With retailers embracing digital transformation strategies, companies’ tech leaders (VP of Digital, Chief Digital Officer, and Head of eCommerce) are now tied to their brands’ key performance indicators (KPIs) like never before. These decision-makers must invest in eCommerce solutions that form a strong foundation to support a broader digital strategy, rather than just serving as a way for customers to purchase items online. Without this foundation, retailers’ digital success will come crumbling down like a house of cards.
But the existing eCommerce technology in many retail companies were built or deployed years ago and have failed to keep up with the times. Businesses in this position lack flexibility and agility that result in lost revenue opportunities because tech leaders can’t respond quickly to new market trends.
So where can these tech leaders turn? The answer lies with API-first headless commerce platforms that are opening new doors to greater flexibility, agility, and adaptability to meet KPIs when creating new business models. In this blog, we’ll discuss why headless commerce plays a critical role in establishing a modern digital business strategy.
1. Unlimited Channels and TouchpointsLet's start with a brief history lesson. From the 1990s until the early 2000s, the eCommerce business model was limited to mostly a single channel: web browsers on Desktops. After the launch of the iPhone in 2007, smartphones emerged as a viable option to research items and even make purchases. In 2020, mobile devices account for more than 52% of all web traffic worldwide. It’s now a necessity for all retailers to not only offer traditional desktop experiences, but also support eCommerce websites on mobile devices and mobile apps.
Born in the mid-to-late 1990s to the early 2010s, Gen Z is a mobile-first generation that has grown up with smartphones in hand and social media platforms as part of their everyday lives, perhaps to the dismay of their parents. Social media platforms have taken notice of these consumers’ preferences, and Instagram in particular has emerged as a go-to place for Gen Z to discover new products.
Facebook & Instagram are now allowing merchants to list and sell their products directly from their platforms. Not to be left out of the action, other companies are following the model set by social media giants by enabling customers to discover products check out directly on the platform. Brands like Steve Madden allow checkouts directly from Instagram.
It’s also important for brands to list and sell products on online marketplaces like Amazon and Zolando, which have both become important to acquire new customers because of their popularity. With the rise of smart speakers and home assistance devices like Amazon’s Alexa, Apple’s Siri, and Google’s voice assistant, people don't even search for products themselves. Instead, they trust their virtual assistants to do the shopping for them.
The greatest advantage of voice commerce is the ease of use. For consumers, they can use such devices to shop when they’re driving, cooking, or watching TV. Purchasing products online has never been easier with hands-free voice commerce. This is just the tip of the iceberg with what the future holds for voice commerce. Connected cars and wearables like smartwatches and smart appliances are expected to emerge as new channels for shopping as well.
With new channels come new sales opportunities and chances to engage with customers in more diverse ways. But companies can’t have separate eCommerce solutions for each of these channels, or their eCommerce strategy will never get off the ground. Businesses must have a single eCommerce solution that can work as a foundation for each to reduce maintenance costs. An API-first “Headless Commerce” is the new generation of eCommerce platforms that are designed to support unlimited channels.
Headless Commerce separates common business logic by using APIs and connects to multiple heads (multiple customer touchpoints or channels) like smartphones, smartwatches, social media channels, and smart speakers. Headless Commerce replaces the monolithic eCommerce solutions that were decades ago when the Web was the only digital touchpoint. If it’s been a while since your last history class, here’s a quick refresher course about how the eCommerce marketplace has evolved:
- IBM Websphere: 1996
- Oracle Commerce, (formerly known as ATG Commerce): 1997
- SAP Cloud Commerce, (formerly known as Hybris): 1997
- Salesforce Commerce Cloud, (formerly known as Demandware): 2004
- Shopify: 2004
- Magento: 2008
These commerce platforms were not designed with multiple channels in mind, limiting the customer experience. Many organizations are now scrambling to modify these platforms to make them work as Headless Commerce engines, but such an approach requires extensive time, effort, and resources to complete. Does your business have the 2,000-4,000 hours available to complete this process? At that point, it makes more sense to simply migrate to a new platform.
