Headless Commerce: What Is It And Why Does It Matter To CPGs?

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Add this one to your buzzword bingo card for 2021: headless commerce. It’s a hot topic! But what is it, and why does it matter? In this blog post, I’ll unpack one of the most discussed and least understood new terms in eCommerce.

Headless Commerce Overview and Benefits

Headless commerce is an ecommerce architecture where the front-end (the user interface for a website, social media channel, and so on) is decoupled from the back-end commerce functionality. Because of the independent architecture, you can update or edit the underlying technology without compromising or interfering with the front-end user interfaces and vice versa. It’s similar to a headless content management system, if you’re familiar with that technology.

Dirk Hoerig , co-founder of?commercetools , coined the term in 2013, so it’s actually been around for quite some time. Gartner prefers to call it composable commerce, so you might have heard of that term instead.

The idea is that you encapsulate business logic in microservices deployed in the cloud. Then, you can wrap the microservices with whatever front-end user interface you want. You might have a user interface for point of sale in a retail store, a different user interface for an ecommerce website, one for a mobile app, and so on. This concept of headless commerce underpins modern selling solutions.

Headless commerce offers several unique benefits:

• User experience—Developers can re-use existing in-house skill sets and investments in content management systems to create a range of user experiences.
• Customization and Personalization—Brands are not limited by the eCommerce platform. They can choose the sales channels and presentation framework that provides the best experience for the consumer.
• Scalability—CPGs can create the consumer experience they choose for their brands and scale it globally.
• Freedom to experiment—Developers can easily test new ideas and functionalities for front-end interfaces without impacting the underlying site ecosystem. Because developers don’t have to edit front-end and back-end code at the same time, they are free test and learn.

Differences Between Traditional eCommerce and Headless Commerce

Traditional eCommerce systems were built specifically for one channel: the web. The content, commerce engine, and administrative effort are geared toward that one channel. In a traditional eCommerce solution, as the number of customer touch-points expands, the architecture becomes more complex to manage, because the IT team has to update both the front-end interfaces and backend system.

With a headless commerce approach, developers can change a front-end user interface without impacting, or having to also change, the back-end. That means brands can build many different user interfaces depending on needs, sales goals, and target audiences. That gives retail brands the agility and flexibility to keep pace with customer expectations, evolving trends, and major shifts in the business landscape, like the sudden changes that came with the COVID-19 pandemic. Headless eCommerce systems are ideal for organizations that need best-in-class consumer experiences that can scale across many channels and geographies in a secure way.

Another key difference: After new content is added to the front-end interface in a headless architecture, the updates are reflected in near-real time. With a traditional commerce architecture, interface changes can take minutes or hours.

Why Should Headless Commerce Matter to CPGs?

Most global CPG brands are launching direct-to-consumer (DTC) channels globally due to the rapid shift to online sales over the last few years. Consider these data points from the?CGT/RIS Executive Council :

• In 2020, 43% of consumers tried new brands, up from 32% in 2019.
• Meanwhile, 70% of consumers switched brands during the COVID-19 pandemic because of supply shortages or because they couldn’t buy products directly.
• More than 57% of consumers aged 18-45 expect to continue shopping online at an increased rate.
• More than 50% of consumers say brands that regularly engage with them using immersive technologies would stay more top-of-mind.

To keep pace with these trends, every CPG’s DTC platform must be agile and flexible to fuel growth—to quickly add new consumer sales channels and products, launch marketing campaigns, personalize the user experience, manage customer data, and add new functionality for order management and product delivery.

A headless commerce approach offers CPGs the agile, flexible digital platform they need. To drive home my point, let’s look at a few facts and figures from?Gartner on digital commerce :

• By 2023, 50% of new commerce capabilities will be incorporated as API-centric SaaS services.
• By 2023, organizations that have adopted a composable approach will outpace competition by 80% in the speed of new feature implementation.
• By 2023, 30% of commerce organizations will require an API product manager role to modernize digital commerce applications and architecture.
• By 2024, 10% of digital commerce organizations will use packaged business capabilities (PBCs) to construct their application experiences.

AWS and Headless Commerce

Using the AWS?working backwards ?approach, we identify the challenge: how best to help our CPG customers create a robust, flexible DTC platform. Then, we define AWS or AWS Partner offerings to address the challenge. One go-to-market solution example is using?VTEX ?as the front-end-as-a-service solution and integrating your preferred content management system on the back-end. You could also build custom experiences with your technology of choice. For CPGs that want to scale beyond a basic DTC platform, we also work with several other commerce engines, including?Magento ,?commercetools ,?SAP Commerce Cloud , and?BigCommerce .

As part of the AWS DTC solution framework, we offer unique, scalable, global services, like personalization, fraud detection, video commerce, advertising, and product fulfillment, that integrate with the eCommerce platforms I mentioned.

Bringing It to Life

The UK is one of the world’s most advanced digital markets, with?15% ecommerce penetration ?in grocery alone. Wanting to gain a foothold with digital consumers,?Co-op , a leading food convenience retailer with over 2,600 locations and 4.6 million members across the UK, identified the need to deliver exceptional end-to-end customer convenience, from eCommerce to final delivery.

By partnering with?Bringg , the leading delivery and fulfillment cloud platform provider, and?Naveo Commerce , creator of the award-winning online grocery platform Connected Commerce, Co-op was able to rapidly deploy, adapt, scale, and optimize grocery eCommerce across more than 1,000 stores and provide two-hour home delivery service.

Bringg and Naveo Commerce’s integrated cloud technology solutions orchestrated end-to-end eCommerce pickup and delivery for Co-op. Bringg’s unified delivery and fulfillment cloud platform managed, automated, and measured multiple delivery models across internal fleets and Bringg’s Delivery Hub to meet consumer demand.

Naveo’s modular, microservices-enabled Connected Commerce SaaS platform enabled the management, measurement, and optimization of eCommerce retail in-store picking and setup for fulfillment, facilitating Co-op’s convenient one-hour delivery.

Working with Naveo, Co-op uses AWS compute, storage, and database services to power innovation. Co-op benefits from the flexible, scalable microservices-based architecture by using?Amazon Elastic Compute Cloud ?(Amazon EC2),?Amazon Relational Database Service ?(Amazon RDS),?Elastic Load Balancing ,?Amazon Elasticsearch Service ,?Amazon ElastiCache API ,?AWS Lambda , and?Amazon DynamoDB ?to provide an agile, secure, and scalable platform.

Over 12 months, the improvements to Co-op’s technology stack resulted in a more than 25x increase in store coverage. Co-op, which launched its online shop in 2019, took the number of stores offering online services from 32 to over 1,000.

To learn more about decomposing your traditional eCommerce application architecture so you can implement a headless commerce strategy, read my colleague Danny Yin’s recent blog post,?Success Strategies for Moving to a Microservice Architecture in CPG .