The future of the retail sector is headless. Or is it?
That’s what we asked Wilko Nienhaus – CTO at Vaimo, and Gillis Hedlund – Vaimo Nordics’ Head of Strategy, during our recent conversation. Vaimo is an international full-service agency specializing in digital commerce and customer experience and a renowned retail expert. So, it’s safe to say that our insights come from the best source.
Embracing innovative digital technologies might very well be the single best solution a retail company can do next year. Why? Because your competitors surely will, and the disparity in competitive advantage, once settled, will be nearly impossible to bridge.
That’s one of the major challenges retailers face today, but there are more.
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Macroeconomics, hyper-competitiveness, and other struggles for retailers
It’s not easy to be a retailer in 2023:
Customers are becoming more and more tech-savvy, and businesses need to be able to react to their changing needs swiftly;
New technologies and platforms pop up and go down faster than ever;
Budget approvals have seen better days in light of the recession, and it’s hard to persuade decision-makers to invest in unconfirmed initiatives.
From a business perspective, it's clear that the main challenge we see today is a shift of macroeconomics. Money is tight for everybody. This means that boards need to spend more time prioritizing budgets, essentially meaning two things: big bets need to be well researched, more so than before, but also that guerilla tactics are coming back in style.
Gillis Hedlund
The budget strains encourage marketers and sales representatives to turn to easily accessible digital technology like emerging AI solutions. This leads to the growing demand for agility and scalability of such tech offers.
Unfortunately, that often remains inaccessible for more established enterprises because complex internal processes or monolithic systems are unable to accommodate the change.
That’s where composable comes in.
The rise of composable commerce: Driving the digital revolution in retail
The concept of composable commerce is transforming how retailers approach their eCommerce strategies. By decoupling the user end of the solution – the frontend – from the monolith backend eCommerce system, businesses running on headless commerce can react to market demands faster.
Retailers suddenly have the flexibility to pick from various best-of-breed commerce components and services, assembling them into a custom solution that aligns with their unique business needs.
Getting to market faster and easier with a composable stack: 5 major benefits of going headless
Headless commerce is based on the principle of modularity. It allows businesses to integrate the best-of-breed solutions for each function (e.g. payment gateways, inventory management, customer relationship management, etc.) instead of relying on one complex system to deliver every functionality imaginable.
Such a modular approach enhances functionality and streamlines the integration process, making it easier for retailers to update or replace individual components without disrupting the entire system.
The principle of composable commerce means that changes can be done faster and more efficiently. It's a system where you have flexibility built into it, which is conducive to innovation at scale. Companies who innovate will be the winners of tomorrow, and that’s where composable fits in.
Gillis Hedlund
The undisputed benefits of going composable are:
Enhanced flexibility
Faster time to market
Fewer risks
Personalized customer experience
Scalability
1. Remain flexible in your internal processes and respond to market shifts faster with composable commerce
Composable is less sensitive to change than a monolith eCommerce system, so it allows for more flexibility. With a composable approach, you’re suddenly capable of adapting to your customers’ needs and providing them with the necessary technology on the go, without jeopardizing your backend’s original setup.
And those components, in turn, can be adjusted based on your current situation and scaled separately, if necessary.
For example, you may be running a flash sale that gets a million visitors in 10 minutes, which may be much heavier traffic compared to your day-to-day. A composable model allows you to build a separate dedicated storefront optimized specifically for large-volume flash sales. It would serve its own purpose while remaining connected to the common enterprise backend. This way, you wouldn’t need to invest in adapting your robust enterprise system to handle occasional flash sales while being able to leverage the functionality.
Integrating the right solution plays a vital role here. After all, compared to a traditional system, composable comes with way more components that need to be integrated with each other. Yet, it also opens up some unexpected opportunities for retailers:
In traditional systems, we work directly on the master data. It is suitable for one specific purpose but not necessarily for others. This is where many performance problems come from. Here, integrations can help you with decoupling your initiatives and make you faster.
Wilko Nienhaus
And speed is one of the most crucial benefits of headless commerce .
2. Get to market faster and deliver best-of-breed solutions to your customers by adopting the composable approach
In a traditional monolith system, as soon as your eCommerce product is released to the market – your job is done. In reality, however, it’s a lot more complicated than that. Today, most merchants struggle with keeping up with the market needs, especially when it comes to the variety of channels.
So, it’s not just about getting your product out there. It’s ensuring that it remains relevant over time.
Retailers usually try to implement trendy features the market expects fast, monolith or not. Yet, the quality of a hastily integrated or improperly copied solution is often lacking and affects customers' overall experience with the platform. Brands are forced to choose between having a poorly executed functionality or not having one at all and risk losing a client.
Thanks to API connectability , we can integrate different high-quality solutions developed by different vendors very easily. That helps with both increasing time to market and not sacrificing the final quality of the functionality you are enabling.