One way or another, retailers will have to embrace headless commerce, either by implementing new platforms or by re-platforming current systems to native API-first headless commerce solutions to rapidly create innovative new touchpoints and customer experiences
2. Innovation and Engaging User Experience
Innovation is a defining characteristic of any successful business. Retailers must continue to innovate to remain competitive and keep market rivals in the rearview mirror. What does innovation look like in the retail industry today? It's all about creating engaging user experiences to keep up with ever-rising expectations. Headless commerce has redefined what’s possible for retailers by separating the frontend and backend of their operations. Companies can add new functionality and new UX changes quickly without having to change the backend logic.
In traditional monolithic eCommerce platforms, making user-centric changes to your website requires both a front and backend transformation, which can turn the smallest project into an IT nightmare. Headless commerce will ensure your company has sweet dreams every night.
3. Easy-to-Manage Integrations
To reach their true potential in a headless commerce world, eCommerce platforms require integration with numerous other applications to maintain their effectiveness over time. If you like abbreviations, then you’ll love how eCommerce platforms can work in harmony with customer relationship management (CRM), enterprise resource planning (ERP), warehouse management system (WMS), order management system (OMS), and point of sale (POS) solutions.
But there’s a caveat to the marriage between eCommerce platforms and all of these abbreviated systems: continuous management. Retailers must constantly manage these integrations over time. If your eCommerce tool is updated, guess what? Your other integrations will require updates as well, and it can be a complex job to maintain all of these moving parts.
Where there’s a problem, there’s always a solution not far behind. By using APIs for these integrations, your company will reduce the complexity of this integration maintenance. Your tech leaders will also benefit greatly from this benefit, as they can now use their time on new business opportunities instead of managing existing infrastructure. It’s a win-win.
4. Business AgilityThe retail industry is never stagnant. Forward-thinking businesses that adapt to customer preferences and embrace new, innovative technology will leave less tech-savvy brands in the dust. To reach this retail utopia, companies must be able to respond quickly to new market opportunities by constantly releasing new features. The old monolithic eCommerce systems, however, are holding these brands back. Every component like a product catalog, product search, promotion, shopping cart, payment, personalization, account services, and content management are tightly coupled with each other within these outdated systems.
This limitation makes it challenging to change any of these components without impacting the others. This leads to additional efforts to rest and finally roll out any new features to the eCommerce system. An effective solution to this issue is to deconstruct the architecture, but even decoupling the existing eCommerce platforms is a time-consuming process. Luckily, all of these components are decoupled in an API-first headless commerce platform from day one. Other advantages of headless commerce include:
- Potentially integrating with other best-of-breed, API-first third-party solutions for product search, product recommendations, tax calculation, and content management.
- Providing tech leaders with maximum agility and flexibility in designing innovative solutions that allow businesses to differentiate themselves from less agile competitors by rolling out unique features quickly.
5. New Business Models
As a part of the digital transformation occurring throughout the retail industry, tech leaders are coming up with new business models to capitalize on the need to provide exceptional service to each and every customer. Some of the new business models retailers are adopting are subscription commerce, products as a service, and enterprise marketplaces. Subscription commerce allows fashion, beauty, and fitness retailers to sell products whose consumption patterns are highly predictable. So instead of selling products for one-time purchases, the subscription model allows retailers to manage long-term relationships with customers and achieve predictable and recurring revenue.
Examples of the products-as-a-service model include selling apparel-alteration services or renting products to customers. To roll out these new business models, an API-first eCommerce platform works as a foundation.
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API-first headless commerce has become the backbone of the retail industry’s digital transformation. Companies can now gain the flexibility and agility necessary to create new business models and streamline customer engagement and selling strategies across all the channels and touchpoints. Although re-platforming to Headless commerce can be a difficult journey for retailers who already generate healthy revenues from their eCommerce business, it also provides them with an opportunity to differentiate and scale fast—must-haves in a constantly evolving marketplace.
Headless commerce solutions promise a backend engine without a predefined presentation layer. To maximize headless commerce, you either have to hire in-house developers or a third-party agency to build the storefront from scratch. These are time-consuming and costly options. Instead of building storefronts from scratch, there are multiple open-source storefronts that can be used as a starting point.
HotWax Commerce is an API-first headless commerce solution that is pre-integrated with Vue Storefront, which reduces your cost of implementation and time to market. Contact us today to discuss how we can accelerate your digital transformation strategy by laying the foundation of your headless commerce solution.