Commerce As A Service: Focus On The Customer Experience, Not The Commerce Technology
By Arthur Lawida, President, commercetools, Inc.
According to Forrester, customers that have a great content and commerce experience spend on average 40% more on a retailer’s site then people coming just to shop. Yet, most retailers are not taking advantage of this opportunity.
In many respects, European retailers and software companies are ahead of the curve when compared to the US market when it comes to leveraging cloud software to enable unique business models.
There is a company that is well known in Europe called Zalando that is just starting to gain recognition in the US as they expand their business to Asia. Zalando www.zalando.com developed their own technology platform and coined the term "Fashion as a Service" to describe it.
One of its basic tenets is the separation of the commerce functionality from the front end creative technology. They wanted to be able to innovate creatively on the front end quickly and without traditional limits imposed by commerce platforms that contain a CMS or front end model. Each brand that they own wanted to be able to maintain their unique brand identity yet share a back-end commerce infrastructure.
They also wanted to be able to access the same commerce functionality from any endpoint including mobile, web, IoT and even POS devices. With revenues exceeding $2 billion Euros last year and a market cap exceeding $14 billion Euros, it's clear that they are successful.
On the downside, they spent millions to be able to develop their own platform and they get none of the shared innovation available on a platform shared by many clients. In their case, they were able to afford taking the risk of developing their own platform but for many companies, that risk makes no sense. So, what can a modern retailer do that wants to take advantage of everything experience driven commerce offers but not build their own commerce platform?
Enter a new kind of enterprise commerce platform called "Commerce as a Service". That means whether you are a B2C fashion retailer or a B2B distributor, you can take advantage of all of the opportunities offered by the same kind of back-end platform that Zalando has created for themselves at a fraction of the cost.
Last year, Rewe, another massive European company that owns among many other things a significant number of grocery stores, focused in on commercetool’s "Commerce as a Service" platform to be the centerpiece of their commerce strategy moving forward. They have many different kinds of unique businesses from wine shops https://www.weinfreunde.de/ to travel agencies and they wanted to have a core commerce capability that supported all of their brands while providing unlimited creativity to each brand to build sites that support their unique brand requirements.
The key benefits for them were that they could leverage a single platform, use whatever front end tools they wanted to create the user experiences and create micro-services to support customizations and integrations.
Over the long run, this provides the best user experience to each customer segment and drives down customization and integration costs because they are not constrained by a specific technology stack as they would be with other enterprise platforms. Commerce as a Service fits into their existing enterprise architecture instead of forcing them to change their enterprise architecture to accommodate a commerce platform.
They can leverage their existing, lower cost development teams to build great user experiences using existing front-end technology instead of hiring very expensive, specialized development teams that must know vast amounts about the monolithic ecommerce platforms in order to be successful. In fact with a cloud based, CaaS platform, the development team doesn’t need to know anything about the commerce platform at all except what API calls to leverage to support commerce functionality in the appropriate user experience.
In the end, businesses want to be as creative as they want in representing their brand across every channel.
In many respects, we are advocating turning the enterprise commerce platform market on its head. Today, because of their massive complexity, most companies select a commerce platform and then decide what presentation technology makes the most sense. Our contention is that what matters most to retailers is a great user experience and this can only be achieved with a purpose built CMS like Drupal, Hippo, Sitecore, Magnolia or Adobe. Once the compelling experience has been created, our clients can leverage our API to inject commerce into whatever user experience they want.
Every commerce platform that does not take the API based “Commerce as a Service” approach has integrated some kind of CMS in order to create and serve the web pages that companies need in order to sell their products. The problem is, these CMS products are most often afterthoughts in the development process and lack key features that are available in even the simplest purpose made CMS platforms.
Our approach puts the CMO and marketers back in charge of the commerce development process. By massively simplifying the commerce platform development and integration, our clients can shift significant budget dollars from technology integration and development to marketing programs and development and achieve the outcomes that support their business objectives instead of focusing purely on technology.
This delivers more actual business value to each client and should be a very compelling proposition to Digital Agencies who want to provide enterprise commerce functionality without becoming enterprise commerce technology experts. Whether you use the commercetools platform or another CaaS approach, we believe the key is to focus your organization and development effort on content rich, unified customer experiences and let the commerce technology support the business goals.