Sennheiser has been a key manufacturer of electronic consumer products for more than 70 years. However, their highly-traffic ecommerce offerings aren’t designed in the way you’d think. In fact, they weren’t able to build the kind of e-commerce experience they desired using a traditional platform. They are instead part of the trend to abandon the old monolith and adopt the concept of a composable approach to commerce.
In Netlify’s latest Headless Commerce Summit, I discussed the key decisions that are pushing companies like Sennheiser to adopt a composable architecture. Ecommerce is among the fastest-growing segments we’re witnessing at Netlify. Below are some of the industry trends that we’re observing across our customer base.
Digital Commerce is Exploding; Ecommerce Web Monoliths Aren’t Keeping Up
In the last couple of years, the growth of e-commerce has been by 10 times the rate of the previous decade. But, remember that it was already a growing sector. There remains a multi-trillion-dollar opportunity, with 81% of commerce still served by non-digital channels. However, it’s not only the volume of sales that is growing. As ecommerce grew and new sales channels have were created, marketplaces grew and the market became saturated with competition. Commerce teams looking to differentiate, increase revenue, and ensure margins realized that their internet monoliths were not able to keep up, since they had:
It is slow to adapt and scale up to new channels and markets.
It is difficult to distinguish
Slow for customers
Costly to update and maintain
Composable Commerce arose from the Remains Of the Monolith’s
Failures
We’re witnessing a major change in the way we create commerce solutions. In particular, we’re seeing an enormous shift towards composable commerce. According MACH Alliance research, 79 percent of the tech leaders surveyed would like to incorporate more composable elements within their design in the next twelve months.
What is composable commerce? What is a monolith in the first place? Let’s start with some definitions:
Monolithic commerce. Monolithic commerce is when one company takes various functions and features, usually none of them top-of-the-line, and combines it into a single solution. For instance an online shopping solution that is monolithic comes from Adobe (Magento), HCL, Salesforce, SAP, or Shopify typically includes the information about products, images of products prices, price, payment functions such as search analysis of customer data and even front-end elements (such such as the mega-menus) but with very limited and unwieldy customization. The problem is that if you are looking to alter one element it is necessary to alter the entire system. This can take years and you’ve already invested millions of dollars, so why not.
Headless commerce. Headless commerce lets you segregate the frontend – which is Web Experience Layer as well as the backend that is monolithic. The benefit is that it allows you to swiftly improve the frontend experience, without affecting the backend. The disadvantages are evident when teams attempt to integrate special components to meet certain business needs. Certain backends for commerce that are monolithic tend to make this difficult or impossible.
Composable commerce. When retailers have embraced headless CMS systems that are optimized for stand-alone searches, and APIs for specific applications such as product reviews as well as Product Information (PIM) personalization, and much more, we’ve been discussing composable commerce. Composable commerce means that the functionality in the backend and frontend is scalable, pluggable as well as replaceable. It is also able to be continually improved by agile development.
The Composable Commerce Tech Landscape Is mature
At Netlify We’ve witnessed in person how the industry of commerce is growing rapidly. The positive is that there’s more flexibility than ever before. However, the downside is that navigating the options can quickly become difficult, as more and more headless commerce tools being introduced on the market every year.
To help you talk to, visualize and design the possible marketplace into three main three pillars:
Storefronts. Storefronts is the component of your eCommerce solution that users see and engages. This is the layer that provides web experiences, or frontend. The majority of the time, this is created by using an JS framework, and an Orchestration platform such as Netlify and, in a few cases, a storefront that is a separate service for your backend of commerce is also added. The alternatives here include MACH solutions such as Vue Storefront, Commercetools Frontend (formerly Frontastic) and Nacelle. They are a an element of a flexible commerce solution, but they are often used on the top or on top of monolithic systems. They differ in how non-code or yes-code they are and this is a expanding market.
Product Experience. A variety of categories make up the product experience Content management (i.e. Contentful, Contentstack. Amplience and Storyblok) and stand-alone search (i.e. Algolia,) and digital asset management (DAM) (i.e., Cloudinary) and Product Information Management (PIM) (i.e., Akeneo, Bluestone) tooling and services relating to personalization (i.e. the Uniform and Dynamic Yield), and then review services (i.e., Yotpo).
Layer of transaction. The transactional layer consists of pricing, order management (i.e., Commerce Layer) as well as payments (i.e. Adyen and Stripe) along with checkout options (i.e., Snipcart).
The majority of these services are offered in more complete solutions such as headless services of Commercetools along with BigCommerce.
