Composable Commerce: Why it takes more than just a flexible technology stack

MACH, best of breed, headless, APIs, and PBCs: These terms have been staples in e-commerce for years. So, what makes the latest buzzword “composable commerce” the model for the future of digital commerce businesses? In this article, Dr. Philipp Hoberg from IT consultancy valantic explains why successfully implementing a composable commerce strategy requires more than just a flexible technology stack.

The shift towards composable commerce models is not surprising. Dynamic markets call for quick responses to changing needs. Inflexible monolithic legacy infrastructures increasingly pose risks for strategic business development, as they stifle the innovation and responsiveness needed to anticipate and address changes in consumer behavior and emerging market opportunities.

Multichannel models increasingly under pressure

After years of investing in technologies, infrastructure, teams, and processes, the euphoria generated by the digital boom during the coronavirus pandemic has faded, leaving many companies somewhat disenchanted. Following several years of experimentation and growth, many e-commerce managers, especially in a multichannel context, now face the challenge of ensuring the online business delivers tangible contributions to their company’s overall success.

A composable commerce strategy integrates various vendors’ top-tier e-commerce components like building blocks to create a tailored application.

The days of easily securing large budgets to keep up with digital competition are over. Now, suddenly, demands are emerging, such as the need for e-commerce platforms to become profitable or serve as strategic drivers for growth (for example, in an international context).

At the same time, competitive pressures and customers’ expectations continue to rise. Especially in B2B, users want more than just a sourcing platform; they seek efficient interaction and collaboration with their suppliers. However, rigid systems hinder these capabilities.

Traditional, mostly cumbersome, legacy infrastructures have difficulty meeting these demands. Their disadvantages are clear:

• Focus on time-consuming and cost-intensive maintenance: Updates, minor changes, and other “construction sites” typically have nontrivial dependencies in other parts of the overall system. Consequently, maintenance tasks are time-consuming, reduce performance, and may even cause temporary outages.
• Laborious testing: Testing new features in a monolithic architecture often turns into a project of its own, frequently resulting in promising ideas being abandoned to avoid unpredictable costs.
• Dependencies and unclear tasks within teams: Monolithic organizational structures and large teams hinder efficient task coordination and thwart innovation. Developing a new idea into a marketable feature often takes a long time.
• Lack of overview: As e-commerce often begins as a side project, the growing complexity of the architecture results in a lack of overview, hindering the efficient mapping of new requirements.

Composable Commerce: A panacea?

Customers now expect personalized experiences and the integration of online and offline channels to create a seamless customer journey. This presents not only strategic challenges but also significant operational hurdles for retailers. Many companies have only just started dismantling their data silos and integrating their various subsystems.

Adapting to new technologies and digital platforms is requisite for implementing a customer-centric approach. Additionally, companies must continuously analyze customers’ needs and use these insights to develop new products and services, such as optimizing customer interactions across all channels.

In light of these strategic and operational challenges, composable commerce might appear to offer a promising remedy. A lean, adaptable, and tailored technology stack enables retailers to continuously optimize their digital touchpoints, processes, and underlying infrastructure, and adapt these to new requirements. For instance, integrating microservices lets specific functions—such as payment processing or product recommendations—be developed and updated independently, positioning retailers to respond quickly to market changes and introduce new features without overhauling the entire system.

Faster, more flexible, more efficient

A strategy focused on APIs facilitates seamless and rapid integration of different systems, ensuring a consistent customer journey across all digital touchpoints. Additionally, a cloud-native architecture enhances scalability and flexibility, enabling companies to scale their IT resources efficiently to meet seasonal demand fluctuations.

The holistic, multidimensional perspective of composable commerce differentiates it from traditional, technology-centric approaches.

Why Composable Commerce initiatives fail

The flexibility offered by composable architecture concepts such as MACH (Microservices, API-first, Cloud-native, Headless) is not the panacea itself. Rather, achieving market agility requires embedding the adaptability paradigm in the corporate mindset and at every level of the company’s operations.

A new online platform will fail to deliver its anticipated benefits if businesses continue to depend on inflexible internal processes and outdated organizational structures. Without establishing further “composable capabilities” – from the company’s internal organizational structure to its business processes – composable commerce strategies are destined to fail.

What is needed:

• Dedicated, interdisciplinary teams that work independently, letting them advance their product modules quickly and focused, within flexible architectural frameworks
• Overarching team orchestration through agile program management
• End-to-end strategy that covers goal setting through to success measurement, enabling the ongoing prioritization and reassessment of new requirements and projects
• Corporate culture that fosters ongoing learning and improvement, in line with the principle of adaptability
• Effective change management and technology enablement that enhances understanding of the chosen technologies and architectural principles – such as training, hiring new specialists, and collaborating with external partners.

How much composability does a company need?

Achieving greater speed, measurable efficiency gains, and overall agility with a composable commerce architecture requires viewing this initiative as a holistic transformation of the company’s structure. Adopting a composable commerce strategy thus involves fundamental change.

The online store of the future grows with the company

E-commerce has evolved beyond a niche for online retailers and is now relevant to all businesses. The coronavirus pandemic showed that almost anything can be sold online, not just through a company’s e-store. Future success in e-commerce hinges on a well-defined strategy and the right technology.

How much composability a company needs, and which capabilities are essential for success, will vary based on the business model concerned. For instance, retailers offering standardized bulk products, such as clothing or household goods, need highly scalable systems, enabling them to handle large order volumes efficiently and adapt flexibly to seasonal fluctuations in demand.

In contrast, retailers with specialized product ranges and more complex configuration and order processes (e.g. individual cut-to-size products and cut-outs in the steel trade) in particular must be able to continuously optimize these processes and adapt them to customers’ needs.

One thing is certain: composable commerce is here to stay. The crux of this concept lies in establishing dynamic business structures as an indispensable prerequisite for actually leveraging the potential of what may initially seem like a highly technical initiative.