Composable commerce explained

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

With composable commerce, IT teams select just the components they need based on their digital maturity—they have the flexibility of using what they want when they need it. They scale each tech 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.

What results is an e-commerce platform that’s 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 working as one.
• Packaged business capabilities (PBCs): PBCs are predeveloped software components with a defined business capability. The defined business capability is what sets them apart from microservices—the latter is more granular. Opting for PBCs helps with reducing 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 work as one solution.

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

Difference between headless and composable commerce

Headless commerce can be seen as the predecessor to composable commerce. To define it, it’s 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's involved with visuals like page layouts, menus, text, images, and video.
• Back end: The server side of a website is in charge of its structure, system, data, and logic. The back end manages the e-commerce operations.

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

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

1. Make modifications to the back end without affecting the front end.
2. Create tailored front end user experiences across multiple touchpoints (like 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 full customization of a business’ e-commerce.

Composable commerce vs. traditional commerce

Traditional commerce is the approach of building e-commerce platforms as singular, self-contained units. “Monolithic” is also a term used to describe these systems. It refers to how they’re 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 efficiency. A traditional commerce platform includes features that a business might not use, but because it’s part of the “all-in-one" package, they’re paying for it anyway.

Composable commerce platforms are the opposite in every aspect. They're 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 speak the same coding language. And each module can scale independently from each other to meet specific demands.

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

One track may have high-speed corners, requiring wings that generate more downforce. Another may be bumpier, necessitating changes to the shocks and springs. A car that can adapt with changing conditions stays competitive.

The same applies to the e-commerce of a business.

Why composable matters

The reality is that the benefits of composable commerce won’t apply to every business that opts for it. Decision makers must assess if 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'll 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 interruptions).
• 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 goals or future outlooks.
• Efficiency: Because a composable commerce architecture enables businesses to adapt and scale its e-commerce, they can reallocate resources where they make the greatest impact.

Challenges

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

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

How to setup composable commerce migrations

A business that can’t customize or update its e-commerce to adapt cannot grow. That's the reality facing many businesses still relying on a traditional commerce solution. The flexibility and scalability of a composable commerce architecture offers a path forward, but how and where does a business start?

What follows is a template of a migration plan that covers the fundamentals:

1. Conduct gap analysis: Audit what’s working well, highlight what could work better, and identify what's 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: Again, here's where the modular nature of composable commerce helps. A business can implement microservices and PBCs at their own pace, experimenting with different combos to see what works best. The phased approach of composable commerce migrations also mitigates the risk of service interruption.
   A strategy that's ready to go should instruct teams on how to migrate critical data, have a list of necessary services or extensions, and know what the user experience should look like.
3. Build the e-commerce platform: Once migration of data is complete, a business can begin the process of choosing microservices and PBCs to build its e-commerce. As the platform is composable, it can pick, choose, mix, match, and scale accordingly. This is the step where a business should consider content management systems, order management systems, or an ERP.
4. Deploy and continue testing: After the 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 helps decision-makers decide which components to keep.

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

1. Merging with an existing tech stack: Implementing an API-first platform enables businesses to unify new tools with legacy ones.
2. Starting with a clean slate: With no legacy systems to contend with, businesses can redesign their e-commerce to best serve their current and future goals. Choosing a headless CMS (content management system) is a key part in rebuilding around a composable commerce architecture, as it gives developers more 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 toward 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 their 250,000 customers in the aerospace, automotive, and construction industries with the materials and services they need—exactly where, when, and how they need them.

Part of its digital transformation and modernization strategy involved enhancing its legacy e-commerce platform to scale sales, allow different payment methods, and introduce new products. Or, in other words, rebuild it on a composable commerce platform.

The company implemented 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 catalogs. The result?

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

ALDO Group

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

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

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

• See real-time inventory.
• Forecast demand.
• Personalize marketing with customer insights.

Collectively, these offerings help ALDO Group smoothly connect digital transactions, inventory management, and customer engagement. For example, SAP Commerce Cloud connects product pages with inventory systems to generate personalized product recommendations.

The composable nature of SAP solutions allows ALDO Group to unify its many applications, scale to meet demand during peak periods like the holiday season and make room for future growth.

Composable commerce platforms today and tomorrow

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

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

Consumers receive a more personalized, more user-friendly shopping experience that changes with their tastes. The authentic sentiment this creates helps build and preserve loyalty.

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

If a business migrates to a composable commerce platform like SAP Commerce Cloud, they can make those generative AI experiences a part of their e-commerce quickly and painlessly.

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