December 8, 2022

By: Naina Singh, Senior Consultant, LTIMindtree

One of the greatest buzzwords in e-commerce is ‘headless commerce,’ but because of the technical lingo, it is hard for marketers to know what it means and whether it is worthwhile. One thing is certain, though: headless brands are different. Are they, nevertheless, better off?

Brands are using every tool or technique to create a more immersive experience and gain an advantage due to the rising competitiveness of the e-commerce sector, including headless commerce.

What is headless e-commerce?

In simple terms, headless e-commerce is an approach to the e-commerce architecture where the front-end is decoupled with the back-end (making the back-end headless), which allows both layers to work independently through an application interface (API). Even without the head, the back-end can function properly when plugged into the selected front-end. This solution provides the flexibility to manage, store, and update the front-end content without having a delivery layer. This way, a customer has a great and more responsive experience with faster delivery compared to traditional e-commerce. This is essentially the future of e-commerce.

A large number of brands are going the headless way, and more than 60% of organizations agree that headless commerce can significantly improve customer engagement and conversions. Big brands like Amazon are going headless, which provides them the ability to develop a new storefront on multiple platforms and devices. It provides their customers the ease to shop for products across multiple channels like mobile apps, Amazon Dash, and smartwatches.

Architecture of headless e-commerce

Traditional vs headless e-commerce

Why is headless commerce trending

The e-commerce industry is changing. The size of the worldwide e-commerce industry was estimated at USD 9.09 Tn in 2019 and is projected to increase at a CAGR of 14.7% from 2020 to 2027.

Online sales made up 18% of all retail sales worldwide in 2020. More than 2.14 Bn people purchase digital goods globally now. Headless commerce is becoming a more common option for brands as the e-commerce industry continues to undergo drastic upheaval.

This makes sense when we consider the convergence of important e-commerce trends that entrepreneurs cannot ignore.

Due to the record number of new e-commerce businesses, brands must differentiate themselves to compete.

As customer acquisition expenses rise, organizations are forced to concentrate on fostering loyalty through unique, tailored experiences.
Simply put, businesses must effectively leverage unique omnichannel experiences to capture consumers’ attention, convert them into clients, and maintain those relationships.

Headless commerce fills that gap. By enabling developer experiences, headless guarantees the ability to design amazing shopping experiences at every point of contact with the customer. Without restrictions on design or development, you can sell in any place.

How does headless commerce work?

API is the foundation of headless commerce. An API is a connection that allows real-time information to be sent from the front to the back-end.

A back-end platform like a CMS is used to manage content that is visible to customers. Depending on your needs, you can use different backend systems with headless storefronts. These systems may comprise:

• Content management system (CMS)
• Customer relationship management (CRM),
• A progressive web app (PWA)
• Digital experience platform (DXP)

These extra SaaS (software as a service) solutions create client touchpoints like a vending machine or mobile app. Every time a customer interacts with your storefront; an API request transmits that information to your back end. Customers only see the front user interface because of your headless backend.

Brands using headless e-commerce

The best example of a company that has successfully adopted a headless commerce system is certainly Amazon. Amazon is clearly the thought leader in this field after launching Amazon Echo and now Dash. With Google Home, Google is trying, but no other retail businesses are truly dominating in this space.

Amazon offers a dash button, a small electrical device you can attach to the side of your washer so you can quickly reorder extra detergent by clicking it, thanks to a headless commerce system. Dash button orders now happen twice per minute, up 70% from the previous year.

LTIMindtree in the headless e-commerce space:

LTIMindtree has implemented headless commerce using Magento as a leading consumer electronics innovator. The solution was implemented to drive premium consumer experiences.

• By enabling a premium shopping experience, delighting through operational experience, and elevating consumer engagement
• By driving Centers for Engagement (C4E) to drive standardization, governance, and reusability for strategic platforms (Salesforce, MuleSoft, etc.)

Is headless architecture the future of e-commerce?

From ‘nice to have,’ headless commerce has become a ‘must have’ approach for organizations to cope up with the dramatic change in e-commerce trends to consumers’ demand. Retailers must leverage this headless approach, which is more flexible, gives users personalized and unified experiences, and is competitive. The headless approach is the best omnichannel, giving retailers the ability to leverage all currently present channels from Alexa and Amazon Dash to IoT. It can increase retailers’ conversion rates and lower customer acquisition costs with content-based strategies bringing more organic traffic than paid advertising.

Who are the biggest winners in headless e-commerce?