In the realm of software and the web there is a constant change, and every once in 10 years or so we experience more drastic shifts. I believe this transition towards MACH as well as the Jamstack is one such shift and that digital leaders driving this change as composable commerce allows:
Speedier times to go on the market.
The biggest benefit of switching to MACH is that it allows your team to release features 10 times quicker. When I talk with CMOs about their top most pressing issue is the time to launch. It’s not surprising. The huge monoliths that comprise the commerce platform as well as glue engines, template engines built tools, customer information personalization, framework for programming and infrastructure are unmanageable and incomprehensible. The single-minded approach to commerce stifles the speed of iteration. I had a conversation with the marketing team of one the biggest corporations worldwide. They had invested millions of dollars on a single platform that caused them to have a painful period between when they had something in place to go live and when they had it implemented, which was the equivalent of 32 days. 32 days!
Cost reduction.
It’s costly to continue using the old method of doing things. One quarter of IT decision-makers reported spending more than 50% the IT budget on updates for their old systems. In the average, businesses spend nearly two-fifths their budget for these updates. A CMO informed me recently that his single tech vendor offered him “everything I’ll ever need, and everything else I don’t need.” The benefit of a modular system is that you can buy and build only what you require by implementing one program, you don’t mean you have to pay for all the other modules.
Omnichannel experiences.
Traditional monoliths make it impossible to provide all the channels that customers are using in the present. Every single place where we exchange data should be accessible via an API. Teams need to separate the vastly various display layers and backend in order to create the most effective experiences for every channel. The ability to cater to shoppers who are omnichannel is a major concern for retailers in the present, because omnichannel customers spend more. Target states that they host 40 million shoppers shopping through channels. Omnichannel customers spend four times more than customers who shop in stores only. Albertsons reported that households with omnichannels are three times more likely to spend than those who shop in stores only. In addition, the number of households that are omnichannel grew nearly five times in the past two years. Macy’s claims that even in a mall-based environment, the omnichannel client spends 2.5x or 3.5x greater than the typical single-channel user. It’s a fair assumption to declare that embracing omnichannel as a strategy is the only way to go for retailers. The only way to expand that is to get rid of monoliths.
Differentiation.
One of the major issues for commerce experiences made with monoliths is that there aren’t the same opportunities to create an unforgettable customer experience that you can in an actual store. This means that thousands of stores similar to yours are only a click away. The most important reason for switching to a composable marketplace is what it’s not. It’s not the website presence. This isn’t the engine for templating built software, the glue system or runtime. These pieces, as well as the decisions that go into them remain completely within your control, allowing you to adapt the technology you use on your website to that of your other projects and teams. With a composable commerce stack that you can build, you’re not bound to specific designs or checkout procedures, and are able to tailor the user experience to meet the exact requirements of your customers.
Faster web experiences.
Managers of e-commerce understand the importance in every second. A study of analytics on customer behavior across thirty million sessions revealed that a speed of 100ms provides retailers with an 8.4 percentage increase in conversion. Due to the versatility of APIs that are headless teams can utilize the Jamstack method of web development to build and improve web assets ahead of time and then distribute these to nodes across the world. With edge functions, pre-built pages load content on the screen more quickly than monoliths since they can eliminate the latency that comes with traveling roundtrip back to their origin in a different nation in which the pages need to be assemble before they can be served. You will know that you’re browsing an un-headless Jamstack site by the fact that it feels extremely rapid and page transitions are immediate.
Web apps that are more secure.
The majority of the malware that is automated is targeted at classic monoliths due to the fact that the building process is constantly in motion and can be easily exposed. Through separating between the web and the backend, and employing the most efficient practices of Jamstack teams, they remove the biggest surface of attack is available to you. At Netlify we receive many thousands of inquiries each month that begin with “WP admin” It’s malware calling your doorstep, asking “Hey Do you have an unreliable WordPress installation that hasn’t been updated in one or two weeks?” A compositable architecture based on the most effective practices of Jamstack makes commerce-related web applications from being secured by design (at most) to being secured by default.
Scale.
Monoliths that are large-scale in size strain the web infrastructure as every request must be created dynamically every time. There are ways to cache and auto-scaling virtual servers. However, this quickly gets complicated. With the modular commerce architecture built on Jamstack web, online properties can have multiple sources of access and don’t have to follow the same build process for every request. If your business is listed on the first page in the New York Times, you do not need to build a massive and expensive server infrastructure to handle the increase in traffic.
Retention of employees is increased.
Developers who are skilled are highly sought-after and they want to work with modern tools. I spoke with an architect in charge of one of the biggest consumer goods manufacturers in the past and he revealed their loss of a programmer during each week due to their outdated stack, which used outdated programming languages, tools and development environments that were extremely inefficient.
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