Shared from the 6/30/2021 Financial Review eEdition

The concept transforming e-commerce


Retail software is undergoing a revolution after global research houses Gartner and Forrester backed ‘headless commerce’ to bring down software costs and accelerate innovation.

Headless commerce is a relatively new concept in e-commerce software that allows any kind of user interface – be it a stylish retail website, a voice-activated device, a smartwatch or Internet of Things gadget – to connect to the back-end digital infrastructure.

‘Headless’ refers to the fact the back end is no longer tied to a head, or front end, and can be updated or changed entirely without needing to interfere with the customer-facing interface.

Worldwide analytics firm Forrester says headless commerce is rapidly replacing legacy technology, particularly after COVID-19 disruptions widened the gap in tech between digitally advanced firms and raw beginners.

‘‘We already knew the commerce suite was dead. But even our legacy notion of the commerce platform has become splintered by new microservices-based architecture that picks functional bits out of their previous homes and sets them free,’’ wrote Emily Pfeiffer, senior analyst at Forrester, this year.

‘‘Commerce tech ecosystems are developing dual cores at either end as businesses assemble their own ‘curated suites’ of solutions.

‘‘At the same time, the all-in-one commerce solution is making a triumphant comeback, though not in the same form as the old-school, standalone platforms we remember. Rather, these new systems are on FIRE: flexible, inexpensive, rapid, and easy.’’

The headless concept is, as Pfeiffer wrote, cheaper over the long term because there are no unreliable legacy systems to try to maintain or scale.

It is also much more agile as microservices can be changed and auto-scaled up without going through expensive, unwieldy upgrades, thanks to automatic updates pushed through the cloud.

Global research house Gartner says that while the set-up is more challenging and expensive than buying a single software system, the adoption of headless technologies is accelerating as commerce companies demand more flexibility and agility: they want the option of a range of different APIs and services to meet customer demands.

The company that invented the concept of headless commerce is Munich-headquartered commercetools, which Gartner named a leader in its 2020 Magic Quadrant report that identifies companies with vision and ability to execute.

‘‘All commerce capabilities are exposed through APIs and each API can be consumed independently, making commercetools’ solution one of the few commerce offerings to adhere to microservices architecture principles. This benefits users by enabling only those APIs required to meet business needs to be consumed,’’ the report said.

‘‘Its eponymous headless commerce solution is . . . aimed at large, complex organisations – a typical customer has over $100 million in GMV annually.’’

Commercetools was founded in 2010 by German entrepreneur Dirk Hoerig. It was spun off from its parent, German grocery company REWE, in 2019 and promptly raised $US145 million from private equity firm Insight Partners.

It added Australia to its operations in more than 30 countries in March 2020, signing up Qantas as the first local customer, says commercetools territory director, APAC, Joshua Emblin.

It has grown quickly in the ensuing months, adding Kmart Australia, optometrist Bailey Nelson, Breville, Baby Bunting and Koala to a broader clutch of new Asia-Pacific customers, building out a client base of more than 250 major commerce companies worldwide.

‘‘COVID-19 accelerated the need for headless technology,’’ Emblin says.

‘‘Businesses realised they needed to be able to innovate and evolve faster as a result of the pandemic, and continuing to work within legacy commerce environments no longer gave them that freedom and flexibility.

‘‘Headless commerce has become more mainstream over the last 18 months.’’

Emblin says commercetools provides a platform that is more scalable, more flexible and better at catering to large spikes in traffic volume than a single overarching legacy system, and at a lower cost than an incumbent platform as it can pass on savings from working in cloud environments, as well as reduce entry costs.

The beauty of deploying individual microservices for different use cases is that companies can pivot quickly when customers’ expectations change, he says, while open-source, software-as-a-service APIs allow for a range of people to make modifications with a pay-as-you-go model, rather than significant annual licensing and support fees.

All of which allows companies to create or adopt new innovative ideas faster.

‘‘Where headless comes in is breaking apart the project and the software into smaller and more consumable pieces that then gives you the freedom and flexibility to easily manage and maintain these going forward,’’ Emblin says.

‘‘It means you can make smaller step changes along the way instead of having to do a big back-end transformational project.’’

Commercetools invented the concept, and it’s at the forefront of a radical change in the way commerce software is being deployed.

Everyone else, as Emblin says, is now playing catch-up.

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