The Future of Retail: How Composable Commerce Revolutionizes Engagement

Factors for Composable Commerce

Composable commerce’s super power is streamlining the creation of unique customer experiences. This potent IT architecture masters scalability, flexibility, integration, interoperability, customer centricity and personalization to facilitate digital transformation while mitigating risk. Composability makes responding to changing business and customer expectations easier, faster, safer and thereby less costly.

Scalability & Flexibility

Scalability is critical for ensuring that all types of transactions across all shopping channels are handled efficiently, even during periods of the highest traffic. This is a challenge for a monolithic architecture with only one extensive application vs. an architecture with multiple, smaller applications and their own infrastructure capabilities. Since composable applications are assembled from cloud-native microservices that operate independently in a feature-as-a-service model, they can automatically be re-used across multiple applications. In addition to scalability, this cloud-native structure inherently makes optimization and deployment more flexible and easily adjustable as business demand shifts.

Integration & Interoperability

With most legacy in-store point of sale solutions the siloed infrastructure means that extension or integration of new features, if even possible without vendor intervention, is cumbersome for development teams and slow to get into stores. If vendor involvement is required, that leaves retailers at the mercy of the vendor roadmap and enhancement delivery schedule which is usually months long and gives them little to no input into the final result. These siloed systems require duplication of functional flows and data that beyond time, also introduces significant risk to the delivery of new store experiences. 

Composable commerce, on the other hand, enables seamless integration between various systems by leveraging preconfigured components (microservices) that can be used across all channels and touchpoints to unlock the power of cloud-native features delivered on an iterative delivery cycle. The reduced complexity also slashes costs, increases agility, speeds delivery of new experiences, facilitates testing and maintenance, and improves reliability.

Furthermore, a Headless Commerce Architecture that separates the front end “experience” from backend processing of commerce transactions enables retailers to build unique experiences that use data and insights from all channels instantly across omnichannel engagement points. Combined with a unified commerce system, retailers are positioned with a technology infrastructure that integrates front-end experiences with critical backend functions like transaction processing, inventory management, orders, and promotions to identify, respond and evolve experiences in response to customer preferences and market conditions.

Customer-Centricity & Personalization

With the acceleration of digitally savvy shoppers, the demand for personalized customer experiences continues to skyrocket, making it incumbent on retailers to recognize customer preferences and previous purchases, reward loyalty, and allow use of rewards no matter where and when customers are engaging with the brand. Customer-centricity is crucial for improving conversion and consumer experience as research from McKinsey shows 71 percent of consumers expect companies to deliver personalized interactions, with 76 percent getting frustrated when that doesn't happen. 

Composable commerce empowers retailers to personalize the customer journey with the ability to develop experiences that integrate data from a customer’s purchase history, brand preferences, previous payment methods, current reward programs, and more. Essentially, this approach creates a single composite view of the customer to drive an experience that says, “We know and appreciate you.” 

Adopting Composable Commerce

Assessing Organizational Readiness

Organizations considering adopting composable commerce should do some soul-searching to assess if they are culturally prepared to embrace this new way of thinking. The ability to embrace the concepts that everything is built to be modular and changeable and that change Is an essential tool, not a threat or burden are essential to success.  

In fact, the inability to change should be viewed as a business risk or technical barrier to an organization’s ability to cope with the pace of change in the retail landscape. Whether the ability to rapidly implement change is viewed as a good defense against disruption or as a risk-reduction strategy for leveraging untapped opportunity, the organization’s culture must see change as a critical component of success in achieving business goals.

Technology Stack Evaluation

Understanding your current technology stack is ground zero for planning the introduction of composable commerce as a low-risk digital transformation enabler. Is your enterprise architecture a hierarchical model that uses a centralized data center to control assets distributed across several sites? Are you using the cloud for a more decentralized IT approach but still relying on legacy systems and software for processing needs? 

The most modern model combines a distributed cloud architecture with multi-region failover and cloud-native software technologies that ensure maximum up-time and rapid experience development capabilities. In this environment, composable commerce allows retailers to react to add or remove use case components without having to rebuild or redeploy entire systems. It also ensures that experiences are scalable and interoperable. 