The biggest headless commerce investments are now made by bigger businesses. If your business relies heavily on your website or app’s speed and brand image, a headless architecture is more likely to be advantageous. Alternatively, if you manage heavy web traffic or want to grow internationally, you are more likely to gain from this.

In terms of traditional versus headless, small merchants and business owners who specialize in a particular region or those with limited IT capabilities may not profit as much from headless and are better off sticking with their current e-commerce platforms.

Trends that are driving companies to switch to headless

Faster time-to-market, personalization, and customization are some of the key benefits of headless e-commerce. Let’s look at the topmost trends driving brands to switch to headless.

Mobile Commerce is Enormous

Consumers these days are using multiple channels for their online purchases in which mobile channel purchase is huge. By 2025, the mobile commerce market is expected to be worth $270 Bn. By 2022, 187.5 Mn people are anticipated to buy on their mobile devices.

E-commerce can profit from this trend by using a headless commerce solution. Without affecting the back-end, developers can create websites with unique front-ends for every type of device.

Brand New Search Engine Optimization Rules

Many e-commerce firms’ marketing tactics heavily rely on SEO. Google did, however, reveal a significant update to their algorithm in June 2021, with the page speed increasing dramatically. Google has introduced three core measures – Largest Contentful Paint, first input delay, and cumulative layout shift. In simple terms, this is how Google’s algorithm evaluates the speed at which a website loads.

You’re set up for SEO success with headless commerce. The front-end must only load for site visitors to access it. As the back and front-end are independent, this leads to quicker page loading times.

How can omnichannel experiences be powered by headless commerce?

Today, the buying process can start and end on any device, anywhere. Your products must be widely accessible across sales channels and provide a seamless experience to draw in clients and convert them. Likewise, customers demand that businesses offer e-commerce alternatives through a variety of platforms or applications for customer interaction, including kiosks, browser-based websites, mobile apps, tablet apps, and more. Headless commerce solutions are used to support this omnichannel strategy.

Additionally, innovation is necessary to draw in clients. A Deloitte analysis of retail and consumer product trends found that 73% of customers bought goods in 2020 using ‘a mix of physical storefronts, e-commerce, digital applications, social commerce, and marketplace platforms.’ In comparison to a single channel, successful omnichannel strategies are predicted to improve average order value (AOV) by 13% and buy frequency by 250%.

Headless e-commerce empowering omnichannel:

Customer Personalization

The personalized experience that each online business provides customers is what sets it apart most from traditional brick and mortar retailers. Your login ID is stored in the cloud so that you may check in from anywhere and pick up your shopping from where you left it the previous time.

Headless Unified API Platform Structure

To meet the expectations of today’s customers, brands who want to provide Direct to Consumer (D2C) e-commerce services must offer a variety of methods for customers to visit their websites while maintaining a consistent user experience. And without a doubt, the finest architecture currently in use for implementing such solutions is headless commerce.

In terms of headless versus traditional architecture, the main benefit of the former is that it is an API-driven system, making it simple to interface with the back-end platform to maintain a consistent customer experience across all platforms.

Consistent Content Across Channels

You can maintain consistency in your content across all platforms with headless commerce. The APIs just need to be updated once on the back-end for these changes to appear on the appropriate panel. Even if you are subtle, it is hard to avoid being seen by customers because of a brand’s colors, emblems, and taglines that they connect with so strongly.

Unified Customer Experience Across Channels

Customers may interact with the forum without constantly visiting the web shop thanks to headless platforms, which provide a cohesive presence across many channels without re-architecting the whole design. The introduction of additional consumer touchpoints backed by the API layer to guarantee data consistency and functionality is made possible by headless commerce for companies. For instance, by using the ‘Shop Now’ feature in each of their posts, marketers may turn their Instagram profiles into mobile stores.

Conclusion:

As customer buying behaviors are evolving with ever-changing trends in technologies, headless solutions have become the future of e-commerce. It is rapidly becoming popular for web-based retail sites and big brands, as the solution is flexible, adaptable, customer-centric, and helps with faster speed-to-market. By going headless, you are future-proofing your business as it makes your website more flexible and adaptable to the changing technologies and future trends.

References:
https://blog.boldcommerce.com/how-headless-architecture-can-help-solve-omnichannel-challenges
https://www.grandviewresearch.com/industry-analysis/e-commerce-market
https://www.trade.gov/ecommerce-sales-size-forecast
https://www.hostinger.com/tutorials/headless-ecommerce
Headless Commerce: why is it the future? – Story of AMS Insights
Number of digital buyers worldwide from 2014 to 2021 (statinvestor.com)