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Why retail is paying attention to headless commerce

Why retail is paying attention to headless commerce

Author: Lisa Rowan

Source: Retail Dive 

What do cosmetics maker Lancôme, fashion brand Michael Kors, and digital publisher-turned-streetwear retailer Highsnobiety have in common? They're just three examples of the many retailers that have embraced headless commerce to strengthen their e-commerce efforts.

While the term headless commerce isn't entirely new, it seems to be picking up speed as a buzzword in the industry. Retailers acknowledge the importance of robust online sales to overall business health, and that comes with increased recognition that how e-commerce systems are established can encourage purchases. 

Today’s sophisticated consumers have high expectations and endless options to choose from. Learn why a headless commerce strategy is the only way to engage, retain and inspire these customers of today and tomorrow.

What is headless commerce?

Headless commerce separates the presentation layer of the online shopping experience from the commerce component, facilitated by APIs, or application programming interfaces. The separation allows front-end developers to determine the best way to present online sales content to customers, and back-end developers to work on delivering that content across the brand's digital properties, as explained by several reports including a guide by Core DNA and whitepapers from Amplience. Headless commerce reduces friction between different teams and allows a retailer to quickly adapt to changing digital trends. 

Headless commerce was born from retailers' struggle to create an online purchasing experience that was consistent with the slick marketing customers were used to seeing. "With headless, the concerns over 'breaking the site' are removed through the separation of presentation layer, content and system," a whitepaper from content management system provider Amplience explains. Its goal is to ensure that content appears accurately and attractively across multiple channels, from mobile apps to wearables to over-the-top video. Headless allows content to be at once created and published anywhere, according to the report.

Why is it important now?

As e-commerce has grown, it's become clear to retailers that the totality of a web presence is important — from a customer's first click on a homepage until the moment an order is confirmed. That system has to work without a hitch, every time, everywhere. After all, there's revenue on the line.

Look at last year's e-commerce growth alone: North American retailers saw a 17.7% increase in worldwide online sales in 2018, according to the 2019 Internet Retailer Top 1000 Report by Digital Commerce 360.  FTI Consultinganticipates total U.S. e-commerce share will surpass the one-trillion mark by 2025. And juggernaut Amazon is poised to control 47% of global e-commerce this year, according to eMarketer

With e-commerce heating up and Amazon controlling so much of the market, it's on everyone else to get competitive. No longer is the customer willing to tolerate a clunky, outdated purchasing process when they could place an order with at any number of competitors that offer personalization, integration with loyalty programs or a variety of payment platforms.  

The pressure has been on for several years, in fact. Google Wallet launched as a competitor to PayPal in 2011, with Apple Pay following in 2014. As the barriers to payment have broken down and shipping has sped up, customers have come to expect the very best from each and every online shopping experience. 

Headless architecture breaks down those barriers for customers, providing a shopping experience that feels cohesive throughout their discovery and research and continues when they complete their purchase. At the same time, a headless e-commerce system allows a retailer to tailor an online shopping experience to a brand's overall aesthetic, both in how it looks and how it operates. The less jarring the transition from browsing to buying, the less a customer will notice — and the more likely they will be to complete the transaction.

Analysts knew this issue was coming before they knew what to call it.

In a 2013 report recently emailed to Retail Dive, Forrester Research identified the importance of removing the silos between e-commerce inventory and branding display, and the process of completing purchases. "It is no longer enough to enable an online catalog and transactional eCommerce," authors Stephen Powers and Peter Sheldon wrote in their report, "Content And Commerce: The Odd Couple Or The Power Couple?" "Today's marketers want to tell brand and product stories through the deep personalization and contextualization of content and interactive digital experiences." 

Joe Cicman, a senior analyst at Forrester, recalls how frustrating the online purchasing experience used to be for the customer. "You'd land on a beautiful brand page, but when you'd click through to buy, the experience was very jarring. The industry was horribly irritated by this," he said in an interview with Retail Dive.

