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What is composable commerce?

June 16, 2022
 

Composability is a way of doing business that enables companies to easily assemble or disassemble different parts of their operating capabilities as their needs change.

The goal of composability is to help businesses scale, innovate, and adapt without constantly recreating their entire technology infrastructure. But composability isn’t just focused on technology. While it relies on the modern tech stack, composability is a business mindset that applies to all aspects of a business—from product development and customer experience to marketing and fulfillment.

Microservices-based, API-first, Cloud-native SaaS and Headless (MACH) ecosystems facilitate composability by allowing companies to plug-and-play different parts of their business as needed. This gives businesses the agility to move quickly and respond to changes in customer behavior and demand.

How composability differs from microservices and PBCs

Composability is often confused with microservices and packaged business capabilities (PBCs), but though a composable approach relies on both of these things, they aren’t quite the same thing. Before we can dive into composable commerce, it’s important to clarify the distinction between these approaches.

According to Gartner in late 2020, “Composable business means creating an organization made from interchangeable building blocks.” From a technology perspective, the microservices and/or PBCs are the building blocks. Here’s the distinction:

Microservices 

Microservices are encapsulated application components that operate independently of each other and thus they can be scaled independently. Microservices enable businesses to  speed up the software development process which optimizes application performance. 

The independent nature of microservices adds stability to your codebase and facilitates easier deployments. One of the limitations of using microservices is that they’re complex since they must be developed and maintained independently of each other.

Packaged Business Capabilities

(PBCs) are complete, out-of-the-box solutions focused on a specific business service (or capability). PBCs are built from microservices working together to achieve a specific function that services the end user (e.g., the customer).  

For example, order management can be packaged into an eCommerce PBC – by linking each component of your order management system (inventory tracking, fulfillment, customer service, etc.). 

PBCs are often confused with microservices because they both focus on breaking down monolithic systems into smaller, more manageable pieces. However, there are some key differences between the two:

  • Microservices are deployed independently, while PBCs can be deployed as a whole or in part.
  • Microservices are focused on improving software development speed and application performance. PBCs are focused on business functions.
  • Microservices can be custom developed or purchased from a third party. PBCs are always purchased from a third party.

Composability, on the other hand, is a business strategy or mindset that can be enabled by microservices and PBCs. Unlike inflexible, monolithic systems, composable architecture enables businesses to move quickly, innovate, and scale more easily.

How does composability apply to commerce?

For retailers, composable commerce—a term coined by Gartner—refers to the ability to easily piece together different commerce capabilities to create a unique customer experience and future-proof their commerce functionality.

Gartner introduced the concept of composable commerce in a 2020 report which emphasized the importance of adopting modular architecture that enabled commerce systems to be more flexible, scalable, and plug-and-playable. 

With composable commerce, modifications to your commerce system can include adding new features and functions, connecting to new channels or marketplaces, and removing outdated systems.

The goal of composable commerce is to give retailers the agility and flexibility they need to meet customer demand and stay ahead of the competition. This, of course, aligns with MACH ecosystems in that they are driven by microservices, APIs, and Cloud-native SaaS which enable companies to quickly add or remove capabilities as needed.

Why should retailers go composable?

There are many reasons why retailers might want to consider a composable commerce approach. Perhaps the most compelling one is that it enables you to meet changing customer demands quickly and efficiently. 

Today’s consumers expect more personalized and engaging experiences. They also have higher expectations for delivery times and order accuracy. To meet these demands, retailers need to quickly adapt their commerce systems. With a composable approach, this is possible. 

Here are some ways composable commerce facilitates modern commerce:

  • It adds flexibility: The ability to easily add or remove commerce capabilities gives retailers the freedom and flexibility they need to meet changing customer demands. Evolving delivery methods, new buying channels, and an increased emphasis on personalized experiences require  a commerce platform that is as flexible as the journey itself.
  • It enables innovation: A composable commerce approach enables you to rapidly test and implement new ideas without having to go through a lengthy and costly process of re-platforming or rip-and-replace. This allows you to pivot your business approach much more quickly than is possible with legacy monolithic systems (e.g., by adding new products, commerce capabilities, and channels). 
  • It improves customer experience: Composability allows you to piece together different commerce capabilities, integrate data from more sources, and act on that data in different ways. This includes things like personalization, customized messaging, omnichannel shopping, and seamless fulfillment—the ingredients for an excellent customer experience.
  • It reduces IT dependencies: With a composable commerce approach, you can reduce IT dependencies and increase business agility. This is because many modular systems embrace low-code and no-code modular approaches to development. Developers can make changes more quickly and non-technical users can also build and test applications. 
  • It helps you avoid vendor lock-in:  When you have a more modular system, it is easier to switch out one component for another. This gives you more control over your data and systems and helps you avoid being locked into a particular vendor’s ecosystem.
  • It has future proofability:  Future-proofing helps minimize the impact of things that impede a business’ ability to grow and thrive. These things are often out of your control (we’re looking at you, global pandemic). While it’s impossible to predict every potential scenario, composable commerce helps future-proof your business by allowing you to quickly add or remove commerce capabilities and infrastructure. It enables you to keep pace with – and surpass – the competition, while meeting customer demands as they evolve. 
  • It’s (ultimately) more cost-effective: While onboarding any new approach and technology can incur high upfront costs, a composable commerce approach is more cost-effective in the long run versus a monolithic approach. One reason for this is that you only need to invest in the commerce capabilities you need, when you need them. Another is that the system doesn’t need to be rebuilt every time you want to add a new feature, tool, or channel.  

