Why composable commerce will be a priority for CEOs and top execs in 2024 and beyond

Why composable commerce will be a priority for CEOs and top execs in 2024 and beyond

Dasha Cherniavskaia
Dasha Cherniavskaia
Head of Product Marketing, commercetools
Published 26 October 2023
Estimated reading time minutes

Business and technology leaders have faced plenty of rollercoaster moments in the last few years as they steered their organizations to meet shifting customer behaviors, flashing-red economic indicators and market changes. Here’s why a composable approach has become a top-of-mind topic in every C-suite agenda — and how leaders that have already implemented composable unleashed value and competitive advantages to thrive.

Why composable commerce will be a priority for CEOs and top execs in 2024 and beyond

“The world is different. As a CEO right now, your job is all about prioritization,” said Liz Hilton Segel, Senior Partner at McKinsey, in a recent podcast. “We’ve thought about these concrete priorities, and the first to consider is building resilience as an organizational muscle. The second is having a courageous mindset toward change — leaning into change as opposed to away from it. Next, technology, which should be considered the foundation for growth.”

Many other sources echo the sentiment of how CEOs and other C-suite executives in general should embrace the power of constant change and use it as a tool, instead of considering it as a threat. Commerce, as the essence of what companies do, is emblematic of the impact of constant change as 83% of leaders think commerce is evolving faster than they can change their businesses. 

So, where do leaders stand when it comes to technology that empowers them to embrace change? A survey by the MACH Alliance with 500 executives, with 34% of them C-level leaders, revealed that 82% said concerns about the economy have increased the need to adapt and modernize IT infrastructure. On top of that, CEOs ranked commerce a top-three priority in 2022 and believe that it is crucial to their growth strategy. This is particularly important, as acquiring new capabilities, product innovation and growth — all of these topics that CEOs are worried about — hinge on technology. And the technology that they’re increasingly investing in is none other than composable commerce

Despite past hesitation to invest in composable architectures, C-suite executives now have the evidence that this technology represents a paradigm shift in commerce like no other. With 85% of business and technology leaders acknowledging that they have to deliver improvements to customers at speed, and Gartner predicting that the mantra for new SaaS will be “composable API-first and API-only” as early as 2024, it comes as no surprise that C-level executives are saying YES to composable. 

For internal buy-in processes, it’s clear that composable is a proven technology that has delivered concrete results across new revenue streams, lower costs, increased flexibility and agility, and more. In the next section, we illustrate these benefits and how leaders across B2B and B2C organizations are using composable to thrive.

Responding faster to shifting customer behavior and market changes

“We used to do one release every six to eight weeks. The release itself would take hours,” shared Ian Rosen, President and COO at Canadian luxury menswear retailer Harry Rosen, clearly frustrated at the impossibility of meeting customer expectations with non-composable platforms. For instance, the company was getting only 10% of development spend on features, which prevented it from meeting customer expectations on the fly. 

The case of Harry Rosen is emblematic of what composable commerce can deliver as it shows the direct link between innovation speed and business value. “About 10% of what we were getting out of our development spend was features. Now it’s close to 50%. Every executive, every person who’s on our site sees newness all the time. And that gives me the confidence to say okay, I can up my digital spend. I know how far it’s going. Again, I don’t really know much about the technology but from a dollars and cents perspective, I know that I can plow dollars confidently into my digital architecture.”

As the company continues to invest in composable technology, Ian concluded: “I can feel confident that my dollars are going further.” And indeed, as Gartner predicts that organizations with composable capabilities will improve digital innovation speed by 60% by 2026 in comparison to 2022, it’s clear that companies that can fast-track innovation at speed are best positioned to meet customer expectations, now and in the future.

Focusing on customer experiences without compromise

The Australian lifestyle brand Koala started its eCommerce journey with an all-in-one platform that eased its way into online shopping. However, as the company started to grow, such an inflexible and hard-to-customize platform became a hindrance to its ambitious growth plans. The retailer was unable to create promotions or tailor the checkout process. That’s when Koala adopted headless commerce and later on, composability. 

The goal was clear: Own and control the customer experience, without compromise. As Andrew Sladen, Director of Engineering at Koala, shared: “After all, if you’re in charge of eCommerce for a retailer, the customer experience is the thing you can control. You can’t control your competitors, input prices like your container or fuel costs, or how the customers are browsing. But you can consider all these things and craft the best customer experience possible. To do that, you need the flexibility to contract, expand and even replace functions every step of the purchase process without dependencies, instead of being tied to a spaghetti-like architecture that makes you stuck where you are.”