3. Embrace the change and minimize the risks – at the same time!
Most of the issues retailers face with monolith architecture originate from the fundamental need for change and the inability of the ecosystem to adjust to it at a desired rate. Ask yourself: How much change can you realistically deliver to your customers as an organization?
“Not that much” is likely the answer, which is the core of the industry struggle. Customers are hungry for fresh perspectives, exciting digital experiences, and new solutions. And if the brands they are accustomed to fail to deliver all that and more, finding a new glossy solution doesn’t usually pose an issue:
Eventually, your monolith system becomes your constraint – it limits how much you can release both from the technical standpoint and because of the processes you have around it, trying to coordinate so many initiatives of different people working together. And when you have decomposed architecture, some initiatives, some developments, and some change can happen concurrently across different parts of it.
Wilko Nienhaus
By putting your eggs in different baskets, you minimize the impact a potential downtime or a bug would have on your entire webstore. And by decoupling the frontend from the backend, you ensure your customers won’t even notice most hiccups before it’s fixed.
4. Meet your customers where they expect to find you and connect on their terms
If there’s one thing every (successful) online retailer can agree on, it’s that understanding your buyer is the key. We hear about it at school, we talk about it at conferences, we sell this idea in our marketing campaigns, yet it’s the select few who actually put in the work that win over the market.
Your brand value is tied to your brand’s experience, especially in retail. Yesterday was desktop-only, and today we’re living our lives on TikTok, next to avatars. And composable specifically addresses it, as it recognizes that customer touchpoints are not necessarily coupled with the logic of the business. Orchestrating that multi-channel journey and existing in the relevant channels where the customer needs you – it’s not a static exercise. It’s always moving.
Gillis Hedlund
Embracing the composable approach opens up numerous possibilities for new and exciting ways of connecting with your customers:
By just changing your tech stack to a headless setup without changing anything else, you may miss out on all the benefits of going composable. There are so many ways you could interact with your customers, so many different channels that you should be thinking of – this is a bigger composable strategy. Headless is a part of that, an important part, but think of it as a wider strategy for meeting your customer in all those places.
Wilko Nienhaus
5. Scale with more ease and see how much your business can grow with the right tech stack
Finally, there’s a matter of scalability. After all, embracing the change and minimizing the risks is only important when you hope to stay in the game for a long time. And with time, your ambition and your operation will only grow.
Most likely, you have a system that performs more than just one core task. Embracing a composable strategy doesn’t mean ripping out everything you have in place and starting from scratch. Rather, it’s about analyzing what processes underperform and taking a long time to improve efficiency by changing or moving them into a system of their own. I would say that complex monolithic systems are almost like a prerequisite for even considering a composable strategy.
Gillis Hedlund
So it’s not as much of an “If we should go headless” but rather “How do we go headless?”. And here, we got you covered as well!
Best practices for implementing a headless approach
Not wanting to miss out on the chance to squeeze as much knowledge from our guest experts as possible, we paid special attention to the actual transition from monolith to composable architecture .
Of course, every case is different and there’s no one-size-fits-all approach, no specific manual for any merchant to pick up and revolutionize their operation overnight. However, this lack of the magic pill can actually be reassuring. Especially since preparing for a transition helps you pinpoint some crucial aspects of your brand values and processes.
Understand the hand you’re dealt before investing in the tech stack
Start by analyzing your current situation. This way, you’ll better understand what is lacking and where to start. Consider the core processes your business is running on. Analyze which systems have touchpoints with these processes. And move up from there:
Go back to basics. I think you really need to understand both your own business and processes. You need to understand what your customers need as well as your own vision and your goals before thinking too much about the technology or the platforms. Without this in place, it's really hard to decide where to put your focus.
Gillis Hedlund
For example, Alokai is focused on the frontend-first approach, which allows you to differentiate through the outstanding user experience achieved by decoupling the frontend from the backend. That could be your first step.
Alternatively, you could go after optimization and reconsider how you manage master data in your products. Here, you would start by looking at your product information management and analyzing what exactly needs to be updated.
Or it could be something else entirely! The important thing is to learn what you have in order to realize what you need:
The most successful projects we've implemented have always started with a discovery process that looks at multiple dimensions. We look at the people, the processes, and the platforms because changing the technology tends to be the most expensive but also the easiest part of a digital transformation project. You need to make sure that you're building the right thing before attempting to build it.
Gillis Hedlund
Composable commerce is all about action and reaction
We’ve been talking a lot about agility, flexibility, scalability – lots of -ilities. Yet, at the end of the day, composable architecture simply allows you to react to market changes and customers’ needs faster.
This, in turn, positively impacts your user experience, which improves customer retention, and, consequentially, allows your business to grow.
And isn’t that what we’re all after?
