In the first blog of this series, we covered the topic of Total Cost of Ownership (TCO) and the pitfalls associated with looking at costs in a short-term and single-dimensional perspective.
Now, we'll shift gears to the other half of the business value equation: Return on Investment or ROI. While TCO entails the investment that businesses make into new technologies, people or initiatives, the ROI is the result after these investments bear fruit: A growth in sales, an expansion in margins and other KPI improvements, showcasing how wisely organizations spend money.
These investments, although necessary, are also risky. ROI is never guaranteed and many technology investments, new hires and initiatives might not work out. Below are some of the reasons why a composable commerce platform is the ideal choice to proactively manage this risk and optimize your ROI.
The value of agility
Speed is a valuable commodity in commerce and success tends to follow retailers and manufacturers who are able to transform their businesses rapidly, adjusting to new market conditions and consumer tastes. Many of the non-composable options available in the industry are designed to find an answer to current challenges retailers face. commercetools Composable Commerce goes a step further by preparing you to not only address your current challenges, but also unpredictable ones in the future.
For example, social media may be the best customer engagement channel for your business this year, and the following year it could be SMS or email. Your existing product catalog may be compatible with your website, but challenges in migrating your product info into a mobile app or a point of sale (POS) could cut off access to valuable customers.
A case in point is Cimpress, a print, merchandise and packaging company. Since pivoting to composable commerce, Cimpress launched two massive projects in the span of four to five weeks so that the company could launch face masks during the pandemic at speed. Similarly, the fashion retailer Express went from releasing updates every two to three months to multiple times a week, enabling the company to keep up with market demands.
With inherent agility and flexibility powered by composability, companies can iterate and experiment frequently and without fear. Companies can actually fail in their attempts without breaking the system, which, alongside speed, is a valuable commodity to accelerate innovation. This means companies can implement omnichannel and mobile-first journeys, hybrid in-store and digital experiences and more on their path to increasing ROI; in fact, Gartner states that organizations offering a unified commerce experience by frictionlessly moving customers through journeys will see at least a 20% uplift in total revenue by 2025.
Similarly to how we extrapolated TCO over a span of three-plus years, the ROI should also be viewed through a long-term lens. And in the ensuing years, there will be various market opportunities that will take shape — therefore, rather than trying to predict the future, ensure your team and your technology can capture opportunities as they appear. commercetools' expansive API portfolio is built for this uncertainty by providing you with the tools you need, before you need it.
The value of productivity
Some of the most successful retailers are the ones able to leverage technology to innovate and drive their business forward. However, this approach is the exception. For most retailers, technology is a blocker, not an enabler, and developers spend most of their time on problem-solving, system maintenance and upgrades. Time for innovation and bringing new ideas to life is limited, which affects not only team motivation, but your bottom line.
Composable commerce switches this mindset; innovation comes first, always. The architecture provides the agility and flexibility to boost developer productivity, accelerating releases and grabbing opportunities as they come. Also importantly, composable commerce provides modern tools to get your employees hooked on challenges and projects that, in the end, directly impact your financial success.
Retailers can massively increase productivity with APIs that are versionless and language-agnostic, so developers can work in the language they prefer. In contrast with legacy platforms that require certified developers, composable commerce lowers the barrier and offers modern tools which attract and retain talent.
The team at Flaconi, a beauty retailer, has experienced this advantage first-hand with developers that enjoy working with cutting-edge APIs that enable them to achieve more, faster. Chronext, a luxury watch retailer, increased developers’ productivity by 80%, while Koala, an Australian lifestyle brand, can now manage constant changes with an overhaul in IT culture based on composability. In other words, developers are not just technology partners, but wholesale participants in the financial success of the business. And like many others in this position, they also focus on growth — because growth is exhilarating! Growth requires innovative thinking, aspirational projects and cutting-edge technology rather than the mundane responsibilities of system maintenance, upgrades of antiquated platforms and fixing broken integrations. And because growth is more fun, developer teams are motivated to be more productive, delivering new capabilities, features and innovations faster.
Our commercetools Composable Commerce product enables developers to focus on innovative areas that have a meaningful impact on sales, customer engagement and business success.
The value of options for the future
In the world of financial services, we often hear the term “stock options.” In a nutshell, a stock option permits its owner to buy a stock at a specific price. If you can buy a stock at 20 USD, even if the actual market price is 100 USD, that 80 USD is still a profit for you.
Of course, stock options have value. They are traded in financial markets because investors love the flexibility of making an early decision that could have big returns in the future. The more options you have, the more potential sources of return you have exposure to.
If we switch back to the commerce industry, the APIs that commercetools provides its customers are akin to this “options” model. With our portfolio of scalable APIs, businesses are purchasing a series of options to pursue a specific growth strategy down the road, even before they know what the strategy may be. This is exactly what we see as the future at commercetools: We provide the tools that work for your business today and tomorrow, and you decide how to use them. You can customize and extend APIs according to your needs, and decide what you build and what you buy. In this composable world, you’re the one in charge — not your vendor. With this flexible and agile commerce architecture, you’re ready to grow your ROI without limits.
Watch Maximizing ROI and optimizing your the cost of eCommerce IT, and learn how to determine the real costs of eCommerce infrastructure and its effects on the bottom line.