Businesses are living in an era of wealth, liquidity and mobility.
- Amazon edges near $1 trillion in market value.
- Netflix recently surpassed Disney in value.
What do both of these companies have in common?
They save people time effectively adding hours to our days otherwise spent in search of commodities or entertainment.
This ultimately delivers convenience.
Plus, time is money.
This blending of content and commerce to provide for both experience and consumerism is not unique to Amazon or Netflix – though they arguably do it the best.
In fact, traditional and digital-native brands across the globe are working fast to implement similar strategies.
The State of Ecommerce in 2018
To understand the state of retail – especially ecommerce – think of it this way:
1. Amazon is the commodity market.
Meaning if you sell there, you are competing for mindshare and subject to immense pricing pressures within the context of the most respected brands in the world.
But more than 50% of Americans begin their product search on Amazon, so it’s wise to think of Amazon as a sales channel rather than a competitor.
Still, though it produces short-term profit, it eats into long-term return – and that’s not accounting for any future Amazon initiatives that eat into additional markets.
2. Traditional retailers are quickly going direct-to-consumer.
Realizing they have lost community, and thus brand recognition, due to the thousands of digital native brands that have focused solely on establishing a lasting connection with consumers.
But shifting to direct-to-consumer from a b2b wholesale model isn’t easy.
Tech debt from historic open source or custom-built ecommerce technology solutions slow down internal decision making and threaten internal innovation and testing.
3. Digital native brands number in the tens of thousands.
Thanks to SaaS ecommerce technology allowing brands to rapidly build modern ecommerce websites affordably.
Without the size to go after wholesale markets, these nimble brands have built grassroots communities and conquered Facebook advertising.
While digital commerce brands often lack the marketing budgets of the mid-market or enterprise brands they hope to displace, they are highly effective marketing and community building machine.
As such, they are causing much larger competitors to respond either through acquisition or head-to-head competition.
This state of ecommerce affairs has resulted in 3 main ways businesses go after increased online share:
1. Monolithic.
This is where ecommerce first started, back in the days when hardware and software were inextricably linked.
For instance, if you buy IBM hardware you must then, therefore, use IBM software. The industry has largely since evolved from this model.
2. Commerce-led.
This strategy uses a commerce platform front-end for UX and checkout, but APIs for data orchestration across a more robust infrastructure.
Businesses using this model often implement a PIM, ERP and OMS for product information management, accounting and customer integration and inventory management across channels.
Businesses using this model are typically using SaaS or open source technologies.
3. Experience-led.
This strategy decouples the presentation layer from the ecommerce platform using popular CMS solutions like WordPress for unparalleled content experiences that increase brand value perception and drive to checkout.
In this model, the ecommerce platform provides PCI compliance and inventory management – though, can be connected to additional systems like ERPs, PIMs, or OMS tools via APIs.
What is Headless Commerce?
This experience-led model is known more commonly in the retail industry as headless commerce.
Headless commerce is the decoupling of the presentation layer from the ecommerce platform, typically for more flexibility in content management and delivery, UX and even SEO.
Ecommerce platforms in this model serve up PCI compliance, security, fraud management and inventory management that can also connect to larger, key infrastructure points such as ERPs, PIMs, OMS and POS.
Headless Commerce vs. Traditional Ecommerce
What is the impetus behind a move to new ecommerce models?
Amazon.
With 55% of product searches happening on Amazon, brands cannot afford to not be there. But Amazon is a commodity market.
Therefore, brands are looking for ways to turn their sites into value destinations driven by community, content and brand experiences.
The Traditional Ecommerce Model
The most traditional ecommerce model is the monolithic model. Many brands still use a monolithic strategy.
The downsides to a monolithic strategy are slow go-to-market timelines and high development costs.
This delays innovation.
Upsides to a monolithic model are full platform control for the IT department.
Open SaaS Ecommerce Model
Commerce-led or commerce-first models use APIs for data orchestration and give relative control to IT teams for infrastructure connectivity.
On a SaaS platform, the number of API calls available is important to making sure this functions properly.
Open SaaS is a SaaS platform architecture choice. It includes the following:
- High or unlimited API call volumes.
- Multiple endpoints.
- Well-documented developer documents.
- A heavy focus on API development in product roadmap make.
This is what an open SaaS architecture looks like.
Headless Commerce Model
Headless commerce takes open SaaS one step further, completely decoupling the presentation layer of the ecommerce platform.
API connectivity and robustness is important in ensuring data orchestration across the decoupled systems.
This is what the Headless commerce model looks like.
