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The rise of headless commerce

By Retail Technology | Thursday September 9 2021

Analysts have been banging the drum for ‘headless commerce’ recently but why has it taken on such added importance? ecommerce expert and Spryker CEO Alexander Graf explains

In many elements of commerce and retail, B2C leads and B2B follows. That is certainly the case with one of the current ecommerce trends making enormous waves in B2C—headless commerce.

Headless commerce is essentially a way of making the physical world as easy to work in as the cloud one. Industry analyst group Gartner—always at the fore when it comes to identifying tech trends—has stated its importance in B2C retail, and this extends to B2B too.

In traditional B2B models, the principal goal has been to sell the product and boost revenues by bolting on maintenance, after-sales support, and spares. But we live in a different world now, in which it is almost impossible to compete on price alone. Manufacturers worldwide can enter a market with a low-cost version of a product, so B2B firms need a different approach and to switch to a more consumption-based model.

How can B2B brands make this change and use headless commerce to maintain and grow market share?

What is headless commerce?

 Gartner stated that “traditional commerce applications require you to deploy the entire application each time you make a change or want to make a change”. Headless commerce means back-end ecommerce functionality is separated from the front end. Gartner refers to this as headless commerce breaking the platform into two separate and customisable elements—the business logic, such as APIs that are integrated for ‘add to cart’, and the UI.

Headless commerce has emerged in no small part thanks to the rise of the Internet of Things (IoT). IoT offers astonishing levels of granularity. In agriculture, for example, manufacturers of farming machinery offer pricing models so advanced that sensors in the field know whether a machine is being used or not, all the way down to the level of knowing how many individual watts were used in the process.

This allows manufacturers to offer bespoke subscription models for equipment. These are highly personalised, often pay-per-use, and tailored to suit a particular use case. It is a model that closely follows mobile phone subscriptions and is a powerful way of building customer loyalty. Further, manufacturers can access data about the customer, equipment and plant usage and use that to improve and tailor the offering even further.

Headless commerce in reality

If one thinks about the process involved in purchasing high-end manufacturing equipment, historically there is a significant price tag. For a bigger organisation, that is less of a problem. But for smaller firms, it might mean that they cannot afford that equipment and ultimately benefit from its superior functionality.

It is even harder to justify if the machine is to be used for light workloads, which all means that the manufacturer would miss out on a sale. So, no one is winning in this scenario. That is why a move to subscription pricing and consumption makes such sense for all parties.

 For the manufacturer, offering the machinery on a subscription basis for a small monthly fee and capping the number of uses means that it generates revenue from a machine that would otherwise have been sitting idle. Initially, this would not be a substantial income, but this model becomes much more viable if the manufacturer could secure enough small users. For the smaller firm leasing the machinery, they can fulfil orders, create employment and enjoy all the benefits of working with cutting-edge equipment.

The cloud-like flexibility of headless commerce

Headless commerce—especially the decoupling of front and back ends of commerce—is critical in giving organisations the flexibility and agility that is so important in modern business. Larger companies with greater cash flow are inevitably less interested in a headless model because it is more tax-efficient to buy equipment outright and amortise the cost over time. SMEs do not have the liquidity upfront.

There is a strong parallel between headless commerce and the cloud. Both allow B2B companies to expand their portfolio by adding mid-market customer opportunities into their sales model with their flexible pricing and usage models.

Legacy systems and interfaces such as ERP are part of the problem and make it hard for organisations to reap the benefit of headless commerce. They cannot manage the volume of variables such as checks on availability, updating pricing, and real-time inputs such as the data from IoT sensors. It is not an exaggeration to state that headline commerce cannot happen without modern B2B marketplace technology.

Headless commerce has already had a significant impact in B2C, and it is starting to gain traction in B2B. It is creating new, innovative and exciting business models, and it is something that no B2B firm can afford to overlook.

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