Shelf: Exploring Headless Architecture in Composable Commerce

💬 Key Takeaways from the Conversation

🫴 Gen Z values the story brands tell and seeks multiple touchpoints with brands through social media and influencers. They prioritize sustainability and secondhand/resale options.

🫴 Headless and Composable Commerce: Headless separates front-end and back-end layers, enabling flexibility and customization. Composable commerce combines best-of-breed vendors for faster innovation and adaptation.

🫴 Headless and composable commerce benefit brands with complex needs and a focus on agility and innovation. They can improve metrics like average order value. However, implementation requires technical maturity, in-house developers, and a long-term investment mindset, with challenges including replatforming complexity and careful evaluation of solutions.

🎙 Dive into the conversation

Kausambi
Dear audience, welcome back. We are on the next episode of Ship Already and today I'm very excited to speak to Anthony Miller. And the cool thing about summer students and a bunch of you guys have already heard about our fundraise. We're very excited about it. And one of our lead investors is Excel and Commerce Tools is an excellent portfolio company.

So you're over there now about Anthony, of course, he is leading the global GTM at Commerce Tool is the global go to market strategist at E-commerce Tools. I'm sure if you've been anywhere in the e-commerce ecosystem, you would have heard about the company by now. It's building the next generation of e-commerce tech and enabling really cutting edge customer and digital experiences across commerce.

In his role, Anthony is responsible for the team's go to market strategy and also sharing his thought leadership on all things e-commerce across the globe. A quick little fun fact he loves during his free time to a new home passion, stand up comedy. And I'm hoping to get some glimpses of that. Do that conversation here. Stay tuned for that.

Today, we're going to dove into what it means to go headless and how it's used in the context of composable commerce. But before we start all of that, the commerce, the composability, as well as the stand up. What I want to hear from you and me is a quick little introduction for our audience. Tell us a little bit who you are and how do you help eCommerce teams as a part of commerce tools?

Anthony
Thanks for the warm introduction. It's great to be here. My name is Anthony Mair and I operate out of the London office here at Commerce Tools. I've been with the company for about two years now. You know, with the broad title of a global go to market strategist, I have quite a generalist role. I help our marketing and sales teams align our messaging with what's needed in the market, what our competitors might be doing or saying..

And I also go around talking at events, doing different thought leadership engagements, as well as evaluating growth, potential and opportunities for the business. Why did I choose commerce tools in the first place? What interests me about the company? Well, I really thought when I was trying to get into the e-commerce space that this was going to be on the back of the pandemic.

You know, a huge industry of growth and focus. I think e-commerce as a percentage of total retail was about 10% at the time when of course, it's about 17%. And I see that number rising. And commerce was very much in that early stage at the forefront of trying to pioneer next generation approach to commerce, which I'm happy to introduce Father Ness.

Kausambi
So through and you know, retail is something that's so table stakes to humanity. It's one of our oldest industries that we've always been, in a way, retailing things that we make, things that we build, you know, sharing it with the rest of humanity. It's also, I think, central to what makes us human and e-commerce. I think digital retail e-commerce is no different.

It's definitely pretty much a very important part of how we buy and especially how the upcoming generations think about even buying and consuming products globally. And that leads us to the first question. It's not just 2023, but the years beyond. You know, as we get into the next phase of this decade, the focus is shifting to the new generation, the Gen Z.

There are a bunch of different digital trends that are super important to consider when setting up great shopping experiences and setting up an online store to help Gen Z take decisions to buy. So, Anthony, I'm going to start with that. What could be some of these top technology trends that are you think are kind of reshaping the shopping experiences for the next generation?

Anthony
Yeah, absolutely. I mean, I'm on the cusp of Gen Z and millennials, so I'll be able to lend some some personal insights.

Kausambi
I love that. Nothing better than personal insights here.