Skillset & Team Structure

You may have rightly assumed that implementing and managing composable commerce would require similar skills to those for creating most technology-driven retail solutions. A cross-functional team comprising IT and business managers is most often led by the CIO who sets strategy with an enterprise architect, front end development experts, legacy asset manager, and integration engineer plus subject matter experts from store operations, store experience, e-commerce, and marketing.

Whether upskilling your existing IT team or hiring new talent is warranted, experience in building and deploying modern cloud-native applications using microservices, mobile-first, offline and headless technologies is helpful. In addition to hard skills, the organization must be onboard with the build-test-learn approach that rapidly creates iterative improvements to be deployed quickly in response to customer and market conditions.

Migration & Integration Strategies

The move to composable is equally as critical as the underpinnings of the technology. Coming from a closed, monolithic tech stack introduces inherent risk in project planning and execution. The strategy of preserving the monolithic platform until the composable infrastructure has fully replaced all elements and is ready for prime time is one that often takes years to implement. While the time alone is a risk, the “waterfall” delivery amplifies the unknowns given the lack of agility and flexibility to respond to changing market or customer expectations. A second, more agile option, is to introduce a Headless Commerce architecture with the capability to decouple the front-end CX presentation layer from the monolithic platform. This approach allows the reuse of legacy assets as well as key integrations and is usually an effective stepping stone to a fully composable solution. To achieve maximum composability requires breaking the monolith into small pieces and leverage a “yours, mine, ours” approach to replace or re-use based on the business value of each element. This creates the lowest risk over time for a full digital transformation as the business has the flexibility to direct investment to those areas with the most opportunity to return high value. Critical, but not transformative operations, can continue to be served by existing services or systems to maximize the return. 

Composable Commerce Strategy

Modular Architecture Design

Modularity is the ability to break down large systems into smaller parts that can be assembled to form a more extensive system. This allows you to build up your solution in layers. This approach offers incomparable flexibility when changing or updating key use cases served by your tech stack as they are uncoupled and therefore can be isolated for individual updates. 

Composable commerce architecture is always modular. All components are pluggable, scalable, and replaceable. You can add, remove, or change one piece without affecting the others. Modification doesn’t require changing your backend functionality. Composable commerce helps you achieve this by enabling rapid construction of use cases using new technology, existing assets or ‘best of breed’ systems.

API-First Approach

A composable API is an application programming interface (API) that allows you to combine multiple APIs in a single feature or application. This streamlines the process of managing data sources to reduce complexity and create cohesion across experiences. 

A microservice is a discrete unit of code, typically a single function, such as an API endpoint. A microservice can also be a group of functions that gets bundled for ease of deployment and management.

In contrast to monolithic applications, where all the code for that application is contained in one large file, microservices are inherently independent of each other allowing changes to be made without affecting other parts of the system. So if you want to make improvements or add features to in-store checkout or pickups, you can do so without impacting the other business critical functions such as inventory, mobility, or the other components. This ability dramatically shortens time-to-market, reduces risk of new feature releases, and speeds response to new business opportunities. 

Agile & Iterative Development 

Agile development is everything in a rapidly changing, highly competitive commerce environment. Considering that retailers consistently tell us that it would take multiple years and millions of dollars to transform even a single function in a legacy system, composable commerce becomes an attractive alternative to iteratively develop and rapidly deploy new experiences to market. 

Composable commerce supports a low-risk, low-cost continuous development approach by underpinning a streamlined build-test-learn process. Retailers can quickly test new features with fast feedback, meaning they have a wealth of information to leverage in improving their solution and/or approach.  The advantage of speed-to-market and time means they are better positioned in responding to competitive threats and customer demands.

Monitoring & Optimization

The beauty of composable commerce in a build-test-learn environment is that success of an application or use case is measured to determine if it meets launch criteria or how it should be adjusted for additional testing. This form of data-driven decision-making drives business growth and operations efficiency.

Composable commerce makes it easy for IT to tweak the experience vs. having to start over—now as well as in the future should the experience being designed be expanded or changed. This approach to “land and expand” enables retailers to get to market quickly but with the tools to efficiently extend their engagement to meet shifting needs.

As each new experience is ideated, the business team should identify measurable key performance indicators (KPIs) that will be monitored and analyzed. Examples may be customer stickiness, basket/purchase size, loyalty program growth.