Understanding the Benefits of Composable Commerce for Retailers

benefits of composable commerce

There is no denying the importance of customer experience for retailers looking to stand out in a crowded ecommerce marketplace. There are many approaches to building an experience that delights, converts, and leads to future sales and growth. However, the path to a perfect online customer experience is unique to each organisation. When constructing those technical aspects of the journey, retailers need to contend with everything from the core commerce functionality (shopping cart, promotions, checkout) to customer service (customer support, FAQs, intelligent chatbots, reviews), and everything in between. The question for retailers today then becomes: can we find everything we need from one platform, or do we need to piece together the building blocks for a custom solution?  

One approach to consider is composable commerce. A term coined by Gartner, composable commerce is a method of constructing and managing digital commerce programs that rely on individual building blocks to create custom and flexible solutions. This path gives brands the freedom to choose the software components that fit their unique business requirements. Each component, or packaged business capabilities (PBC), can be deployed and scaled independently, answering a specific business function. They all roll up into one connected solution via application programming interfaces (APIs). 

SAP is one software giant that has embraced the trend with its on-demand module offerings. According to SAP, brands embracing composable commerce are seeing a significant increase in customer retention; however, this approach isn’t always a fit as we will explore below. 

Why you should evolve your technology stack 

A composable approach allows retailers to be nimbler, incorporating the latest technologies to meet or exceed changing shopper expectations. The challenge is that many are beholden to monolithic ecommerce platforms and ageing legacy application suites that lack flexibility. At SAP’s annual Sapphire conference, Winnie Albornoz, director of Product Marketing for SAP CX explained: “Nearly 45% of leaders focused on customer experience have said that their top challenge is an increased need to deliver differentiating experiences. And that’s difficult because, on average, most organisations use at least nine different channels to engage customers.” And therein lies the rub, meeting customer expectations is hard if you don’t know who the customer is or can’t piece together their journey flow across so many channels. 

That said, there are positive elements at play as well. Albornoz also shares that the reward is worthwhile for companies that do adopt agile CX programs. The benefit is “to the tune of 2.5x year over year increase in customer retention rates,” she added. In recent research, Gartner has been asserting that organisations with a composable approach will outpace the competition by 80% in terms of the speed of new feature implementation. 

Taking a closer look at what it means 

Taking a composable tack can be more complex than simply separating the front-end experience from the back-end technology powering retail sales. That separation is known as headless commerce. Headless is a good place to start; however, retailers looking to build a composable architecture take it a step further. A composable approach means retailers have the ability to divide their platform into individual services that all work together for one cohesive experience.

Companies like Coveo customer Nespresso are pondering the right approach to having this agility. Ian Bennett, who heads up best practices and personalisation optimisation for Nespresso, shared that the brand is still weighing headless ecommerce versus composable versus the more traditional monolithic tech stack; however, they are leaning into the composable ecommerce experience today. 

“The composability approach for us as a global brand truly brings us flexibility in deciding what additional ‘plugged-in’ tools work best for us. Allowing each market to compose their local toolset enables us to not be locked in and try to force a one-size-fits-all solution when we know in many cases that doesn’t work – especially within the ecommerce industry,” he explained.

According to Riad Hijal, the Global Head of Solution Management for the SAP Commerce Cloud Solution at SAP, fitting together multiple composable solutions from different vendors can be expensive and time-consuming. “Businesses across all industries are starting to recognize the long-term value of composable commerce,” he said. “But many still struggle with barriers to adoption including higher up-front costs and increased complexity.”

Breaking it all down

There are many reasons to consider a composable path the primary benefits for business, including: increased efficiency and profitability, flexible solutions without vendor lock-in and a better user experience. Companies can choose from best-in-class components, such as content management systems (CMS) and marketing automation software that better enable targeted, personalised shopping experiences. 

One way to gauge fit is by examining the stage of technical maturity a company is at, and what resources are available to devote to the implementation. Given the technical demands, a composable approach can be complex and take longer to implement, require more upkeep, technical know-how, and staffing. To make the right decision on whether (or not) to go composable, retailers must factor in size, time and budget requirements associated with their business goals. 

While composable is an attractive option for many retailers, it is a big commitment of time and money and one that deserves ample consideration before changes are implemented to your technology stack.