How to face the e-commerce challenges of today – without a head

Tim de Kamper
VP eCommerce Europe

Length

8 min read

Date

14 October 2022

E-commerce is booming. From 15% of total retail sales in 2019, global e-commerce surged to 21% in 2021 in response to the restrictions caused by COVID-19. Research companies like Morgan Stanley, Statista and McKinsey forecast further growth of up to 25%, despite an overall slowing of economic activity. But to continue thriving and staying ahead of the growth curve, organisations need to tick a growing number of checkboxes. From marketing and technology to data and creativity, there are key challenges to address to keep the e-commerce growth going.

Last year, global retail e-commerce sales reached $4.9 trillion and are expected to exceed $7.4 trillion by 2025. This year, B2B e-commerce adds $14.9 trillion on top of that. While many factors have contributed to this continued digital growth, the two leading factors are the emerging digital presence of companies and the accelerated consumers’ digital maturity. The way how companies sell and how people shop has changed permanently. However, this doesn’t mean that the e-commerce pie is shared equally.

Fiercer competition requires better experiences

The e-commerce landscape is getting more competitive as more companies pivot to launch or optimise their digital commerce operations. In the race to gain consumers’ attention, the cost of advertising has increased and the return on ad spend (ROAS) has reduced. CPMs on Facebook rose 47% in 2021 when compared to 2020, and Google, YouTube, TikTok and Snapchat are demonstrating a dramatic increase in advertising costs year-over-year. Smaller players with less financial means find they cannot rely as heavily on advertising as before. Additionally, advertising data is becoming less valuable as privacy concerns lead to stronger regulations and restrictions on third-party data worldwide.

The best way to stand out from the crowd is by creating exceptional digital experiences that inspire and attract consumers:

54% of shoppers enjoy browsing and discovering online more than in-store.
74% of consumers are likely to buy based on experience alone, according to a recent Forbes study on the value of CX.
32% of customers would consider breaking up with a favourite brand after only one poor customer experience.

The standard for a good customer experience is rising every year. So it is no small wonder that customer experience was named a CEO priority for all respondents in an IBM survey of 3000 CEOs across 50 countries and 26 industries. The big challenge to realising a differentiated customer experience is having the right technology architecture in place.

Technology drives e-commerce growth

Delivering optimal digital experiences is difficult when tools and technology are outdated, inflexible, and disconnected. Research by Gartner finds the CMO’s top concern for 2022 is, therefore, rebuilding the marketing engine for flexibility in a changing environment. Customer journeys today have become complex, spanning a proliferation of devices and touchpoints. This results in new marketing challenges like managing content, keeping branding and messaging consistent and connecting the marketing teams that work with their own systems. True omnichannel – integrating all the channels into one seamless customer experience that is both relevant and of high-quality – is difficult to pull off, despite the stakes. Meanwhile, new channels keep coming and gaining momentum, from podcasts, AR, VR and Metaverse, to voice assistants, smart home devices and car commerce.

Marketers also see more urgency to launch digital products and iterate in today’s rapidly changing digital world. The ability to experiment, analyse, pivot and deploy at the right time depends on agile solutions. All these developments lead to the need for a higher level of involvement from back-office technical roles. Because in today’s modern marketing environment, technology has become a cornerstone of doing business.

Every company is a tech company

The growing dependency on technology has led the marketing department to collaborate closely with the IT department. From data collection to personalisation, hypertargeting to focusing on high-value customers, technology enables it all. The IT department has seen its responsibilities grow to support a growing number of systems, including CMS, CRM, data warehouses and now CX platforms. The traditional gatekeeper role of the IT department has evolved to become a business driver. Every company is turning into a technology company, because, as Forbes puts it, “Today, no company can make, deliver or market its product efficiently without technology.”

Historically, the leading choice for numerous organisations has been ‘monolithic’ platforms that contain a general solution for their most frequent marketing and e-commerce needs. These suites provide an all-in-one answer that addresses prevailing challenges with out-of-the-box solutions that ‘fit all’. The monolithic architecture is also associated with various cons, such as slow go-to-market timelines, inflexibility and lack of agility, complexity and scaling issues. In response to these concerns, a new approach arose that decoupled the front end and the back end.

The rise of headless

The term “headless” comes from the analogy of chopping the “head” (the front end) from the “body” (the back end). By decoupling the presentation layer from the back-end processes, content can be easily served to whichever digital channel is connected. One head becomes many heads. This means that developers can build whatever they want and however they want, without having to worry about how it will be presented to the customers. The rigidity of a coupled system is replaced with the flexibility of having two or more systems, loosely coupled with APIs. By going headless, developers can also address the pain points that have appeared due to increased smartphone adoption and create a mobile-optimised shopping experience. The flourishing of mobile commerce is one of the key reasons why headless became so popular. When headless solutions entered the market, the available full-suite solutions proved inflexible to address the growing mobile traffic and the growing matrix of buyer touchpoints, unlike headless.

Other cited technical reasons for choosing a headless architecture are flexibility, faster time-to-market and stability. Additionally, companies prefer not to be too dependent on one system and one full-suite supplier. For essential marketing practices like loyalty, A/B testing and big data analytics, they want the solution that is best in its class. A headless architecture allows you to integrate these kinds of tools into an ecosystem. When a certain tool becomes inefficient or outdated, replacing it is relatively easy in a best-of-breed approach. This way, headless addresses a prime dilemma for organisations today: adapting to change without having to overhaul the whole architecture.

Headless comes with challenges

With all its pros, the headless architecture also comes with cons. You need to build what you want from scratch, which requires vision and ongoing development. This also means that marketing becomes IT dependent for making content changes and running campaigns. The biggest pitfall of going headless is doing it blindly and losing your head. Want to know more about these challenges? Read our other blogs The challenges of going headless, Composable commerce for controlling the digital experience and How to tackle the ‘head’ with Headless to learn more about the composable approach or download the whitepaper The Ultimate Guide to Headless and Composable Commerce. In this extensive guide, you will learn how the composable architecture builds on the headless approach and puts marketing back in control of the front-end experience.

Going headless with content and commerce

“The term headless typically refers to a headless CMS that organises and stores all the content data (images, text and videos). Popular headless CMSes are Sanity, Strapi, DatoCMS, Builder, Kontent.ai, Prismic and Contentful. The content is delivered via an API to a front end, which can be custom-coded to fit specific needs. In headless commerce, the body consists of an e-commerce platform, which can be a full-suite solution such as Magnolia or Salesforce or a specialised commerce platform such as BigCommerce, Shopify and commercetools. While full-suite platforms offer a native front end, this can come with the disadvantages of using a suite solution. That is why full-suite platforms are now moving towards developing front-end capacities that match better with the headless approach.” – Tim de Kamper, VP eCommerce DEPT®

Headless is booming – for enterprises

In 2016, there was only one headless vendor in the Gartner Magic Quadrant for Digital Commerce. The Magic Quadrant for 2021 now features eight vendors offering headless solutions. The adoption of headless is booming globally, and headless is often called the future of e-commerce. According to research by Vanson Bourne in 2021:

64% of enterprise organisations are now using a headless approach, a nearly 25% increase from 2019.
92% of respondents state that implementing headless technologies makes it easier to deliver a consistent content experience.
92% of respondents recognise digital experiences as essential to their organisation’s success.

Still, only 2% of all websites worldwide use headless, mostly enterprises. Why are midlevel and SMBses not embracing headless with the same fervour?