It may come as a surprise to many to hear that Amazon, one of the biggest and most successful retailers on earth, gets around half of its revenues from operations which have very little to do with retail.
In fact, most of its key rivals in retail and technology, including Alibaba, Google and Microsoft also owe huge chunks of their yearly revenues to this new technology which promises to fundamentally change the way the internet works.
“Everything is will soon be completely on the cloud, soon all you’ll need is chrome,” Commercetools chief product officer Kelly Goetsch told Charged.
Commercetools is at the very tip of the cloud computing spear, pioneering the concept of ‘headless commerce’ and, in its own words, “providing the building blocks for the new digital commerce age.”
The concept of headless commerce was created by Commcercetools’ co-founder and chief executive Dirk Hoerig in 2013, according to Goetsch.
In layman’s terms ‘headless commerce’ involves separating the front-end of a website, where the customer will browse, interact and buy items through various touchpoints, and the back-end operational systems which retailers use to run their business.
“A lot of organisations said are you nuts, we need our customer data in our four walls, we have to do that”
Instead of one ‘monolith’ CMS system which encompasses a retailer’s entire digital operations, headless commerce exists in the cloud, and parts can be added and removed without having to redesign and recode large parts of the system.
Once the front end has been done away with developers use things called APIs, kind of like pre-made apps to you and me, which can handle near any task and be presented in any way.
Crucially, it allows online retailers to deliver content, products and payment options across any device they choose effortlessly, from smartwatches to instore kiosks.
“I heard about it in 2014 as I was researching my book, you know, it made perfect sense to me,” Goetsch explained.
“Because by that point people had iPhones… everybody had a mobile device. People were starting to get other devices as well, (smart) watches were starting to become popular and social media commerce was starting to become a thing.”
With the rise of smart phones, smart watches, smart assistants and smart everything else over the past decade the number of touchpoints, or devices on which people could make a purchase, has grown exponentially.
Trying to work these new touchpoints into traditional ecommerce platforms, rigidly designed to only deliver content in the form of websites and perhaps native mobile apps, soon became a real issue for retailers and their developers.
“There was a lot of touch points out there,” Goetsch continued.
“I’ve had the experience of trying to build a UI on top of a commerce platform that was retroactively fitted with APIs. It never works because it wasn’t built for that. You have to build a platform from scratch for APIs only.”
Despite what seemed like a no-brainer to Goetsch, it took a while for retailers to share his vision for this new way of operating.
“First, people didn’t trust cloud,” he explained.
“Now in hindsight, that’s crazy. But that was only three years ago, like that was not that long ago that they were having these challenges. A lot of organisations said are you nuts, we need our customer data in our four walls, we have to do that.
“It took a while for the market to catch up. And then at the same time that was happening, the dominant vendors that all launched their platforms in the 90s all started to fail as well.
“So you had Oracle, IBM and SAP which had platforms that were built in the 90s. By the mid-2010s nobody’s buying those platforms, because why would you find a platform like that when you wouldn’t build an application like that to begin with? It’s an old, old style of application.
“The competition was failing. People were much more comfortable with the adoption of cloud and API’s and micro-services and our product had matured quite a bit.”
“The challenge is within enterprises. You have a lot of people who are very risk averse, who are afraid to make changes”
Commercetools’ platform is now used by leading retailers including Audi, Carhartt, Moonpig, Yamaha, Bang & Olufson and Highsnobiety and headless commerce is fast becoming the standard way of operating for retailers of a certain size.
Despite this there are still significant barriers to overcome before this system truly becomes the norm.
While some of these problems lie with simply transferring operations to this new system without disrupting their business, likened to changing the pipes while the water is still running, the most challenging lie within company culture.
“If you were to put it up for evaluation, most organisations would choose our approach,” Goetsch continued.
“The challenge is within enterprises. You have a lot of people who are very risk averse, who are afraid to make changes.
“I think it’s that old style of thinking because people are incentivised within big enterprises. They’re incentivised to do the same thing they did last year but a little more efficiently. And if somebody takes a risk and says we need a new platform and it doesn’t go well, they get fired. That’s what happens.”
As with any technology which promises to change the way things work at a fundamental level, vox populi is so often the slowest and toughest element to change.
Big retailers, like ships, are slow to turn. Yet when they do the direction of their business will be transformed for years to come until the next big turn is made.
As Goetsch optimistically concluded: “They are not our customers… yet”.