Technology and the rise of eCommerce have revolutionized how people shop for goods and services online. However, the process of browsing and buying from an online store can often be time-consuming. The checkout process can be particularly frustrating as it usually requires customers to create an account, fill out a lengthy form, and enter their payment details.
To address these problems, a relatively new type of eCommerce has emerged — headless eCommerce. Headless eCommerce is an approach to eCommerce that separates the front-end experience from the back-end systems. It allows businesses to manage and customize their customers’ experiences without being hindered by the limitations of a specific eCommerce platform. This article presents a detailed guide to headless eCommerce and its potential impact on the future eCommerce market.
Current State of Headless eCommerce in the US
Experts estimate that a compound annual growth rate (CAGR) of 6.9%, which may reach $3.5 trillion by 2025, is making businesses and eCommerce retailers look for new ways to manage volume and logistics.
This has led to significant interest in headless commerce. A Vanson Bourne research involving 400 employees found that, as of 2021, 64% of enterprise organizations were using headless eCommerce, which is an approximately 25% increase from 2019. This figure is expected to grow rapidly in the next few years, which is in part due to the growth of eCommerce.
Many investors are also funding headless eCommerce platforms. Since 2019, several platforms have raised nearly $330 million to explore headless eCommerce technology. As per Forbes, a total of $1.65 billion has been raised to fund headless technologies, with several experts claiming that this will shape the future of eCommerce.
Experts also agree that fulfillment systems, marketing, and sales teams, and even content management systems or CMS will have more control over their processes since they can be decoupled from the front-end part of the business. Companies will be able to integrate end-to-end warehouse management systems like Hopstack with other CRMs and eCommerce websites, ensuring a seamless customer experience even on omnichannel platforms.
Comparing Headless and Traditional eCommerce
There are two main types of eCommerce: headless commerce and traditional commerce. Traditional commerce is the older model where everything is handled by a single platform, or where the customer experience is predefined by the platform. This model can be a good option for businesses that don’t want to manage multiple platforms or don’t have the bandwidth to handle all aspects of eCommerce sales, such as storage, delivery, and logistics.
Headless commerce is a newer model that doesn’t rely on traditional eCommerce platforms. Instead, it uses application programming interfaces or headless eCommerce APIs to connect to different parts of the business, like accounting, marketing, and shipping. This allows businesses to use the best tools for each individual task instead of being limited by a single platform.
There are three things that differentiate headless eCommerce from the traditional model:
- Headless eCommerce is not limited by the front-end design or structure.
- Headless eCommerce offers limitless personalization and customization for businesses and customers.
- Headless eCommerce saves time, effort, and cost for all users.
Impact of Technological Advances on Headless eCommerce
Developments in artificial intelligence, progressive web applications, and even UX/UI (user experience and user interface) are all creating new opportunities that drive headless commerce. Two such major technologies are APIs and microservices.
Application Programming Interface (API)
An API, or application programming interface, allows different systems to communicate with each other. It enables different parts of a business to work together seamlessly, even if they are using different software.
APIs, in the context of eCommerce, would allow a headless eCommerce platform to connect with a third-party provider (such as a shipping company) in order to automate tasks such as order fulfillment and shipping.
Most eCommerce platforms offer some level of API integration, but the degree of integration varies from one platform to another. Some platforms offer limited API capabilities, while others are more extensive and allow for a high degree of customization.
Microservices are small, self-contained applications that can be used to build a larger application. This makes them very scalable and easy to manage and update. Microservices help design an application as a set of small services that communicate with each other, allowing more flexibility, scalability, and easier testing and debugging.
Microservices can be especially useful in eCommerce applications that may require different parts of the application to be scaled up or down depending on traffic. For example, a microservice-based architecture can be used to create a headless eCommerce store where a separate service would handle the checkout process, allowing the main website to scale up or down without affecting sales.
Investing in Headless eCommerce Technology: Is it Viable?
The market for headless eCommerce technology presents a huge opportunity, but it is still growing. Businesses are in the process of exploring this new model, which can lead to a shift in the next few years. There are several indicators that show that going headless might be the future for many businesses.
