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In the evolving landscape of e-commerce, a term gaining traction is “headless commerce.” But what exactly is it, and why is it significant for consumer packaged goods (CPGs)? In this article, we’ll break down this often-misunderstood concept and explore its relevance for CPG leaders and technology teams as they devise their strategic architecture.

Understanding Headless Commerce

Headless commerce refers to an e-commerce framework where the front end—representing the user interface across various platforms like websites and social media—is separated from the backend commerce functionalities. This architecture allows for modifications to the underlying technology without disrupting the user interface, and vice versa. It’s akin to a headless content management system, which you may be familiar with.

The term was introduced by Leo Jensen, cofounder of a leading e-commerce solutions company, in 2013. Gartner refers to this concept as composable commerce, which you might have encountered instead.

The crux of headless commerce is the encapsulation of business logic within microservices that are deployed in the cloud. These microservices can be paired with any front-end user interface desired. For instance, you might have a point-of-sale interface for physical stores, a unique interface for an e-commerce site, and another for a mobile app. This headless approach is foundational to contemporary selling solutions.

Advantages of Headless Commerce

Headless commerce provides several advantages:

Enhanced User Experience: Developers can leverage existing skills and investments in content management to create diverse user experiences.
Customization and Personalization: Brands are not confined to a specific e-commerce platform; they can select sales channels and presentation frameworks that deliver optimal consumer experiences.
Scalability: CPGs can design the consumer experience they envision for their brands and scale it globally.
Freedom to Experiment: Developers can test new ideas and functionalities for front-end interfaces without affecting the backend, allowing for a true test-and-learn approach.

Traditional vs. Headless Commerce

Traditional e-commerce systems have been designed with a singular focus on the web channel. This means that as customer touchpoints grow, managing the architecture can become increasingly complex, as IT teams must update both front-end and backend systems.

In contrast, with headless commerce, developers can modify the front-end user interface independently from the backend, enabling brands to create multiple interfaces tailored to different needs and audiences. This agility is essential for retail brands striving to meet customer expectations and adapt to shifts in the marketplace, such as those brought on by the COVID-19 pandemic.

Furthermore, updates to the front-end interface in a headless architecture occur in near real-time, whereas in traditional setups, changes can take significant time to implement.

The Importance of Headless Commerce for CPGs

As global CPG brands increasingly pivot to direct-to-consumer (DTC) channels, particularly in light of the surge in online sales, the ability to remain agile is crucial. Consider the following insights from the CGT/RIS Executive Council:

In 2020, 43% of consumers tried new brands, rising from 32% in 2019.
70% of consumers switched brands during the pandemic due to supply shortages or the inability to purchase directly.
Over 57% of consumers aged 18-45 plan to continue shopping online at an elevated rate.
More than 50% say they are more likely to remember brands that engage with them using immersive technologies.

To keep pace with these trends, a CPG’s DTC platform must be flexible enough to rapidly introduce new sales channels, products, marketing campaigns, personalized user experiences, customer data management, and order management features. A headless commerce strategy offers CPGs the agility and flexibility needed to achieve these goals.

AWS and Headless Commerce Solutions

At AWS, we adopt a “working backwards” approach to identify challenges faced by our CPG clients in building resilient DTC platforms. We then outline AWS offerings or partner solutions to address these challenges. For example, utilizing VTEX as a front-end-as-a-service solution while integrating preferred content management systems on the backend. Additionally, we collaborate with various commerce engines like Magento, commercetools, SAP Commerce Cloud, and BigCommerce for those CPGs aiming to enhance their DTC capabilities.

Our AWS DTC solution framework encompasses unique and scalable global services such as personalization, fraud detection, video commerce, advertising, and product fulfillment, all integrated with the aforementioned e-commerce platforms.

A Case Study in Action

The UK stands at the forefront of digital markets with a notable 15% e-commerce penetration in groceries alone. To capture digital consumers, Co-op, a major food retailer with over 2,600 locations and 4.6 million members, recognized the necessity of providing seamless customer convenience from e-commerce to delivery.

By partnering with Bringg, a leading delivery and fulfillment platform, and Naveo Commerce, creators of the award-winning online grocery platform Connected Commerce, Co-op swiftly deployed an optimized grocery e-commerce system across more than 1,000 stores, offering two-hour home delivery service.

The integration of Bringg’s cloud technology solutions facilitated comprehensive e-commerce management, while Naveo’s microservices-enabled platform enhanced retail operations and fulfillment processes. Leveraging AWS services, Co-op gained a flexible, scalable architecture to drive innovation.

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Conclusion

Understanding headless commerce is imperative for CPGs navigating the complexities of modern e-commerce. By embracing this architecture, brands can create tailored experiences that meet the dynamic needs of their consumers while remaining competitive in an ever-evolving market.