Cicman said that retailers knew this was an issue because they could see in their analytics that customers would click through to make a purchase, but drop off before completing the process. Big companies who had significantly invested in analytics knew they had a lot at stake by figuring out how to retain those customers, he said.

A separation still exists in a headless architecture, but integration of the various parts is more seamless than older methods of patching together a streamlined system. By implementing headless commerce, front-end developers, back-end developers and content creators don't have to wait on one another to get a robust catalog up and running.

Many brands have embraced headless commerce, but the discussion is often kept within the tech community.

Streetwear company Highsnobiety built a headless commerce system for its product collaboration with Prada this spring, according to an Ad Exchangerinterview of Founder and CEO David Fischer. The system "allows us to show up with an online store module wherever the audience is," Fischer told Ad Exchanger, noting Snapchat, WhatsApp, or embedding within articles. 

"If you rewind the clock to the pre-headless days, you could literally spend millions of dollars figuring this stuff out for yourself. It would be horribly painful to integrate. [Now] drop a little piece of javascript into your page and have it up and running in between an hour and a day."

Fisher said the brand had previously worked with Shopify before it shifted from primarily being a publisher to also planning major product launches. (Shopify is one of the many players in headless commerce, offering plug-and-play headless features alongside tailor-made e-commerce systems.) 

"If you rewind the clock to the pre-headless days, you could literally spend millions of dollars figuring this stuff out for yourself," Cicman said. "It would be horribly painful to integrate. [Now] drop a little piece of javascript into your page and have it up and running in between an hour and a day," with APIs, he said. A retailer can pick and choose how to present products with help from Shopify, Salesforce, Mobify, or other providers. 

Michael Kors shifted to a headless architecture in 2016 to streamline its efforts to engage with mobile users. Until then, the desktop and mobile versions of the website were hosted separately, making the process of updating and aligning marketing efforts difficult and time-consuming, according to a case study from hosting company Spark::red. "We have over 20 sites, nearly a dozen languages and multiple currencies. Moving towards a single code base was essential to streamlining testing and release management," Nick Reshamwalla, digital director at Michael Kors, told Spark::red. 

Lancôme is another company that transitioned to headless in 2016, in an effort to capitalize on its increased mobile traffic. While mobile had become the primary source of traffic for the brand, mobile sessions were only one-fifth as likely to convert to sales as desktop sessions, according to a case studyby Mobify, the headless front-end that overhauled its mobile experience. As a result, Lancôme saw a 36% lift in mobile revenue and an average order value increase of 11%.  

While a headless setup increases agility, it's not a quick solution for every retailer. "We're definitely getting more questions about it," Penny Gillespie, VP analyst at Gartner said in an interview with Retail Dive. "But it is more likely to be adopted by larger organizations who have the resources to devote to it." She noted a sizeable, skilled IT team is required to implement a headless architecture well.

Another challenge is a brand knowing what it truly wants and being able to implement it. "You don't buy headless from a vendor," Cicman said. "You doa headless architecture." The relative ease of adding features through API connections can only be taken advantage of after a system supporting a brand's technological components is put into place.

Beyond serving customers today, headless commerce can help researchers prepare for upcoming technology trends that impact the customer experience. As the ways people shop continue to evolve, it's easier to adapt headless architecture for new platforms than it is to keep starting from scratch. 

Cicman said that large enterprises who started down the headless route with APIs years ago may not have built out capability enough to match competitors. Newer firms or those who did a complete overhaul are looking beyond headless into a greater focus on cloud technology. "They've outpaced those who didn't full retrofit," Cicman said.

As the consumer relationship to mobile devices and the Internet of Things grows and morphs (remember the relatively brief rise and fall of Amazon Dash buttons?), so will retailers need to adjust e-commerce strategies to keep up. Whether the popular new way to shop is through wearables, chat bots, or methods not yet dreamed up, those brands that implement headless commerce systems may find it easier to adapt quickly to be able to grab a bigger of valuable market share.

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