How Headless Commerce Can Help Subscription Businesses Win
In a space as dynamic as ecommerce, it's easy for buzzwords like "conversational AI" and "omnichannel" to steal the limelight, even if few ecommerce experts can precisely define them. The term headless commerce has recently emerged as the "next new thing," and like most new things, it's not yet fully understood by most people.
But that doesn't mean headless commerce is a meaningless fad. In reality, headless commerce is a meaningful reimagining of the entire ecommerce tech stack, with profound implications for vendors and consumers alike.
In this blog post, we'll break down what headless commerce is, why it matters, and how you can successfully implement a headless commerce strategy.
What is "headless commerce"?
Headless commerce is a model for organizing the tech stack of an ecommerce solution. In a headless commerce approach, the front end presentation—everything consumers see when using a website or mobile app, such as the photos, videos, and text on screen—is decoupled from the back-end systems that power the ecommerce experience. A headless commerce approach makes heavy use of APIs to connect the front end with back-end systems. These back-end systems include:
A product catalog system
An inventory system
A payments layer
Accounting and finance systems
A billing and management platform
What does this "decoupling" look like? For a simple analogy, think of the differences in experience when you shop at a department store, like Target, versus a specialized store, like a Louis Vuitton store. Both stores have similar back-end management systems to track inventory, ensure security, and manage employees, but everything you see and touch is vastly different because Target and Louis Vuitton have different goals when it comes to the shopping experience.
Just as Target and Louis Vuitton separate their back-end systems from the front end customer experience in their stores, all ecommerce companies that embrace headless commerce aim to present a unique, on-brand online shopping experience regardless of the systems that power things on the back-end.
How did we get here?
Traditionally, most ecommerce sites used (and many still use) a single platform to control both the front end experience and the back-end systems. This approach, known in the industry as the "monolithic approach," is ideal for small- and medium-sized businesses that don't have the resources to configure multiple systems and simply want something that "just works."
In the enterprise, however, flexibility is king. Companies don't want the systems they're using to manage back-end operations to limit the front end experience—how their brand is perceived by consumers. Enterprises want, and are willing to deal with the work to support, all the advantages of a headless commerce approach. Which brings us to...
What are the advantages of headless commerce?
Separating the front end ecommerce experience from the back-end systems powering it all comes with a number of benefits for both consumers and developers. These include:
Richer customer experiences: Customer expectations, competitive pressures, and new technological developments move so fast that developers need to constantly design more compelling experiences. The agility that headless commerce offers is key to building better and more personalized sites and apps.
Rapid experimentation: Ecommerce companies can roll out new offerings, introduce various promotions and discounts, play around with different buying motions, and try different page layouts—all without having to configure back-end systems.
Speed: In ecommerce, milliseconds matter, especially on mobile. In fact, if a page takes five seconds instead of two seconds to load, the bounce rate can go from 6% to 38%! Separating the front end experience from the back-end systems can streamline processes and shorten load times significantly.
I'm an ecommerce company. How can I ensure a successful headless commerce implementation?
Whether you're switching from a monolithic approach or have already started down the journey of adopting a headless commerce model, there are a few things to keep in mind from a development and systems perspective.
First, you need a standout development team that understands the value that APIs and flexibility bring to the development process. The tools you use should all have modern, robust, and consistently updated APIs. Additionally, make sure both your front end and back-end developers communicate on a regular basis and understand each other's goals, so that both sides work seamlessly together.
Second, no matter how things are structured, you'll need a secure and compliant payment flow. For each of the back-end systems your front end integrates with, ask the vendor if they're compliant with PCI, GDPR, and other regulations as required, like SCA (as dictated by PSD2). Bring your security team into these conversations.
Finally, make sure your QA team has thoroughly tested every entry point on web and mobile to ensure an excellent and secure user experience.
Where do subscriptions fit with headless commerce?
It's safe to say that Recurly knows the benefits of the subscription model well, from predictable recurring revenue to increased customer lifetime value (LTV). We believe headless commerce is an ideal fit for subscription-based companies for two main reasons.
For starters, providing a standout customer experience is absolutely critical when you're not just talking about a one-time transaction, but a recurring set of transactions. You want to do everything you can to encourage a conversion, because that single conversion potentially means a large stream of revenue, and headless commerce makes it easier to drive that standout experience.
Moreover, selling subscription goods requires a lot of systems to work in concert with one another: payment gateways, a billing and management platform, ecommerce platforms, and more. While bolt-ons are available even for monolithic systems, these generally don't provide the scale or enterprise-grade support that large subscription businesses require.
If you're asking yourself whether your subscription business is performing at the level of the "big guys"—or at least in tandem with your competitors—check out our Recurly Research report on subscription ecommerce to see how you benchmark.
Ecommerce companies in every industry and of every size can attest to the benefits of a headless approach, from being able to deliver a more robust and compelling user experience to greater flexibility. And while migrating from a monolithic approach to a headless one isn't drop-dead simple, it's becoming easier every day as vendors make their platforms more API-friendly.
Our advice for ecommerce companies: think big! There's never been a better time to reconsider the construction of your tech stack and consider the possibilities you could unlock from adopting a headless commerce approach.
At Recurly, we have deep experience integrating our subscription billing and management platform with various other systems, both front end and back-end. Check out our case studies with Cora and FabFitFun to learn how we've worked with major ecommerce companies to integrate with their tech stacks, and contact our sales team if you're interested in driving success for your subscription business.
For even more insight into the headless commerce approach, check out our on-demand webinar, "Why Headless Commerce is the Future of Retail." Watch it now!