Anthony
They got my generation, but we're very much a new wave of consumers. You know, no one has a crystal ball and will tell you how commerce might look like in the next ten years. But what we can do is go off trends of how the next generation of consumers buy their goods and I'd say Gen Z is much more invested in the story that brands tell rather than just the product.

We can get products from marketplaces, from a bunch of different providers of not good or service, but we want to be connected with the brand on multiple touchpoints. Social media is thrown around, as you know, a place where we spend a lot of our time, maybe too much of our time, but you know, the stats don't lie. 76% of Gen Z is in the US.

Use Tik Tok to consult their favorite influencers before buying a product. You know, we spend our time in different ways on different channels, gaming is a huge one as well, which is why we're seeing brands trying to move into these different spaces. We're also ecologically minded. We have a climate crisis on our hands and our influencers are purchasing decisions, which is why you see secondhand and resale becoming a huge area of focus as well.

So I think all in all, we can just go off the clues that we're seeing, especially as commerce tools. We're seeing companies adapt to my generation more and more.

Kausambi
Absolutely. And it's going, I guess, composable ahead, unless these are technological, you know, sometimes jargons for a lot of people, but they actually empower a lot of the trends that you just spoke about. So on box set for our listeners here, how can a headless tech play an important role for all the three trends that you just spoke about trends or other fundamental shifts in how people buy? How does headless AR composable forward that?

Anthony
Yeah, I think first and foremost, you know, it took me a while to get acquainted with these terms. There's so many different terms being coined and thrown around. So maybe defining what you mean by headless would probably be a good place to start. I mean, commerce tools, if you break up the name where bunch of commerce tools that help companies build next generation commerce experiences on top of us.

So we consider ourselves as an enablement framework and we're very different from the solutions that went before us. We were actually born out of an agency that implemented Safety Hybris as part of the old generation of commerce. And, you know, those solutions were were revolutionary for the time. But what they did do is kind of put your customer experience in that box.

You know, customer experience schemes, the website that you interact with was predefined by the templates that they gave you. So by creating headless commerce, all founder wanted to create an approach that allows teams to focus their development resources on creating a differentiated customer experience. So headless just means separating the front and the backend logic. When it comes to composable, that's slightly different.

Composable allows you to. It's the name of the approach that allows you to take a best of breed selection of different vendors. One might be the such, one might be the one might be order management and compile these vendors into a solution rather than a platform which is all in a box. And there's benefits of that in terms of speed to market.

And some of the trends we just spoke about, this approach allows you to pivot faster and react to developing new channels that help cater towards Gen Z and different different market segments.

Kausambi
So to help us with an example here, I pick one of the two trends may be gaming or maybe sustainability, which you mentioned. I love that specific, you know, a fundamental shift, which is we want to connect with the story of the brand we can buy in marketplaces. But, you know, if we connect with you as a brand, we would prefer and would love to interact with you as a brand first.

All right. So how can any of these stack, you know, decisions that I take in my e-commerce stack, help me as a brand to power a better one on one experience with my Gen Z or any other customers?

Anthony
Yeah, sure. So if you take one of our customers, Burberry, for example, they were one of the early adopters of this, you know, Mac approach. And, you know, what is done for them is just allow them to stay super nimble and structure their development teams based on specific what we call microservices. So services that are part of the e-commerce journey, that might be the site, that might be a team dedicated for the frontend experience to the content that you see.

Each of these teams are agile and by following this architecture approach they're allowed to focus development capabilities on scaling, editing, changing one part of the commerce journey without affecting the whole of the stock. So what we're saying is a company like Burberry, you go on their website, you buy a product from them. There's a very bespoke customer experience and we're allowing them to innovate quicker.

So, for example, that teams became 50% more agile under this approach, which allowed them to increase that time to market and pivot quickly. So we have foundational effects on them, but it's up to the forward thinking companies like Burberry to use this approach to release and innovate quicker. You know, that's one use case. For example, we have companies like Audi that are using us because we're headless.

