As today’s customers increasingly demand more personalized e-commerce experiences across multiple channels, commercetools’ composable software architecture is purpose-built to satisfy that demand.
The pandemic accelerated many digital trends — from jumpstarting the adoption of collaboration/meeting platforms like Zoom and Webex, to speeding digital transformation initiatives across industries, to spurring the adoption of digital commerce and the rise in direct-to-consumer offerings, to providing a major boost for the ecommerce industry.
On the ecommerce front, Statistica reports that revenue in the ecommerce market is projected to hit $4.173 billion in 2024 with a CAGR of 9.5%, resulting in a projected market volume of $6.568 billion by 2029. User “penetration” is estimated at 40.5% this year and expected to climb to 49.1% by 2029. Here’s an interesting look from Statistica on the market drivers for revenue change in the e-commerce sector:
Better online shopping experiences, the rise of social commerce, a rise in the number of internet users, GDP growth, and AI all impact revenue in a positive way, but it’s that enhanced online shopping experiences that’s the biggest driver.
It’s important to note that ecommerce and digital commerce are different: ecommerce generally speaks to online marketplaces and storefronts, while digital commerce includes a variety of digital touchpoints, including social media channels, chatbots, mobile apps, and beyond.
The term “composable” in software refers to an ecommerce architecture comprised of building blocks that are modular in nature and can be combined where needed to create unique, customized solutions. This means that vendors no longer need to settle for a one-size-fits-all approach, and instead can create tailored solutions to best serve their customers, especially as it relates to integration payment processing or inventory management solutions.
commercetools is in the Right Place at the Right Time with its Composable Commerce Software Architecture
Given the rapid rise of ecommerce in both the B2C and B2B markets, we believe commercetools has found itself in the right place at the right time — in spite of the fact that this is a fairly crowded market.
commercetools’ composable commerce solutions are designed to help customers build best-in-class shopping experiences, meet customer demand for personalized experiences, provide easy, effective transaction journeys, and serve up efficient customer service interactions. And commercetools does this with flexibility and infinite scalability at the heart of their solutions.
This has never been more important, as channel ubiquity has quickly become the new go-to-market mantra, and enterprises of all types need more flexible tools to gather and utilize first-party data generated from these direct engagements. They also need tools to use this data to augment third-party channels via external APIs wherever possible.
The commercetools’ Differentiators
commercetools is one of a handful of ecommerce software vendors that offer a next-gen application architecture designed to make data management and data wrangling a lot easier.
In terms of the differentiators in commercetools’ architectural approach, the company is one of the founding members of the MACH Alliance, a group of software providers that have all adopted a common design strategy: microservices + APIs + Composable + Headless.
Composable is the key design element here, as this approach allows different modules to be quickly assembled, a bit like Lego pieces, via internally segmented APIs. That internal segmentation is the important part of this equation.
This approach is differentiated from older monolithic systems, which tend to be template-driven without the headless option or with only one common API layer. This approach limits the ability to create unique workflows using different data types (e.g. historic, engagement, preference, anti-fraud, etc.).
It was also very clear throughout the course of the Elevate 2024 event that the team at commercetools are believers in the power of community and collaboration. The company’s passion for bringing diverse people with diverse experiences together, forming meaningful partnerships and alliances that help build the future of commerce, and making every part of the ecommerce process and experience more customer-centric is clear. Innovating with the customer in mind, building a strong ecosystem, building strong partner alliances, and meeting customers where they are all foundational parts of the commercetools‘ strategy — to our way of thinking, that bodes well for future success.
Ecommerce Strategies Going Direct
One consequence of the rise of these centralized platforms has been the need for businesses of all types to double down on building out their own direct-to-consumer (DTC) ecommerce strategies to complement their reliance on centralized platforms.
Going direct has multiple benefits, including access to and control of first-party customer data and the ability to personalize experiences for high-value customers. In addition, DTC provides the opportunity to recapture margin away from the aggregators, which can range anywhere from 15 to 50% per transaction, depending on which services they relied.
