Gain New Revenue Streams with Headless Commerce
Headless commerce is a term we use to describe the ability for an ecommerce platform or architecture to run with a detached frontend. Giving more explanation, this means that the backend store administration and ecommerce functionality is all handled in one or more platforms as you would expect, but the presentation layer that your customers see and interact with is now a separate thing. The frontend can be your store website, a mobile app, or some other marketplace or device that is pulling data from your platforms. Headless commerce allows this incredible flexibility so that businesses can change and adapt their sales channels quickly in whatever way is required to reach their customers. This article aims to show you how a headless commerce setup gives online retailers the power to explore new revenue streams.
How headless commerce works
But first off, how does it work? Headless commerce relies on web services and APIs (application programming interfaces) for passing data between a platform or platforms and any detached frontend, application, marketplace, etc. A headless commerce architecture can be as simple as using one ecommerce platform to handle all of the ecommerce functionality to a much more complex setup where multiple best-of-breed platforms are used for specific purposes (ecommerce, ERP, OMS, PIM, CRM, CMS, etc.). Whether a business uses one platform or many, APIs are what make the data available wherever it’s needed. Here’s a simplified visual representation of what a headless commerce architecture with detached frontends looks like.
As you can see in the graphic, the API layer is what sends and receives data from the commerce architecture to the various frontends. This is powerful because not only can a website frontend use this data to show products, catalog and checkout, but it also provides a method for connecting to apps, third party marketplaces and anything else!
Can any platform run headless?
No, not necessarily, although in today’s day and age most can to some degree. There are a lot of specialized software and services available to us now. The creators and developers of these tools have realized that in order to reach the widest audience their software needs to integrate with other software and services. Whether it’s a platform or a tool, many creators choose to make APIs available to use. This is partly why you see so many plugins and extensions available within a platforms for extending its functionality. The extension or plugin you need may already exist and just needs to be installed and configured. If it doesn’t, then software developers (either first or third party) may be able to build the integrations you need using the available APIs.
Where you might not have APIs available are with older and legacy software, although new software isn’t exempt either. When this is the case, depending on the nature of the software you may still be able to build, or have built, he integrations you need. This is something to consider on a case-by-case basis. Additionally, you can also swap out the software or platform to something that does have APIs available to suit your needs.
Gaining new revenue streams
Ecommerce today is much more than just a website. According to conversion rate data of online shoppers in the US for the 1st quarter of 2019, only 4% of shoppers using a desktop computer or tablet, and only 2% of shoppers on mobile, convert into buyers. That’s not a very high conversion rate at all! To increase sales, businesses need to get their products in front of their target audience wherever they shop and are most likely to buy. Headless commerce allows this to happen with the benefit of businesses only needing to manage their products and data ideally in one centralized backend location. From this location, the product data goes out to each frontend while order and customer data comes back. With the right headless commerce setup, business scalability and growth into new sales channels is both doable and manageable. However, with the wrong setup, new revenue streams can grow business but become a nightmare to manage, leading to swivel chair processes and increased staffing overhead.
Choose your sales channels
When branching out into new sales channels, businesses must first consider where their customers shop and how a product could best be sold to those customers. That’s obvious enough, but the reason I bring it up is because there are so many possibilities. Retailers can get pretty creative with their opportunities. Let’s look at some ideas and examples.
The most likely example I can think for many online retailers is to expand their sales channels into one of the many online marketplaces, the massive hubs such as Amazon, Alibaba, Ebay, Google Shopping, etc. There is a lot of competition in these spaces, but connecting your ecommerce platform to these marketplaces may just open the door to increased sales.
Although this isn’t specific to a headless setup, many businesses are offering their products as a subscription-based service. Everything from food delivery to children's crafts to on-demand video has made its way into an ongoing subscription model. This is convenient for shoppers who don’t mind a monthly charge and could be a great opportunity for many businesses not yet doing it. Like your traditional marketplaces, subscription-specific marketplaces like Cratejoy are out there too, which could open up a new sales channel.
One of the earliest forms of headless commerce is via a branded mobile app. While web app technology is blurring the lines between your traditional website and app, a mobile specific app can still be a great way to reach an audience that would benefit from it. An example that comes to mind is the Nike+ Run Club app that works with your phone and smartwatch. This app lets users tag their shoes to keep track of the distance run in that pair. What’s interesting here is that the app gives a “distance remaining” metric for tagged shoes to let the user know when it’s likely time to purchase a new pair. This is a pretty creative sales and marketing strategy.
From trade show booths to airport lobbies, strategically placed kiosks could be a great way to open up a new sales channels. A kiosk could potentially just run a version of the business website, but a separate headless frontend specific for this type of buying experience is another option. It’s another topic, but headless commerce is ideal for creating the perfect customer experience.
Visuals aside, voice activated virtual assistants such as Google Assistant, Siri and Alexa offer new and evolving opportunities for some merchants to reach customers. If you’re sceptical of this, think about what Marc Lore, CEO of Walmart’s e commerce decisions had to say in 2017.
“Voice is the next big way for us to be able to leverage data from a person’s car, home, or device. It will allow them to shop in a very conversational way with a robot, in the same that they would with a specialist on a showroom floor of a retailer. And that robot will know you as well as your mom or dad.” (Source)
Internet of Things (IoT)
The internet of things is all of the connected or smart devices that you don’t typically think of when you think of online shopping, but in reality it’s an exciting opportunity for many retailers and manufacturers. From a supply chain point of view, smart devices can tell businesses when inventory needs to be replenished or that a perishable product is expiring soon. Samsung and other manufacturers are integrating connected technology into their appliances. Even something as simple as a furnace air filter can now notify you when it’s time to replace it. Like virtual assistants, these opportunities are still evolving and will continue to become more prominent in our lives as time goes on.
I’m sure there are countless other examples out there that I haven’t mentioned or have yet to be conceived, but the point of all of this is just to show that headless commerce is a very real concept that has huge potential. Now would be a good time to stop and consider how your own business could use headless commerce? What sales channels could you tap into? What makes sense for the type of products you sell?
Start planning new revenue streams
Do you see opportunity that you think could be the next big revenue stream for your business? Your first task is to understand if your digital commerce architecture and/or ecommerce platform is capable of running headless. If it is, you can start planning how to engage this opportunity. If it isn’t, you can decide if the opportunity is great enough to consider moving to a different platform. In either case, an ecommerce or commerce architecture consultant is worth talking to early on. Consultants in these fields will be able to quickly give you the answers you need to start moving forward with knowledge in hand and a feasible plan.