We can be used across multiple channels. So Audi wanted to match Tesla and provide in-car commerce where you could, you know, if you're in Toronto and it's -20 degrees and you're freezing, you can add heated seat functionality to from the inside of your car, which is powered by our backend and that is your head, that's your commerce head.

And we were basically the only solution at the time that provided that. So we power in-car commerce for Audi, which allows them to pre build scores with all the functionality needed, which is cheaper for them rather than making each one bespoke. And then they can upsell customers using our commerce engine. So the use cases of our platform are very different.

Kausambi
Yeah. And very meaningful to you as a business. Which leads me to a question. If I am a merchant or a brand or a team or a retailer, maybe, and we are kind of thinking as a company exploring headless, exploring composable, exploring commerce tools, maybe what are the kinds of businesses that seem more benefit with this approach versus others?

And are there any kind of bare minimum checklist or, you know, skill sets or requirements? For me, as a brand, as a company, before I even take a step towards this.

Anthony
I'm not going to say this is a silver bullet that's going to solve your problems. I think there's some things that must be known. I think when it comes to the types of clients with, you know, excelling with its clients with over $100 million in online revenue per year. But we're starting to pivot towards smaller mid-market brands that are very brand conscious and want and have that technical maturity to follow this approach.

But when I talk about technical maturity, you have to be technically savvy enough to understand the virtues of this approach. To have in-house developers or architects would be even better. That can draw up designs of what a composable approach looks like. Commerce tools. Don't you know? We provide professional support, but we don't take care of the development and implementation ourselves.

We provide introductions to partners, be it Deloitte, Accenture, EY ACI partners that can really hold your hand and draw on what innovation might look like. But I think first and foremost, it just requires companies that are always trying to push past the status quo, that have ambitious visions and want to be pioneers in that category. And I think that culture of innovation really aligns well with what we're providing.

Kausambi
And, you know, as you were speaking, Antony, you know, what was going through my mind is that it definitely feels like and this is a consistent thread across all the conversations we've been having with different experts. Is there somewhere it has to do with better innovation and faster pivot according to the dynamic environment that the world could throw at us?

Like, for example, for 2019, then the whole pandemic and post-pandemic, how a lot of people are going back to retail and not kind of really wanting that in-person experience. Again, all of these different shifts and changes that happen in the ecosystem somewhere going headless actually could help me as a brand and help us as a company innovate faster and deliver better experiences no matter what's happening out there.

And I want you to kind of underscore, you've kind of touched upon it a little bit with the example of Burberry and Audi, but help our audience with a more concrete case study, if you might. Right. Some an example of a brand who made the switch and some numbers and metrics and kind of our way that they noticed that just brings forth this whole innovation and time to market and high quality experiences to the forefront for sure.

Anthony
So, you know, the way I would put it is, you know, by freeing yourselves from the maintenance required to make changes to a monolithic platform, companies are now able to reallocate those development costs and focus on improving those key metrics, like increasing average order value, increasing customer retention, customer lifetime value. And if we take you back to retail, we spoke about before how retail is a is something that pre-dates currency almost.

It's it's such an old phenomenon and the concept of commerce isn't that different. It's a handshake between a merchant who has the goods and a buyer who wants to purchase those goods. And what we're saying is, like, we can offer commons the same principles of that in a way that doesn't limit you. So, for example, we have a luxury menswear customer called Harry Rosen, and they're very ambitious.

They're based in Canada, actually, they're very ambitious, brand conscious retailer. And since they switched to ecommerce stores, they've seen a 50% increase in average order value. And that also ties back to their use of commerce tools. So they're constantly iterating that, you know, brands can no longer just make 12 releases a year on a large, cumbersome e-commerce platform.

They need to be constantly iterating. So thanks to our architecture, they are allowed to do that. And it thanks to their ingenuity, they have found ways of constantly trying new things and that has led to a 50% increase in average order value. So there's a two pronged approach. We're facilitating that metric, but they're also using us to develop and constantly innovate and iterate.

So there has to be a marriage of those two entities, the technology and the deliberate use of it.