Because of these upsides, most organizations generating significant online revenue have now adopted an omnichannel approach. Marketplaces and social commerce remain important channels, but going direct has its own unique value, and is now one of the pillars of a comprehensive ecommerce strategy. Quite simply, it’s about being in all the channels your customers want you to be in so that the buying journey can be an easy one.
commercetools’ Data Modularity Capabilities Creates Value for Customers
During theCUBE’s recent coverage of commercetools Elevate 2024 conference, we had the chance to sit down with Greg Fancher, EVP and chief information technology officer at PetSmart. Fancher illustrated this new thinking on the challenges of leveraging first-party data by unifying data from in-store records with their online portal. PetSmart’s approach to personalization (and embrace of tech solutions that make that possible) means that customers can quickly and easily learn about and utilize the many services PetSmart offers (e.g. scheduling grooming, boarding, etc.). He shared how PetSmart is using machine learning and predictive analytics to better manage the data the company has amassed on its 65 million customers, which helps them better understand what the needs of “pet parents” are, where customers are on their individual pet journeys, and make personalized product recommendations and create offers, etc.
Fancher also spoke about how a modular approach to composable commerce helped PetSmart implement an updated to their system piece-by-piece and also helped completely de-risk the overall project, which is music to any IT leader’s ears. Fancher spoke of the beauty of composable commerce is that it allows the company to drive down risk. They can ease into making sure that not only do the commercetools solutions they are using work, but that they work within the context of their unique environment. The challenge is always around cart, checking, servicing, product detail pages, product listing pages, and making everything work with your data, your promotions, your pricing, and hooking it into the broader enterprise. That’s always where the challenge is, and the composable commerce solutions are attractive because they meet customers where they are.
Check out the full conversation with PetSmart’s Greg Fancher here:
Going Direct for B2B Sales is the Future of B2B Buying
Big picture, digital commerce is clearly entering a new phase. The rise of online marketplaces and a disinclination toward dealing with salespeople has vendors going direct for B2B sales — composable commerce solutions as part of that strategy is, to our way of thinking, the path forward.
Exciting times are ahead. GenAI shopping assistants, such as the Gemini Customer Agent recently demonstrated at Google Next ‘24, promise to democratize the process of product discovery and shift customers from reliance on aggregators and online superstores.
The multi-vendor marketplaces will have their own data strategies to leverage. Amazon recently launched Rufus, an AI-powered shopping assistant, which leverages Amazon’s considerable customer profile data captured from shoppers over the years. Centralized warehousing, fulfillment, and shipping is still a considerable moat that will preserve Amazon’s and other marketplace roles as core digital commerce channels.
But as IDC analyst Heather Hershey pointed out in her keynote presentation at commercetools Elevate, the direct strategy is most noticeable in the B2B sector, where the following trends are evident:
1) Buyers are buying larger ticket items
2) Buyers are buying directly without the intervention of salespeople
3) Buyers are using more digital sources to navigate complex buying decisions
We have seen these same trends in our research on the B2B buying journey and it’s clear that B2B customers are now savvy B2C consumers and they want the same seamless buying experiences in the B2B realm that they experience when buying consumer goods.
These trends have driven the emergence of a new discipline around PXM, or Product Experience Management. This is the art of creating compelling, omnichannel product experiences and relying on more complex data flows, which requires more flexible commerce infrastructure.
Wrapping Up and Thoughts on What’s Ahead
The rapid growth of digital commerce and ecommerce bodes well for both customers and vendors. But one of the consequences of the rise of these centralized commerce platforms and marketplaces has been the need for businesses to ensure they have multiple options to help them reach the right customers. One of those options has been to double down on building out their own direct ecommerce strategies to combat reliance on centralized platforms. However, building your own solutions is not always the best path.
Channel ubiquity creates entirely new technical challenges. Knitting together increasingly complex data flows is one challenge, and upgrading and improving older commerce infrastructure to create newer, more personalized experiences is another. That’s why composable commerce vendors like commercetools are exciting to watch. Their next-gen application architecture is all about making data management and gaining insights from that data quick and easy and providing customers with the flexibility to quickly adapt to market changes and customer needs.
One of the best parts of any event our team attends is the opportunity to talk with customers and get their candid feedback on the technology challenges they face and the solutions they choose to help meet those challenges. At the commercetools Elevate 2024 event, we heard from customers like PayPal, Ulta, and PetSmart, and there was a discernable theme throughout every conversation: composable commerce is a game changer, and commercetools’ composable commerce solutions are paying big benefits.
We look forward to continuing to watch the evolution of this space, the growth in and adoption of composable commerce solutions and, of course, we’ll be tracking the inroads commercetools is making on that front.
Want a quick overview of the commercetools Elevate 2024 event? Here’s a look at our final thoughts as we wrapped the event.
