In 2020, when COVID-19 hit, we experienced 10 years' worth of commerce growth as eCommerce quickly replaced most physical channels in just three months. Mckinsey termed this phenomenon as "the quickening."
While nimble and flexible businesses were winning, those using monolithic technology — aka Commerce 1.0 — could only experience the quickening, but couldn’t react to it. Many looked for quick fixes in their rigid monolithic solutions to bring back their lost buzz, only to realize that the cost of guesswork was high and the path to get new changes into the market was clunky. After the quickening, we saw increased adoption of the next evolution of digital commerce — Commerce 2.0 — as a safe bet to bring back customers by providing them with modern content experiences.
Businesses began ripping the head off their monolith using a headless CMS to split up their ecosystem’s frontend and backend, allowing content adaptations for multiple touchpoints. This enabled content authors to independently work alongside developers and reuse content from an atomic design system. After headless content platforms were widely deployed, API-first commerce solutions followed suit. And by adding commoditized offerings like search, cart and checkout, businesses could now deliver consistent experiences with increased speed, moving past stagnant growth during uncertain times.
This transformation to Commerce 2.0 was a direct result of the increasing popularity of cloud-based and headless SaaS solutions like the headless CMS Contentful and third-party search tool Algolia that offered different ways to interoperate with your monolith. Clearly, this was a notable evolution in selling online that showed you an intricate but possible way to work around your monolithic platform with less guesswork and more certainty.
But what would you do if the quickening were to happen today? How would you get ahead of your competitors already using Commerce 2.0? Before you start preparing for another shift in commerce, consider exploring the major challenges coming your way.
Modern customers are becoming increasingly tech-savvy
With each passing day, customers consciously and subconsciously learn to use modern tools and touchpoints — voice, metaverse, interactive kiosks, chatGPT, etc. — and are going through new customer journeys.
If you aren’t delivering experiences that cater to these tech-savvy customers, know that your competition probably is. For example, many cab companies now offer interactive kiosks at airports to help international travelers book cabs without going through the hassle of downloading apps or connecting to the internet. Those who don’t are missing out on these potential customers. So the win-win commerce mantra is to "meet customers where they are."
Touchpoints continue to turn smarter and expand exponentially
We’re already seeing smart touchpoints everywhere. Smarter, faster and more effective touchpoints will become more feasible and provide critical competitive advantages. For example, social apps rapidly influence customers’ purchasing habits by collecting browsing data and generating personalized recommendations for products and services. Businesses need to "sense and respond" to touchpoints to better manage relationships, supply chains and distribution. Staying up to date with touchpoints helps inform the development of new physical and digital experiences.
You can surprise modern customers and smart touchpoints with the right technology and the people who know how to use it. So gear up and prepare for Commerce 3.0, also known as MACH or composable commerce.
At this stage of commerce growth, you entirely replace your monolithic platform with different composable technologies coming together to create your new ecosystem. The backend now consists of independent packaged business capabilities (PBCs) orchestrated to make a composable commerce engine — cart, catalog, checkout, payment and analytics, to name a few. All PBCs are MACH-based, touchpoint-agnostic, experimentative, agile, replaceable and scalable, giving your business limitless flexibility through the absolute abstraction of technology.
How does this evolution of commerce help you tackle challenges?
Proactively staying in-sync with market fluctuations: With Commerce 3.0, your business can timely and cost-effectively pivot to support modern customer expectations, channels and devices, i.e., sophisticated and much faster web apps, mobile apps, conversations in chatbots, voice and more. Composable technologies have no vendor lock-in, giving you more control over your systems. So, you have the ability to make those split-second decisions that cost eCommerce companies billions of dollars. For example, a Storyblok survey shows 42 percent of customers decide to leave a website within 10 seconds of arrival. With Commerce 3.0, you can meet these customers where they are and address their needs more promptly.
Exploiting the most significant asset — data — made easy: When you make those split-second business decisions using Commerce 3.0, data helps inform you of possible outcomes. When you started using Commerce 2.0, capturing customer data through touchpoints became possible. But you had few fixed options for using this data due to technological limitations at the backend. With Commerce 3.0, you have a composable commerce backend that allows you to exploit customer data to your benefit. And then convert the insights into new and improved customer experiences through a "build, learn, and adapt cycle." So, now your business can backtrack frontend data points to specific backend business capabilities that you’ll need to improve. Suppose more customers drop at the checkout phase. In that case, you can try refining your checkout capability by understanding customer footprints and leveraging A/B testing to assess all possible solutions — that’s the kind of certainty you get.
Overall, your organization benefits from each business capability that you gain with Commerce 3.0. And these orchestrated business capabilities continuously improve as they benefit from an advanced data layer. Such a mature business with this level of operational intelligence can frictionlessly cater to a modern customer base and respond to any level of quickening. It is this certainty that’s pushing key commerce players to transition toward Commerce 3.0. And this trend will only accelerate.
For example, Shopify, which has been more inclined towards Commerce 2.0, is now positioning itself as "componentized." However, it will be interesting to see how well these "components" interoperate with other technologies.
Working closely with our composable commerce partners like commercetools, we (Apply Digital) have helped many businesses become operationally intelligent and resilient to change. We doubt anyone at the enterprise level will buy a legacy commerce platform in a few years.
So get ready
With Commerce 3.0, your business is set up to enter the scale-up growth phase. This means you’ll be able to pivot as you like, and you can never be stagnant for long because it’s convenient to switch to new MACH-based technologies without missing a beat.
It also means you must continuously analyze the decisions behind choosing tools and implementations. The only way to do this effectively is by getting your organization ready to become data-literate. This will be similar to the time when the tech industry first adopted agile methodology, which made an everlasting impact. Commerce 3.0 is your driver for change management, helping you to focus on managing rapidly expanding teams, ensuring that people, old and new, are delivering measurable value, and concentrating on the right key performance indicators (KPIs) that push the business forward. This change management acts as a catalyst for Commerce 3.0 to substantiate.
Want to know more about Commerce 3.0? Join us at Shoptalk 2023 in Las Vegas. And if you’re looking to advance your business towards Commerce 3.0, reach out to our team. We’ll help you bring together the best MACH technologies, so you can measure business outcomes with certainty.