Composable commerce explained

Every business is unique, so every business requires a unique e-commerce platform. That is the core philosophy behind composable commerce.

With composable commerce, IT teams select only the components they require based on their digital maturity—they have the flexibility to use what they want when they need it. They scale each technology up or down to match demand and remove or add new ones without disrupting the rest of the system.

They do this at will and on demand because composable commerce architectures are modular. Each component is independent yet easily integrated with others.

The result is an e-commerce platform that is tailored to business needs and customer expectations—and adapts quickly to changes in both.

Examples of composable commerce technology

A business uses the modularity of a composable commerce platform to quickly adapt to these expectations. Some examples of components include:

• Microservices: These are small software components that perform specific services. Each microservice runs its own process and provides a solution to a problem. Developers can structure individual microservices to form a more complex app functioning as one.
• Packaged business capabilities (PBCs): PBCs are pre-developed software components with a defined business capability. The defined business capability is what distinguishes them from microservices—the latter are more granular. Opting for PBCs helps to reduce complexity in a software ecosystem. Initial set-up and maintenance costs are lower with an integrated unit.
• Application Programming Interface (API): Software components need to work together. APIs are the sets of rules and protocols that instruct them how. They enable PBCs and microservices, for example, to share data and functionality. Without them, there would be no way for a composable commerce platform to operate as a single solution.

This composable technology, as one vice president of engineering sees it, enables them to “optimise costs but also build differentiated products that bring value to our customer base.”

Difference between headless and composable commerce

Headless commerce can be regarded as the predecessor to composable commerce. To define it, it is helpful to first explain what the “front end” and “back end” of a website are.

• Front end: Also known as the presentation layer, this is the side of the website that is involved with visuals such as page layouts, menus, text, images, and video.
• Back end: The server side of a website is responsible for its structure, system, data, and logic. The back end manages the e-commerce operations.

A traditional architecture has the front end and back end closely coupled to each other. This makes it difficult to modify—changing one aspect could require altering the entire platform.

In headless commerce, the front end is independent from the back end, communicating with each other instead through APIs. This decoupling enables developers to:

1. Make modifications to the back end without affecting the front end.
2. Create bespoke front-end user experiences across multiple touchpoints (such as mobile apps and interactive kiosks.)

In short, headless commerce is more flexible and scalable than traditional architecture, but still less so than a composable commerce architecture. The modularity of the microservices that make up a composable commerce platform allows for complete customisation of a business’s e-commerce.

Composable commerce vs. traditional commerce

Traditional commerce is the approach of building e-commerce platforms as single, self-contained units. “Monolithic” is also a term used to describe these systems. It refers to how they are developed in the same language and with the same dependencies.

All components, from its user interface to its data access layer, are tightly integrated. Because of this, it is not possible to change one component without changing the whole unit.

There’s also the matter of cost-effectiveness. A traditional commerce platform includes features that a business might not use, but because they are part of the “all-in-one" package, they are paying for them anyway.

Composable commerce platforms are the opposite in every respect. They are made from a combination of modules that teams deploy, update, and remove without affecting the rest of the platform. Those modules work together without needing to use the same programming language. And each module can scale independently of the others to meet specific demands.

Think of a Formula racing car, with its aerodynamics, suspension—even driver. It, too, is built with a composable philosophy to better adapt to the different circuits it competes on.

One circuit may have high-speed corners, requiring wings that generate more downforce. Another may be more uneven, necessitating changes to the shock absorbers and springs. A car that can adapt to changing conditions remains competitive.

The same applies to a business's e-commerce.

Why composable matters

The reality is that the benefits of composable commerce will not apply to every business that chooses it. Decision-makers must assess whether the pros outweigh the cons.

Consider the modular nature of a composable commerce platform. Adding or removing technologies is quick but requires an experienced development team. And experienced means expensive. After all, they will be working in a diverse and possibly unique ecosystem of components.

Benefits

• Adaptability: The priorities of a business can change from day to day. A composable commerce platform enables its e-commerce to respond quickly to new growth opportunities (or unexpected disruptions).
• Scalability: It’s not just what’s needed, it’s also how much. With composable commerce technology, businesses can scale components up or down to better match current objectives or future prospects.
• Efficiency: Because a composable commerce architecture enables businesses to adapt and scale their e-commerce, they can reallocate resources where they make the greatest impact.

Challenges

• Complexity and cost: Experienced development teams are required to maintain the diverse ecosystem of third-party and legacy technologies.

A traditional commerce platform, then, is ideal for a smaller business with less mature development teams. Composable commerce is better suited to larger organisations aiming for high growth.