Kausambi
Which is so true. And, you know, it's almost like it's nothing is a magic wand, right? It's all about how whether you understand not just where the technology can advance you, but also are able to leverage it at the right time, at the right part of your final part of your stack to actually power the mix shift in how your brand performs for different segments and different groups of customers or maybe overall.

And that leads me to this question. I'm sure that, you know, as you said, it's not a silver bullet and it's also a lot to do with how you use it, how you use this power superpower. Now, as a brand, does succeed. I'm sure that you've seen examples of where there might be some challenges that teams go through as they implement and shift to this kind of a mindset.

And when I say mindset, it's not just a tech, as you said, it's also the mindset of iteration and innovation and what could be some of these challenges that brands should watch out for, maybe ownership, cost or the complexity of the replatforming and so on?

Anthony
Yeah, no, I'd say there are few complexities for sure. I think when you're prescribed the solution or prescribed the medication, for example, you were just given something. You're given that template with a monolith, you're given an easy, a place to store, everything's prepackaged. You don't have to really get creative yet. After use too many development resources to get it up and running.

And that's why it works for a lot of people. I wouldn't sit there telling merchants starting off their e-commerce journeys to not use Shopify. Shopify is great at what it does. However, if you have that level of complexity in your business, in your organization, then this approach makes a lot more sense. And what I would say is knowing where to store is normally the hardest part, which having a mindset of analyze, knowing which part of your stack isn't quite working, that might be the order management, might be product information, it might be the way that you react to changes or released, just having those candid conversations and self-reflection on what's not working and starting by replacing that, I think that's always the hardest place to start. And then in terms of like being able to really see the benefits of this approach, it's a long term investment. You know, brands are like Burberry, like Aldi, the generational brands. They want to stay at the forefront of trends. And this isn't a quick fix. It's a long term investment, but I think it pays dividends, especially given the amount of changes we've seen in the way we consume goods.

You know, who knows what the map of us might be when it comes to retail? Who knows? You know, the adoption of decentralized finance of Web 3.0. We don't know what these trends might be. We're not telling you what the future trends might be. We're telling you you want to be agile. You want to be able to pivot quickly. And that's our value proposition. That is complexity involved.

Kausambi
Yeah, I love that part that you mentioned that it's not a quick fix or it's not a trend of the season. It's almost like, I guess going on a fitness journey. It's a lifestyle change, it's a shift in how you think because it's about all the small choices you make, because you know that in the longer term we have a bigger impact to take care of love.

That good point there. One question, Anthony, that often comes up in our conversations with teams who are breaking through from being who are breakout brands and now getting into midmarket or beyond and getting closer to the 100 or plus GMV. What is headless and what is composable? It's used interchangeably a lot of times, right? You kind of test upon it at the very beginning.

You give an example and you kind of define both of them but help, I think just put that to rest today and give a little bit of a comparison and help our audience understand that this is headless and this is composable and this is how it's different.

Anthony
Sure. So what I'll do is I'll start with headless, right? So let's say we have like a sliding scale and what I just spoke about, that templated approach is prescriptive is being prescribed to you. There's a formula, you know how it works that works for a lot of people in terms of flexibility and freedom. It doesn't give you that much room to wiggle when it comes to headless.

Headless basically means separating that front and back end layer. And the way that your new frontend will interact with your backend is via APIs. So there's no prescribed way of how those APIs might interact with your new frontend and it's extremely valuable to your needs. And what composable is, is this idea of compiling an e-commerce operation or platform or whatever the architecture through different best of breed pieces.

So what we're seeing is multiple companies that just specialize in one part of the stack that might be such that might be seems that might be Tim and a composable approach to commerce is about gathering those best in class providers also commerce tools. We don't want to give you hundreds of functionalities. We want to give you a very scalable core and commerce engine and give you the choice to then plug and play other other providers and just connect them via APIs.

