Recap Modern Commerce Day 2019 – The unstoppable rise of modern commerce
If you missed the Modern Commerce Day or just want to rewind the key points of this event, then this Blog Post is for you. At Modern Commerce Day 2019, successful brands and retailers explained how they use state-of-the-art commerce technology to innovate and grow. In this article, the key points of some of those presentations are highlighted, proving once again that headless technology, APIs and microservices are the future of e-commerce.
From monolithic to microservices: the unstoppable rise of modern commerce
Whoever wants to prepare for the future of commerce cannot deny the use of headless technology, APIs and microservices. That message was loud and clear during Modern Commerce Day, on 7 November 2019 in Amsterdam. Major brands and retailers talked about how they use state-of-the-art commerce technology to offer their customers seamless multi-platform shopping experiences.
Digital disruption, you could call it the uncontrolled version of digital transformation. It’s what happens when young companies very quickly gain a dominant position in a market over existing market parties due to digital innovation. Entire industry sectors have fallen prey to this phenomenon. The optics industry up until recently was spared disruption – not least thanks to the fact that an eye test in an optics store was a necessary condition when purchasing a new pair of glasses or lenses. But nobody can guarantee this process will stay the same. It’s best to fix the roof before it starts raining.
‘Mad in every way’
It’s exactly what GrandVision is working on. The optics firm, owner of thirty retail brands, including Pearle, Eyewish, Zonnebrillen.com and Charlie Temple, is currently in the final phase of an extensive two-year project that is meant to rebuild the commerce activities from the ground up. And there was enough reason to start this project, according to Kunal Mukherjee-Chakraborty, Chief Digital Officer of GrandVision.
Mukherjee explained that GrandVision’s thirty retail brands are active in 44 countries and each brand had developed its own local systems. The result was a strong fragmentation, both at the front of the commerce activities as well as behind the scenes. This meant there were hundreds of back-end IT systems being maintained across GrandVision. “It was mad on the front-end and mad on the back-end,” Mukherjee said about the company’s starting point.
A central element of GrandVision’s approach is the switch to a headless e-commerce platform, on which the country divisions of each brand have the freedom to choose their own front-end applications. The optics firm went from more than a hundred back-end systems to one central database, including a broad collection of micro services, connected via APIs.
The result isn’t just drastic simplification of the IT infrastructure, but also new levels of flexibility. Where previously the provider of the commerce platform decided on the frond-end, now the GrandVision brands are able to choose the solutions that best fit their wishes and needs for each market in which they operate.
“The time of the monolithic providers has passed,” says Mukherjee-Chakraborty. “Best of breed is the trend.” He does point out that the project wasn’t easy to carry out and that it gave him sleepless nights. “You need to put all the puzzle pieces together yourself. And you never know if it’s going to work beforehand. If your organization doesn’t have the knowledge and expertise in house to complete the puzzle, you shouldn’t start it.”
From monolith to microservices
An approach based on headless commerce with use of APIs and microservices is also known as modern commerce. It’s a strategy that’s rising quickly and of which commercetools is one of the pioneers. Simply put, a division is made between the content management platform and the platform that delivers specific front-end services (microservices) and is connected to the underlying back-end technology via APIs.
Kelly Goetsch, CPO of commercetools, summarized the recent developments in digital technology in his introduction and determined that a development of ‘monolithic to microservices’ is taking place. In other words, the heyday for providers that deliver large, all-encompassing software packages are over. Instead, we’re moving towards a situation in which brands and retailers build their own solutions.
According to Goetsch, it’s an inevitable evolution, because customer experience is pre-eminently the way for brands and retailers to distinguish themselves from the gray mass. If you, as a provider, want to be able to tie customers to you using the best customer experience, you need to be able to implement the best services available on your platform.
