Industry 4.0, the fourth industrial revolution or the second machine age has a major influence on retailers in all aspects – from production, logistics and, last but not least, buying patterns. The world has now moved from the “Online first” generation, through “Mobile first”, to “Platform first”, or “APIs-first”.
Digital commerce vs e-commerce
The result of APIs dominance is a shift from e-commerce towards digital commerce, defined by Gartner as,
Buying and selling interactions among businesses, people and things for products/services via digitalization technologies; these interactions result in a valued transaction to the customer, based on a combination of factors, including good customer experience, inexpensive price, timeliness, ease of use, clear policies and others.
It is too general to say that e-commerce is about “being available online”. A transaction can happen in any channel, via conversation technologies, an Apple Watch or a Google Home unit. There are AR technologies assisting with digital purchases, social media content, chatbots and so on. So, in the future, there can very well be hundreds of touchpoints between a customer and a company. More than that, the customers want their in-store experiences and their digital experiences to be unified, like an extension of one another. That is why talking about e-commerce in a sense of one channel, is a narrowed view of the world we are entering. With time, each channel experiences growth, plateau and demise.
Digital commerce is more of a digital ecosystem, in which retail companies will have their physical products at the core, augmented by digital interfaces and multiple services, either their own or third-party. One key requirement of Industry 4.0 is, then, a seamless integration of the value chain partners, the customers and the retailers in uninterrupted networks. These platforms will themselves create new opportunities and value for the stakeholders involved.
B2B software buyers demand now much more than just a shopping cart. Software vendors should therefore support the entire selling process, create or facilitate personalised experiences, and offer data-driven merchant tools. In addition, a need for agility and speedy time-to-market are essential elements when evaluating the best digital commerce solutions.
Building e-commerce stack
When building an e-commerce stack, there can be three distinctive approaches:
#1. All in one
The traditional approach is to go with an “all-in-one” solution, where the vendor provides everything from an e-commerce platform, order management, PIM, and customer experience. Although this method is good for the less experienced e-commerce companies, it has several drawbacks. Most importantly, you are putting all of your eggs in one basket, and therefore become fully dependent on the vendor to deliver the best solution. With an ever expanding specialization of offerings, you can easily get locked in solutions that are mediocre – not very bad, but not great either. If you want to use another service from another vendor, it usually entails a change of the entire system. Since e-commerce solutions now are a major part of the sales channels, such a change will often be both costly
and bout with high risk.
#2. Mixed approach
A different approach to digital commerce solutions is when providers offer a full commerce management solution, but use complementary third-party solutions, like for order management. This strategy gives the customers more sense of freedom with regards to using other software. Still, the process of integrating with the existing commerce solutions can be troublesome and expensive.
#3. Best of breed
The third type of solution available is also the latest way of purchasing software – headless commerce suites. Here, the commerce part of e-commerce solution has been separated from the front-end. The headless commerce sits as an intermediary between ERP and the frontend. Such a solution often contains basic PIM, CMS and OMS solutions, but their main selling point here is that these products can also be linked to any other type of service. This means that you, as a customer, can choose any best-of-breed solution that is currently the most relevant, and later change to another one when the market or the customer needs are changing.
Important tip: The typical purchaser of a headless commerce system are companies that already have great knowledge and experience with e-commerce, and who have outgrown their existing solutions. They perceive their company’s digital assets as their main competitive advantage and know that this is what will make them winners (or losers) in the future. :
Best-of-breed is really best
So – why should you consider headless commerce for you new commerce solution?
- You will gain a competitive advantage compared to other market players. By always searching for the next “best-of-breed” services for all aspects on your ecommerce solution, you will be able to give your customers the most optimal user experience, for example through personalization, search functionality, or omnichannel management.
- You will get extreme flexibility in your solution. By using pre-existing microservices on different functionalities, your time to implement the changes will be reduced dramatically. You see something interesting today, you can implement that solution tomorrow, without being locked to your main solution, or depending on your supplier’s internal roadmaps.
- You can optimize customer experience without facing the risk of disrupting the entire digital commerce solution. Changes and optimization of the frontend functionality can be done with keeping your commerce functionality intact.
It is estimated that in 2020, companies that generate digital trust will generate 20% more in sales. And since 2018 (Gartner), it is estimated that half of the commerce sites in the US have more than 15 vendors involved in their solutions. This has a major impact on how customer experience is delivered. The companies that offer a personalized experience that strengthens the relationship with the customer will be among the winners.
Do you want to discuss the best approach to software choices for your brand in the face of digital transformation? Schedule a meeting with one of our experts here.