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Composable Commerce: What is it and why is it critical for digital maturity and growth in 2022?

Composable Commerce: What is it and why is it critical for digital maturity and growth in 2022?

5 mins Read
Composable Commerce: What is it and why is it critical for digital maturity and growth in 2022?

Remember those matching furniture sets that were all the rage in the mid-90s but have since fallen out of favor? Buyers no longer want one-size-fits-all solutions from a single vendor—and the same goes for traditional e-commerce platforms. 

These legacy applications offered basic capabilities for anyone to set up and run a low-code/no-code e-commerce website. While well-suited for the first e-commerce wave starting with Amazon’s founding in 1994, these platforms were not built for the addition of new digital touch points such as mobile devices, IoT (Internet of Things), and social media.

With e-commerce fast becoming the predominant conduit for businesses to engage and convert prospects—by 2023, online sales will represent 22% of all global retail sales—today’s businesses are breaking away from rigid technology stacks that lack scalability, API integrations, and omnichannel support. 

The new solution? Composable commerce—a type of agile software architecture that allows businesses to integrate best-of-breed applications from different vendors into a seamless technology stack.

What is composable commerce?

Composable commerce is an approach to e-commerce that involves stacking disparate microservices (small, independent services that communicate over well-defined APIs) to achieve greater flexibility. These microservices are also known as Packaged Business Components (PBCs). 

They’re different from regular software applications because instead of offering, for example, a complete mobile payment system like PayPal, a PBC might offer a shopping cart microservice that deducts items from inventory and lets customers complete the checkout process, while a separate PBC handles order fulfillment. Think of a PBC as a building block within a larger software application. Rather than sharing a unified codebase, as with monolithic applications, each PBC holds its own data and business logic.  

Composable commerce and packaged business components gartner
Source: Gartner

Basically, composable commerce architecture leverages modern technologies like MACH (Microservices, API, Cloud, Headless) and JAMstack (Javascript, APIs, and Markup) to enable businesses to integrate and combine these building blocks in virtually limitless ways. It includes pre-built solutions, integrations, and reference libraries.

The importance of customization for digital maturity

Why does this level of customizability matter? Let’s say, for example, that your business sells concert tickets. When a customer adds an item to their cart, you want to impose a time limit for completing the purchase so that other shoppers aren’t barred from purchasing tickets if someone abandons their cart. If your payment processing software doesn’t offer that feature, you’re stuck. 

By combining piecemeal microservices rather than trying to shoehorn business requirements within the limitations of an out-of-the-box e-commerce platform, businesses can offer better CX personalization and even improve product discoverability. 

Think about it: in order for your products to be searchable, you need multiple moving parts: a digital experience platform (DXP), SEO, visual configuration, custom storefronts—not to mention providing an omnichannel experience across your website, social media channels, voice search, and more. No single e-commerce platform offers all of the capabilities needed.

According to Elastic Path’s State of Composable Commerce report, 95% of e-commerce practitioners surveyed believe composable commerce is the best approach businesses should take. 

Benefits of composable commerce

Today’s e-commerce businesses are differentiated not so much by the products they sell but by the type of online shopping experience they offer. For example, plant-based cereal brand Off-Limits created a vending machine-like buying experience that led shoppers to a gamified checkout to make buying cereal fun. Meanwhile, Allbird’s mobile app lets customers try shoes on virtually using AR. Here are some reasons why composable commerce benefits brands who want to push the envelope. 

  • Allows businesses to be vendor-agnostic
    Rather than being locked into one vendor’s solution, businesses can make changes to strategy and even experiment with new business models without relying heavily on IT staff.
  • Modular architecture
    Supports agile delivery, faster time to market, and improved experiences across all touchpoints.
  • Open ecosystem
    Empowers brands to assemble best-of-breed solutions using third-party applications, in-house solutions, and custom-built apps.
  • Cost control
    Reduce operational costs by choosing only the features and vendors you need.
  • Gives businesses a competitive edge
    In a “build vs buy” landscape, businesses that rely on out-of-the-box solutions will fall behind peers who are building their own custom applications. Gartner predicts that by 2023, “organizations that have adopted a composable commerce approach will outpace the competition by 80% in speed of new feature implementation.”

Disadvantages of composable commerce

While composable commerce offers greater flexibility, organizations need a high level of digital maturity to implement it. 

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  • Managing multiple vendors
    Each time you implement a new microservice, you’ll have to negotiate purchase agreements, review terms and conditions, and integrate it with your existing technology stack. Also, beware that each vendor has its own service level agreement; some are better than others at handling traffic spikes and other contingencies.
  • Creating an interface to integrate microservices
    Connecting microservices from different vendors require businesses to build a cohesive user interface on top of these components—a process that is time-consuming and often unclear.“Think of microservices like LEGO blocks without an instruction manual to piece them together to build that creation you had perfectly envisioned,” Jimmy Duvall, chief product officer at BigCommerce, wrote in an article on Forbes. 
  • Fear of the unknown with your internal teams
    Introducing more variables to your e-commerce stack makes it more complicated for teams to learn how to use the software or understand its capabilities—especially during implementation.

Why composable commerce? Why now?

The death of third-party cookies has forced brands to rethink personalization. A Shopify survey found that 42% of brands plan to offer their customers personalized product recommendations through tools like quizzes, custom mobile apps, and first-party or third-party behavioral data.

Customer channels are becoming more numerous and fragmented. Consequently, brands need tools that will allow them to create an omnichannel experience across all customer touchpoints. 

  • Retailers are experimenting with new channels like voice shopping, connected TVs, and messaging apps.
  • Direct-to-consumer (DTC) brands are doubling down on marketplaces as a way to get new eyes on their products.
  • Brands are creating more ways for customers to interact with them (eg: recipe sites, community hubs, chat rooms, and IRL experiences).
  • Demands for AI-assisted upselling and cross-selling, which can customize a website for every customer by predicting shopping habits based on browsing and purchase history. 

While traditional e-commerce platforms would gather behavioral data, categorize users according to a set of predefined personas, and serve each cohort with “personalized” content, today’s modern platforms are built to personalize for an audience of one.

What is the difference between modular and composable commerce?

Even if composable commerce is new to you, you may have heard of its close relative: modular commerce. Both are examples of headless commerce—a type of software architecture where the frontend is decoupled from the backend. This separation means the front end can be updated without interfering with the backend.  

Modular commerce took headless commerce a step further by separating backend services (eg: file storage, databases, APIs) from each other, allowing them to be offered individually rather than purchasing a prepackaged system. Composable commerce builds on that by allowing retailers to gain complete end-to-end control over both back-end and front-end, choosing and implementing only the services they need when they need them. 

Think of modular commerce as having the ability to combine bricks from different LEGO sets. By comparison, composable commerce is analogous to combining bricks from any toy brand in any configuration you desire.