Having the required technological flexibility is becoming more urgent as commerce is expanding to different channels. Where before companies just had to worry about their online store – and potentially a mobile friendly version of the online shop – they now have to be present on various channels. From wearables, kiosks and social media to messenger services, voice assistants and connected cars.
Implementing a dedicated solution for every consumer touchpoint is not a realistic strategy for online businesses. This is why it’s important to detach the back-end from the front-end in order to separate experience and e-commerce functionality on a technical level. Digital Experience Platforms (DXP) allow you to connect all channels via API and support the headless scenario.
For Goetsch it’s clear as day that all-encompassing monolithic systems are a thing of the past. Mike Lowndes, Research Director at Gartner, is even more adamant. According to Lowndes, brands and retailers holding on to suites simply aren’t going to make it. For anyone wanting to keep up with market developments, there’s no other choice but to ‘decompose or die’.
Lowndes discussed five upcoming e-commerce trends in his presentation:
- Visual commerce. After the disappointing conversational commerce, the visual aspect will gain more importance and augmented reality is on the rise.
- Personalization. This has been a longtime goal, but lacks execution. Personalization shouldn’t just focus on addressing the consumer personally, but needs to play into personal demands.
- Unified commerce. This began as picking up online orders from physical shops, but shop owners will need to recognize customers as they enter the store. In the future, this will apply to all consumer touchpoints.
- Artificial intelligence. The use of AI has three purposes: increasing profitability, reducing cost and improving client experience. The latter can be done by creating better conversational interfaces.
- API-based commerce. The headless commerce strategy enables brands and retailers to use the best of breed services. The downside of this trend is the increasing complexity of managing these services.
The unwieldiness of monolithic systems
The market shift from monolithic systems to microservices is not caused by lack of functionality but driven by the business need for agility. This is underlined by Claus Hovge Anderson, Chief Digital Officer at the Salling Group.
With 1,600 shops, Salling is the biggest retailer in Denmark, owning a large diversity in concepts varying from offline shops and department stores to pure players, click-and-collect concepts and subscription models (meal box delivery). To stay competitive with these different concepts, it’s important to scale up using innovations. And this is when they were confronted with the limitations of old monolithic systems.
According to Anderson, the problem is the interdependence of the various components in these systems, causing unwieldiness and long go to market times for new services, as well as high maintenance costs. “We strive for a simple and modern omnichannel shopping experience, built on headless principles and microservices, which enables us to anticipate future developments.” Salling is currently in the process of rolling out the platform. Step by step, as trade continues as normal.
To stay competitive in this rapidly changing world, it’s essential for brands and retailers to be innovative and agile. Tariq Khan, VP Consumer Experience at Beamly, gave a look behind the scenes. Though the company name might not sound familiar to the general public, Beamly is the in-house product and marketing innovation accelerator for cosmetics and fashion group Coty, the parent company of Gucci, Adidas, Max Factor and Calvin Klein, among others.
With a team of 150, the London based company works on innovative applications that contribute to the digital transformation of these brands. An example is the award winning Virtual Make Up Artist, an application that provides customers with valuable make up advice through the use of a variety of technologies, including facial recognition to analyze face shape and augmented reality to virtually try out the advice generated by the system.
Getting the technology to work wasn’t the biggest issue, says Khan. The challenge lies in obtaining full insight into the customer and getting marketeers and developers to speak the same language. At Beamly, they work with tribes and squads, an organizational model borrowed from Spotify based on fast and agile teams (squads) working on the same or related products or services. As far as Khan is concerned, a flexible setup of the organization is a key requirement to be able to switch from the monolithic era to modern commerce.
According to Khan, a characteristic of modern commerce is that success is no longer determined by the so-called marketing technology stacks that offer everything, but by marketing technology ecosystems in which talent and employee training make the difference. Major brands and retailers have now taken a step in that direction. It will not always be easy, Khan admitted, but he doesn’t see another option. “We either board the plane and know it will be a bumpy ride, or we wait and see our businesses slowly decline.”