How to set up composable commerce migrations

A business that cannot customise or update its e-commerce to adapt cannot grow. That is the reality facing many businesses still relying on a traditional commerce solution. The flexibility and scalability of a composable commerce architecture offer a way forward, but how and where should a business begin?

What follows is a template for a migration plan that covers the essentials:

1. Carry out a gap analysis: Review what is working well, highlight what could be improved, and identify what is not needed at all. Then, outline the "ideal state": what does a perfect e-commerce solution look like? How can it best serve the needs of a business and its customers?
2. Decide on a migration strategy: Once again, this is where the modular nature of composable commerce is beneficial. A business can implement microservices and PBCs at their own pace, experimenting with different combinations to see what works best. The phased approach to composable commerce migrations also reduces the risk of service interruption.
   A strategy that is ready to go should instruct teams on how to migrate critical data, include a list of necessary services or extensions, and specify what the user experience should look like.
3. Build the e-commerce platform: Once data migration is complete, a business can begin the process of choosing microservices and PBCs to build its e-commerce platform. As the platform is composable, it can select, choose, mix, match, and scale accordingly. This is the step where a business should consider content management systems, order management systems, or an ERP system.
4. Deploy and continue testing: After implementing the user experience layer at the front end, the business is ready to deploy its new e-commerce platform. It is vital to continue testing to prevent data corruption and refine system performance. Tools that monitor each component in real time help decision-makers decide which components to retain.

In the end, a business chooses one of two strategies:

1. Merging with an existing tech stack: Implementing an API-first platform enables organisations to unify new tools with legacy ones.
2. Starting with a clean sheet: With no legacy systems to contend with, businesses can redesign their e-commerce to best serve their current and future objectives. Choosing a headless CMS (content management system) is a key part in rebuilding around a composable commerce architecture, as it gives developers greater control over content and user experiences.

Who is succeeding with composable commerce?

In order to keep up with fluctuating customer demands and disruptive trends, leading companies are shifting towards modular architectures.

Here are companies that made composability a priority in their digital transformations:

thyssenkrupp Materials Services

As a leading steel manufacturer, thyssenkrupp Materials Services provides its 250,000 customers in the aerospace, automotive, and construction industries with the materials and services they require—precisely where, when, and how they need them.

As part of its digital transformation and modernisation strategy, it enhanced its legacy e-commerce platform to scale sales, allow various payment methods, and introduce new products. Or, in other words, rebuild it on a composable commerce platform.

The company implemented the SAP Commerce Cloud solution to build and deploy two new portals: one for B2B order placements and account management, and one for product and content catalogues. The result?

• A more robust e-commerce platform that allows for scalability and additional functionality.
• An improved way of working for quoting and pricing, accessing customer history, and consulting with customers thanks to time that has been freed up.
• 20% increase in revenue from e-commerce platforms.

ALDO Group

A different kind of fashion company, built on respect and a deep understanding of its customers. That was the vision with which the ALDO Group began in 1972.

With more than 1,500 shops in more than 100 countries, one could say that the strategy was a success. But how does a fashion retailer continue to meet customer expectations while increasing profitability—especially during challenging economic times?

The retailer saw the answer in building their own version of unified commerce. This involved bringing their best-in-class apps to manage content, orders, delivery, and connect in-store functions into a cohesive solution. Now the ALDO Group can:

• View real-time stock.
• Forecast demand.
• Personalise marketing with customer insights.

Taken together, these offerings help ALDO Group seamlessly connect digital transactions, stock management, and customer engagement. For example, SAP Commerce Cloud links product pages with stock systems to generate personalised product recommendations.

The composable nature of SAP solutions enables ALDO Group to unify its numerous applications, scale to meet demand during peak periods such as the festive season, and make provision for future growth.

Composable commerce platforms today and tomorrow

As seen with the ALDO Group, the migration to a composable commerce solution benefits both businesses and their customers.

Businesses gain the ability to fully tailor and scale their e-commerce platform to achieve specific objectives. They are able to add, remove, and replace components on demand to efficiently adapt to market conditions.

Consumers receive a more personalised, more user-friendly shopping experience that changes with their tastes. The genuine feeling this creates helps to build and maintain loyalty.

It is here that generative AI can play a starring role in the future of composable commerce. Today, algorithms are already powering personalised product recommendations. Tomorrow, that experience can evolve into a shopping assistant that can answer customer queries, compare products, and provide recommendations based on conversational context.

If a business migrates to a composable commerce platform such as SAP Commerce Cloud, they can incorporate those generative AI experiences into their e-commerce quickly and effortlessly.

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