Andrew believes with composable commerce, “You’re in charge of choosing the best-fit components for your customer experience — web, payments, CMS, analytics and commerce — and have control over how to glue all of these components together, you’re in the best position to shape and tailor customer journeys on the fly.”

Increasing efficiency and automation

Automation serves as a highly effective and economical solution for enhancing productivity and simplifying operations. This is especially evident in digital commerce, where businesses contend with the management of numerous markets, languages, channels, product categories and various peak demand periods. Despite this, many companies still rely on manual processes because non-composable platforms cannot handle the complexity of today’s commerce.

One such example comes from Treedom, the platform that allows anyone to plant trees around the world. “It becomes evident that the custom in-house solution we previously relied on was inadequate for a larger organization,” recognized Valerio Manzo, CIO at Treedom, as the DIY platform was unable to handle stock management consistently or support concurrent carts and subsequent transactions. These issues prevented the company from scaling operations and growing revenues, which prompted Treedom to pivot to composable commerce. 

Now, it’s not only possible to customize functions but also to efficiently manage its operations in stock management and beyond, which has helped the company to save valuable time and effort.

The financial impact: Reducing costs + increasing revenue

Is it possible to reduce total costs of ownership (TCO) while boosting revenues? The short answer is yes. In fact, Gartner predicts that: 

  • The IT costs of managing SaaS operations will be halved as a result of the adoption of composable application architectures by 2024. 
  • Organizations offering a unified commerce experience by frictionlessly moving customers through journeys will see at least a 20% uplift in total revenue just a year later.

One company that has capitalized on both sides of the equation is the B2B workwear provider Cargo Crew. The leading Australian firm migrated from an all-in-one platform to composable commerce to focus on a digital-first experience that would allow for faster time-to-market, as well as increased scalability and innovation. As a result, the company not only increased conversion rates by 15% and online revenue by 34%, but it also saved time and money through automation by an estimated 2,000 hours of customer administration time and reduced raw development costs by 700,000 AUD (445,000 USD). 

Paul Rodgers, Co-Founder and Operations Director at Cargo Crew, shared that “With a composable commerce infrastructure, we can experiment with new technologies and features without being limited by the constraints of a monolithic platform. This has allowed us to quickly and easily develop new products, services or features that meet the changing needs of our customers, without having to go through a lengthy development process.” 

There are many other examples that show how companies benefit from reducing TCO and boosting ROI. For instance, the American retailer Ulta Beauty moved to composable commerce to create seamless shopping experiences across physical and online channels, such as its Virtual Beauty Advisor for personalized recommendations and GLAMLab for virtual makeup try-ons. With a composable infrastructure running in the cloud, the company is now able to handle traffic peaks to monetize holiday surges with ease.

The smart investment for your commerce future

Companies that are outperforming their competitors have one thing in common: They’re putting technology at the front and center to set them apart in the marketplace. For them, picking the right eCommerce technology isn’t merely a tool: It’s a strategic investment that can make or break the company in the years to come.

Digital commerce solutions must be flexible and nimble to respond quickly to changing customer expectations. Companies must respond quickly with new products, processes, delivery methods and customer experiences. Composable commerce enables solution changes to be made, deployment to production environments and achieve scaling more flexibly, whereas a monolithic platform includes many tightly coupled components that are not changed in every release.
Sandy Shen

VP Analyst, Gartner’s Hype Cycle for Digital Commerce, 2023

Composable commerce has arisen to bring your business vision to life without the risk associated with legacy, all-in-one platforms. Not only can you keep pace with constant changes but you can set the tone on how the future will look like. To achieve this, you need an ultra-flexible, scalable and agile solution that can bend to your needs, be it delivering omnichannel experiences, increasing efficiency, boosting innovation or reducing costs… And composable commerce does it all! 

Check out our deep-dive article What’s composable commerce and why does it matter?, which answers the most common questions about composability.

Dasha Cherniavskaia
Dasha Cherniavskaia
Head of Product Marketing, commercetools

Dasha leads Product Marketing at commercetools. Software engineer by profession but a creative at heart, she found her happy place in marketing. With 15 years of experience in tech, she concurs that “Innovation distinguishes between a leader and a follower.” Loves problem-solving, big libraries and 80s music.

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