A digital identity is pretty much exactly that. It is the sum of all interactions online. It is a networked identity that an individual, business, or device adopts while they are in cyberspace.
It is possible to create many digital identities through the use of multiple communities. A digital identity is identified when a user logs online with any specific device, say a mobile or laptop, for example.
A business can identify a customer based on its digital footprint. A business can also create a digital identity for any given product or service too. They can create what is known as a digital product identity which can help in the marking of their goods.
Product Digital Identity
The digital transformation of a product, for example, the images, videos, properties, information, etc, that are used to define a product all work together to present this particular product to market.
By creating a digital version of a product, the company increases its ability to create, manage, and send digital content out to wherever it is needed, enabling it to jump on any given opportunity that may arise in the digital sphere.
It maximized the companies ability to market its product on all channels. This process simplifies and reduces inefficiencies that can bog a company down. Instead, it speeds up flow and reduces the use of various resources. 
Any person can access the digital avatar created for a product within an organization, which means that the marketing and advertising process is sped up across various platforms simultaneously. In effect, this translates to a better and more coherent marketing strategy that can only build trust and loyalty within customers.
Good Customers
When customers are identified through their digital identity when they log onto a website, a business can recognize whether these are good customers or bad customers. This is a huge and central priority for any digital business.
It allows them to focus resources and target marketing material effectively. The main problem is that customers do not want to be recognized and want to enjoy a bit of anonymity. A way to identify the actual person from the footprint is to offer newsletters where they only have to type in a name and an email address.
A company gets to know a little about the customer, and the customer has not gone through a long process of putting a name to their digital footprint, or in other words identifying themselves. Over time this initial newsletter sign-up could progress to registration and login.
It takes time for a company to develop a relationship with a specific digital identity. The truth is digital identity is a great way to open up new markets for any sort of eCommerce business.
It is a way to build trust and loyalty not based on who the customers actually are, but what their activities are online. By using this data, activities and traits can be monitored, and a pattern can be achieved. This will help a company throw resources in the right direction.