eCommerce

Could ‘Headless Commerce’ Strategy Help Retailers Compete With Amazon?

online shopping

It’s a simple concept, but one that is quickly revolutionizing how consumers buy from eCommerce. It’s called headless commerce. Aside from the funny name, technically it’s a digital architecture that separates the back end and front end of a retail website to optimize search results, customer experience and the purchase journey. New research says it may be the key to leveling the future eCommerce playing field for Amazon competitors.

Technicalities aside, here’s how it works. Suppose a recent college grad is looking for a dress to wear for job interviews. In a standard model, that consumer would search on “job interview dresses” (maybe starting on Amazon instead of Google). The search page would be populated with retailers. Now the buyer clicks on Dress Store A, where the home page shows the typical UX with the logo, total inventory tabs and generic images.

Now let’s go headless. The college grad searches on “job interview dresses.” The retail list is specific to that type of apparel. And when the buyer clicks on Dress Store A, she goes right to a page that has a selection of seasonally-appropriate dresses with the “buy” button prominently displayed.

It’s a nuanced but important addition to the eCommerce experience. With so many searches beginning on Amazon, the headless approach is a critical approach. For many eCommerce companies Amazon’s most important native advantage is not its purchasing and distribution power, but rather its ability to streamline and customize the payment process, making it frictionless and intuitive for consumers. One study shows that for 77 percent of these retailers, developing a solution that can allow them to attain levels of order management efficiency comparable to Amazon is now a top priority.

According to the same study, 62 percent of top retailers believe headless commerce can improve conversions and consumer engagement.  That’s because headless commerce makes it easier for retailers and brands to get a holistic view of front end and back end user experience and tweak consumer-facing touchpoints and payment processes as needed. When data indicates that a change is needed in a retail front end, the headless commerce approach allows a retailer to redesign the front end of the website or add new content without it impacting back-end operations. That makes retailers more agile in responding to granular user experience insights, but it also means a shift in many business models that were built around an all-in-one sales platform solution.

Walmart was an early adopter of the headless eCommerce approach,  using a tech stack that promoted faster loading times, intuitive design and an app-like experience on mobile. Years of research show tangible benefits from separating back end from front end in the name of speed and efficiency. One study found a 35 percent organic traffic boost for online retailers who transformed their web pages to look and feel more like apps on mobile using a headless approach. For Walmart, the gambit has paid off consistently — eCommerce sales were up by 41 percent in the third quarter, with 55 percent of consumers now saying they prefer to do their online shopping at Walmart rather than Amazon.

According to Brett Biggs, Walmart CFO, Walmart is seeking to expand its marketplace business by focusing on consumer experience while maintaining a structure that allows for the world’s largest grocer to process orders more efficiently while growing inventory. Speaking at the UBS Global Consumer Retail Conference, Biggs stated, “Marketplace is going to be a big part of our business. I mean if we’re sitting here three years from now, I think we’re going to be talking about a much bigger marketplace business than we have today.” Growth, for Biggs, also means having a front end that offers a seamless, app-like experience powered by a robust back end capable of adding volume that is visible yet uncluttered on the consumer-facing side. “And that adds to assortment, which adds stickiness to the customers. It’s very circular. There’s a loop there and a flywheel there.”

Headless commerce is catching on with most retailers, even if how they apply the approach varies, from the use of APIs to create dynamic pages to inventory curation based on location-based real-time data.  Approximately 61 percent of online retailers plan to implement some form of headless eCommerce structure this year.

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

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