Bridging the Growth Ga
Many small- to medium-scale businesses experienced sudden growth during the pandemic. This has led to a need for these businesses to find flexible solutions to help their merchants and suppliers meet demand without deconstructing and redesigning their front-end end and back-end processes.
Creating new platforms can be costly, and expansion can only make it more expensive. Businesses need to create solutions that are modular and deliver what is needed the most at the moment. Headless eCommerce will provide companies with an opportunity to switch to better CRMs, create new website designs, and use new digital warehouse platforms that can address logistics and storage issues.
Businesses can still use their end-to-end warehouse operating system like Hopstack to manage their inventory and delivery system while continuing their operations even if they are upgrading their website or adding a new marketing campaign or advertisement.
However, the eventual winner might be any company that combines the best elements of traditional eCommerce with headless eCommerce, especially for companies that might need support to grow into headless technology. The expansion that is happening and will continue to happen in the next few years will offer opportunities for software providers who can provide merchants, suppliers, and logistics companies with an optimized way of creating seamless customer expectations and experiences online.
Advantages of Headless eCommerce
Since headless eCommerce relies on APIs to connect to different front-end systems, it allows businesses more flexibility and control over the design and customer experience of their online store.
There are several benefits of using a headless eCommerce platform.
Customization and Personalization
Businesses can easily create custom designs for their store that reflect their unique brand identity. Customer data is readily available, so companies can create targeted marketing campaigns based on user activity and promote products and services that are more personalized to improve customer experience.
Headless eCommerce platforms can easily integrate with other systems such as marketing automation or customer relations management (CRM) software. It creates more marketing opportunities in other customer channels, whether through mobile apps or even brick and mortar stores.
Improved Customer Experience
The high level of customization and personalization means that companies have more control over the customer experience on various channels, such as mobile apps and online websites. Headless eCommerce uses backend data, which makes marketing campaigns more targeted and suited for the customers. It improves the agility of your marketing campaigns and makes them better suited to specific customer needs and desires.
Improved Conversion Rates
Headless eCommerce allows the separation of the front-end/back-end activity and makes it easier to test technologies and optimization checks that can improve customer experience. This further improves conversion rates, especially when a company could address issues regarding delivery and logistics.
Businesses have more flexibility when it comes to interacting with customers. Merchants and retailers can offer different front-end interface options including smart technologies, platforms, and new devices. Users can change the front-end without disturbing the back-end processes.
Disadvantages of Headless eCommerce
Despite the many advantages of headless eCommerce, there are also some drawbacks that need to be addressed. Here are some of the more challenging ones that companies need to look into.
Tracking Conversions and Sales Can Be Tricky
It can be difficult to track conversions and sales. With headless eCommerce, product pages are hosted on a different platform, so you can’t easily track how many people are coming from your site and converting.
Website Update Challenges
Designing and managing your website can pose more challenges. It can be more difficult to manage and update content because the content is often managed by a separate team or department. This can lead to communication breakdowns and conflicts over who owns which pieces of content. Tracking user engagement with content can also become more difficult because that data is often scattered across different digital commerce platforms and tools.
Your business might need to spend more on maintaining the front-end and back-end of your website, which are separate when you use a headless eCommerce platform. Both aspects would require different expenses for hosting and maintenance, so you can expect additional costs for maintaining any digital transformation.
Training Teams and Learning Curves
With front-end and back-end decoupled, your teams need to depend on management for additional training for logistics associates, marketing associates, and storage and warehouse associates. These teams need to understand your site’s design templates, upgrades, bugs, and other troubleshooting they may need to do.
Your marketing team will also need to rely more on IT to update content or explore new technologies to prevent delays in time-sensitive campaigns.
Headless eCommerce is the Future
Digital is the future. The more we learn how to integrate technology and human capabilities into customer service and eCommerce, the more optimized and more enjoyable the customer experience.
The growth potential of your business depends on how much you use innovation and customization. So, using headless architecture is the best answer for any company that wants to be part of eCommerce’s big future.