But what you're seeing is, you know, legacy platforms can still be. So what we talk about when we talk about modular commerce is microservices. So different parts of the stack, those are different modules of the business. So a monolithic code base or a monolithic platform can be headless. It could not have a head for behind the scenes. All these modules and different parts of the business are still tightly coupled, so you can't make changes that quickly without affecting other modules that a true modular, composable and headless platform allows you to own your experience layer because your headless be make changes to different modules and services within that e-commerce stack without affecting the rest of the business and being API for us means by following this approach means that your platform was built in mind to easily integrate with other and communicate with other systems. So there's a lot of jargon, but hopefully that makes things clearer.

Kausambi
And as double click on that with one follow up question, Anthony, is how do brands kind of understand the difference between commerce tools and other composable and headless and the solutions that are out there? We, for example, am right. And they say that a lot of their entire Adobe Stack has different components that help Google composable super fast.

So how do they take a decision and what's one composable and headless tag versus the other? How how do you evaluate?

Anthony
I think, you know, there's only so many words in the English language. So, you know, I'm not throwing shade at any of our competitors. But once a compared to sees that certain words are resonating, it's very easy for them to just change their messaging. I think what I would advise is, you know, Commerce Tools offers a 60 day free trial.

We offer access to all our APIs now publicly accessible. If a company wanted to dedicate some development resources to testing that out, to seeing the different way, the different loads that we could handle in terms of scalability of our platform and of our API, that's something we provide. So I think once you get under the hood, once you get your tech teams in to evaluate the difference between those solutions, that's where you can see that's where you can really understand the difference because these other marketing terms are quite blurry.

Kausambi
Yeah, that's a super fair point. And you know, we're towards the closing end, but I don't want you to leave Anthony without one final round up the whole. I love the way we started the conversation, which is a lot around the future of commerce and kind of bringing in how composable and headless helps you achieve that. But there's something very specific that's happening right now, which is that our holiday season and you know, that's on one side, there's the whole strategic movement towards a certain segment of cohort of customers and how the world's evolving.

But there's also your technicality and the reality of I got to run my holiday sales. So I think what I want you to leave with is quickly your cards and and the way commerce thinks about how does headless composability at a fundamental level power brands not just through this holiday season, but essentially to actually evolve through different events that just keep happening today and new events that keep coming up right. What are your thoughts on that?

Anthony
Yeah, I think if you look at Cyber Monday and Black Friday, these phenomena, these are that are very recent right now, we can kind of put them in the bucket with Christmas and on the festive periods as planned, spikes in traffic. So none of them, no brand is on aware of these high traffic events. These discounts are provided which leads to a surge in traffic initially when this this stuff was becoming consumer norms, that's when we saw a few wins.

So Lego, for example, was operating on Oracle at the time, a large legacy platform at that platform, because it wasn't Cloud Native, it wasn't hosted in the cloud. It wasn't scalable enough to auto scale and to deal with those peaks and traffic. So that's what led them to migrate to this approach. But what we'd say now is, you know, companies need to be prepared for not just Black Friday and the festive periods, but the unplanned spikes for giveaways on Instagram, for a feature in an influencers video, which, you know, garners a lot of interest for your product.

These are unplanned spikes, and that is why we're advocating this approach. So you can just be nimble uptime and availability and scalability are some of our core value propositions. So I think that type of, you know, mentality going into the festive period is very important for us to double down on. This might be the busiest time of the year that you expect, but there are other times of the year where traffic and that you might not expect and your e-commerce operation has to handle that.

Kausambi
And I love that example. Thank you so much, Anthony, for giving us your time and your headspace. And we learned a lot and we'd love to bring you back again in a few episodes back again and we'll catch up around the new trends. Maybe that are happening in the ecosystem. But thank you today for your time. And that's it for today's episode will be laying out a lot of information on what Anthony spoke about, about commerce tools, about peddlers in general, and some of the earlier podcasts and blogs that he's been a part of.

The link it out in the show notes, but that's it for today. Keep your questions coming in and we'll get you again next day.