The future of commerce is composable

Originally published by Total Retail

E-commerce has come a long way since companies like Amazon.com and eBay first launched their online businesses. While pre-pandemic online transactions only amounted to 13.8 percent of global retail sales, consumers quickly shifted to online shopping when the world went into lockdown. As a result, brick-and-mortar retailers had to start or expand their online businesses, while digital retailers had to modify their business models significantly.

However, this introduced new challenges for many companies as their e-commerce platforms were built using a traditional, monolithic approach to software development — with all critical capabilities coming from a single vendor. An “all-in-one” solution can be seemingly convenient, but the e-commerce platform is also rigid, slow, complex, and expensive to modify in response to customer behavior changes or emerging market trends.

As a result, many retailers have chosen a composable, cloud-first, and API-first approach to their e-commerce applications. This approach allows them to select best-of-breed software components from a wide range of technology partners and combine them into an e-commerce solution optimized for their business needs. In addition, it can easily and cost efficiently grow and evolve with the business.

The main benefit of having an e-commerce platform built on a monolithic software architecture is the ease of use. All critical components integrate into a single system, which means businesses have immediate access to essential functionality like a product catalog, search engine, shopping cart, payment processing, and shipping. Furthermore, it’s possible to gradually introduce additional capabilities with scheduled platform upgrades or via software customization or extensions.

While having everything in one place can be convenient, this approach presents significant challenges when the business faces change. In the presence of changes in the business environment, the tight “seamless” integration of the monolithic software platform turns from an advantage to a drawback, with even the slightest modification affecting many components and sending waves of change and potential instability across the entire platform. Moreover, this software complexity slows the ability of businesses to develop new capabilities and hinders innovation and experimentation. The result: retailers aren’t able to respond quickly enough to consumer behavior changes or emerging market trends to keep an edge over the competition.

Retailers need to move quickly to compete successfully in the market today. The growing adoption of a composable approach to e-commerce platforms allows them to roll out new online features and functionality, as well as customer experiences, at a much faster rate than ever before. This faster time-to-market is enabled by the rise of the cloud, the emergence of API-first digital ecosystems, and the continuous improvement of the customer interface. Together, these technology trends have introduced what’s known as a MACH software architecture: microservices, API-first, cloud-native, and headless.

Microservices offer a decentralized approach, with multiple autonomous, interconnected services that are each purpose-built to fulfill a single goal. It typically takes several pieces to create a complex business function. For example, to build a shopping cart, the application must incorporate product inventory, recommendations, pricing, discounts, ordering, and checkout microservices.

While managing multiple microservices may seem daunting, it provides retailers with the flexibility and agility that the monolithic architecture fails to offer. The individual services can be developed, updated and upgraded independently from each other without impacting other pieces of the system. This modular approach allows businesses to easily “mix and match” software components, adding, swapping or removing various capabilities as business needs change.

An API-first approach ensures that the digital “communication” between the different platform components only occurs via an application programming interface (API). It allows updates and enhancements to be made to a single component without impacting the rest of the e-commerce platform. It also dramatically democratizes access to data, unlocking internal innovation.

This refers to building and running e-commerce applications designed to leverage the concepts and power of cloud computing fully. This provides speed-to-market and just-in-time scalability, which is especially important for retailers during peak times: from Halloween to Black Friday, to Christmas celebrations and New Year’s Eve. For example, retailers dispatch 25 percent of total annual orders within the last three months of the year. Without the scalability enabled by the cloud, these businesses would have to deploy holiday capacity months in advance to sustain the peak while keeping the system underutilized throughout the rest of the year.

Headless commerce refers to the complete decoupling of the customer-facing front-end of the platform from the operational back-end of the platform, with the two sides connected through APIs. It allows retailers to offer multiple front-end customer interfaces at a wide range of touchpoints, enabling them to better connect with buyers wherever they are, providing a curated experience based on the channel or end-user device.

A composable architecture extends the MACH architecture with the notion of packaged business capabilities, or PBCs. A PBC is a cohesive group of microservices delivering a well-defined business capability and having a clear API perimeter. Typical examples of PBCs are search, order management, recommendations, and loyalty systems. PBCs help convert a technology-centric view of the MACH architecture to a business-centric one and allow users to substitute PBCs with an alternative implementation or third-party service without affecting the rest of the ecosystem.

A composable MACH architecture helps retailers in the following ways:

• Expect the unexpected. Quickly react to business environment changes and roll out new customer experiences composing existing APIs and capabilities.
• Use best-in-class solutions. Focus on building differentiated business capabilities and make granular build vs. buy decisions for the rest.
• Own the brand. Differentiate with UI/UX, fully control the look and feel, and achieve speed-to-market for UI features and changes.
• Experiment and innovate. Try out new customer experiences without costly upgrades, and experiment easily with emerging cloud/SaaS services.

Technology organizations also benefit significantly from a composable architecture:

• Embrace cloud. Composable commerce is cloud-native by design, fully leveraging elasticity and scalability, infrastructure as code, edge computing, and API management cloud capabilities.
• Democratize data access. An API-first approach allows teams to access data across the organization and enables data-driven innovation, machine learning, and AI.
• Organize for the future. Conway law says that software architecture follows the organizational structure. Composable brings in natural vertical separation between subsystems, enabling teams with mastery, autonomy, and purpose to accelerate business.
• Enable speed-to-market. Businesses can deliver new products faster without losing control, embracing continuous integration and delivery (CI/CD) and quality automation.

The idea of composable commerce brings online shopping to an entirely new level. It shifts e-commerce models from an inward-looking platform-centric view to an outward-looking approach focusing on the customer experience.

Composable commerce gives brands and retailers the flexibility to achieve their business goals and satisfy ever-changing customer needs. In addition, it offers enterprises the freedom to select best-of-breed solutions for every aspect of their business operations, allowing them to make rapid changes to their technology stack, create a personalized user experience for each customers, and become more competitive in the global market.