How headless commerce supports composability

Headless commerce, an architectural approach that decouples the front-end of the commerce system (the “head”) from the back-end (the “body”) supports commerce composability in several ways.  

In a traditional, monolithic commerce system, the head is tightly coupled to the body, so making changes to the front-end requires making changes to the back-end system. This is often time-consuming and expensive. 

With headless architecture, back-end systems can be updated, altered, or changed without impacting the front-end. The result is a more flexible system that can be quickly adapted to meet changing customer demands. 

For example, let’s say you want to add a new product to your online store. In a headless commerce system, you can simply add the product to your product catalog. There’s no need to make changes to the front-end of your site. This means you can get new products online faster and with less effort. 

Another (critical) example of how headless systems facilitate composability is with order management.  In a headless system, orders can be routed to different fulfillment systems (e.g., in-store pick-up, ship from store, or home delivery.) This allows you to quickly adapt your fulfillment strategy to meet changing customer demands. 

Headless systems also help improve the customer experience by enabling retailers to adapt quickly to changing customer shopping behaviors. For example, if you want to add a new payment method, you can simply add it to your back-end system and it will be available on the front-end—there’s no need to make changes to the front-end code. 

What’s next for composable commerce?

The pandemic accelerated the move to composable commerce and the adoption of technology needed to facilitate this approach. Businesses were forced to rapidly adapt to changing customer demands, add new commerce capabilities, reimagine fulfillment, and incorporate more payment methods. 

As the post-pandemic world continues to adapt, we expect composable commerce will gain popularity as businesses look for ways to future-proof their operations and improve customer experience. 

Here are a few trends fueling the move to composability:

The omnichannel movement: The blending of online and offline shopping channels into a single omnichannel experience is a trend that’s fueling the adoption of composability. Nearly a third of online commerce is expected to be fulfilled using an omnichannel model by 2025. 

Traditional bricks-and-mortar brands like Macy’s are already benefiting from this trend. In 2021, Macy’s decided to pause the planned closings of several physical stores when they discovered that eCommerce sales were higher in markets where physical stores were present.

The headless movement: Headless commerce systems will play a key role in supporting composable commerce since they provide the flexibility and agility needed to facilitate omnichannel commerce. 

The data movement: Composable commerce architecture also addresses another, growing need—the ability to integrate customer data (and communication) across multiple touchpoints. Mobile, social media, web, in-store, and contact center interactions all generate customer data that must be managed. 

This is a challenge for businesses since most traditional commerce systems were not designed to handle customer data across channels. When customer data resides in silos, it’s difficult (if not impossible) to get a 360-degree view of the customer.  

Composable commerce systems can help businesses overcome this challenge by integrating customer data (and communication) across channels. They enable a holistic view of each customer which is the only way to effectively personalize communication across offline and online channels. 

The payment method movement:  Customers are increasingly using alternative payment methods like buy now, pay later (BNPL), digital wallets, and scannable payment vouchers. Composable commerce systems make it easy to add a new payment option to your back-end, so that it’s instantly available on the front-end without having to make changes to the front-end code. 

The digitization movement: And finally, composable commerce systems make it easy to add digital touchpoints to physical stores. This is important as businesses look for ways to digitize their physical stores, manage inventory across channels/locations, and offer customers a consistent brand experience—regardless of how or where they interact with the company.

Composable Commerce with Kibo

We believe that composable commerce is the future of eCommerce because it’s the only way to effectively meet the needs of today’s customer. Kibo Headless eCommerce provides the flexibility and agility needed to support composability – which is why we believe it’s the best option for businesses looking to future-proof their eCommerce operations. 

If you’re interested in learning more about composable commerce or headless systems, we encourage you to request a demo. We’re happy to chat with you about how Kibo can help support your composable commerce journey.