable platform, 67% cited the ability to compete with their peers as the key motivator. For many of them, this year will be one of reaping the benefits.

There’s no longer a question of whether to invest in tech, only how long companies can afford to wait. The choice for C-suite leaders is stark: take steps now, or risk falling behind in a market that waits for no one. In this environment, the real risk isn’t adapting – it’s complacency.


Kelly Goetsch is an advisor for Commercetools. He previously served as the company’s Chief Strategy Officer and prior to that he was the Chief Product Officer at Commercetools for nearly six years. Goetsch is an industry thought leader who champions Commercetools’ unique MACH (Microservices, API, Cloud-Native, and Headless)-based architecture, and he co-founded the MACH Alliance, a group of 100+ independent, future-thinking tech companies dedicated to advocating for open, best-of-breed technology ecosystems. Prior to Commercetools, Goetsch held senior-level product development and go-to-market responsibilities at Oracle and held the role of Senior Architect ATG (acquired by Oracle), where he was instrumental to 31 large-scale ATG implementations.

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