Headless ecommerce. If you're competing in the ecommerce space, you've heard about it.
For some, "headless ecommerce" is just the latest ecommerce buzzword.
For others, it is a set of features stapled onto a content management platform.
But for smart brands looking to expand their D2C capabilities, it may offer an answer to a critical question: How can brands keep pace with the accelerating evolution of ecommerce and online shopping?
No question: Ecommerce is evolving. Now faster than ever. And brands are struggling to keep pace.
People no longer shop "online." They shop everywhere: on desktops, tablets and phones. On kiosks and point-of-purchase displays. And with emerging Internet of Things (IoT) technologies, they may be shopping without even realizing that they are shopping.
It's a challenge for marketers faced with maintaining a consistent brand experience everywhere their customers shop.
Headless ecommerce is designed modify how content is experienced at any consumer touchpoint, giving marketing folks new levels of flexibility and control in creating the brand's customer experience.
But we're operations and logistics people. So what can headless ecommerce teach us?
All of us - marketing, operations and the rest of the organization - can agree: We here to build a brand, and that means we are here to create a great customer experience.
Headless ecommerce isn't really a technology. It's driven by APIs, and that technology has been around for years. Rather, headless ecommerce is a new way of thinking about the customer experience.
Let's take a look at headless ecommerce. What is it? What is it designed to do? And what, as operations professionals, can we learn from it to support the endgame of creating a best-in-class experience for our brand and its customers?
The Ecommerce Everywhere Challenge
Consumers are embracing new ways to consume content, search for product information and reviews, and make purchases.
So ecommerce has evolved beyond traditional touchpoints, such as Amazon-like marketplaces and branded shopping sites.
Today's new shopping options include mobile devices, smart watches, in-store kiosks and point-of-purchase displays, voice assistants, and Internet of Things devices such as Amazon's Dash button experiment for easy restocking on consumer items.
But the opportunity to sell everywhere consumers want to shop also creates challenges for ecommerce brands: Each of these consumer touchpoints has different technical requirements, specifications and usability considerations needed to deliver product content to its screen or device.
The solution for doing that is called headless ecommerce.
What is Headless Ecommerce?
Headless ecommerce decouples the front-end presentation layer (or the "head") from the back-end operations or applications layer.
The presentation layer is the customer-facing layer - it's the user interface that changes depending on the device or sales channel that the shopper is using. The presentation layer presents the product listing, order form, pricing, delivery options, reviews and other content that the customer interacts with.
The back-end operations layer includes applications such as a content management system, digital asset management system, inventory management system and other systems of record. These systems provide data and content to the presentation layer.
Traditional ecommerce platforms have a predefined front end that is highly integrated with back-end operational processes. While there may be some customization options and even access to code, these platforms really are designed only to deliver content in the form of websites or native mobile apps.
While it may be possible to make changes beyond the platform's predefined limits, it takes a lot of time and skill to make these changes which, even if they help initially, may prevent future upgrades.
In a headless environment, front-end developers can create a user experience from scratch. They don't have to worry about modifying databases or other elements of the back end - they just get the information they need through API calls. Developers use APIs to deliver listing content, pricing, payment gateways, blog posts or consumer reviews to any screen or device - in some cases just using a template or theme.
The objective of headless ecommerce is to offer a seamless, consistent user and brand experience wherever, whenever and however customers shop.
How Fulfillment Shapes the Brand Experience
So far, so good - at least for ecommerce content creators. But unlike a traditional retail experience, an ecommerce customer's experience doesn't end with selecting the product in the store and then unboxing the purchase at home.
Fulfillment - actually getting the product into the consumer's hands - plays a critical role in creating the ecommerce customer experience. Perfecting fulfillment creates trust. And trust creates loyal, repeat customers and advocates.
Ecommerce operations professionals understand the "fulfillment" is actually a complex interaction of order, inventory and warehouse management disciplines balanced with various shipping and delivery options.
But for most ecommerce shoppers, "fulfillment" just means fast shipping and accurate order picking. And their fulfillment expectations play a big part in their decision of what and where to buy online.
- 61% of U.S. online shoppers say fast shipping is essential to a positive customer experience (the highest ranking factor).
- 78% of U.S. online shoppers say fast shipping and delivery is the most important factors in deciding to make an online purchase (again, the highest-ranking factor).
- 69% of consumers are much less or less likely to shop with a retailer in the future if an item they purchased is not delivered within two days of the date promised
Shaped by Amazon's same, next, or two-day delivery programs, consumer delivery expectations are high no matter where they are shopping online.
- More than 67% of U.S. consumers expect same-, next- or two-day delivery of their ecommerce orders.
- Consumer expectations for free shipping also have grown. Consumers now expect to wait only a maximum of 3.3 days for orders sent with free shipping, down 40% from 5.5 days in 2012. So even if you aren't able to offer one- or two-day delivery, you will need to deliver more quickly than you have in the past just to remain competitive.
What consumers don't expect is the need for them to pay for shipping. At one point, offering free shipping was a competitive point of difference. Those days are gone.
Of course, "free" shipping is never free - it comes out of already tight ecommerce margins and is just one driver in making fulfillment a major expense for most ecommerce sellers.
An independent study by Fulfillment Companies showed that fulfillment costs averaged 10-15% of gross sales but could reach as high as 20% if there was little automation in place. So getting fulfillment "right" not only is a major factor in improving the customer experience and boosting brand loyalty, it can have a major impact on the bottom line.
Here's the surprising fact: Despite all the wonderful content, detailed product descriptions, dazzling photos and device-responsive UIs designed to shape their shoppers' customer experience, the two biggest drivers of a positive customer experience are logistical, back-end factors - shipping speed and delivery process.
- The top contributors to creating a positive customer experience - and driving more sales - are fast shipping speed (62%), an easy delivery process (54%) and ample product information (53%).
Headless ecommerce is a marketing strategy designed to create a positive customer experience. It decouples the customer-facing experience layer from the back-end operations layer.
But given the importance of fulfillment to the customer experience, decoupling the layers shouldn't mean ignoring back-end operations. Rather, adopting the "headless" viewpoint to addressing back-end opportunities will help deliver a better customer experience.
Also, most headless ecommerce approaches are focused on sales and increasing top-line growth. Optimizing operations around a headless strategy not only supports top-line growth, it can actually improve bottom-line margins.
A Headless Approach to Ecommerce Fulfillment
Headless ecommerce is focused on decoupling the front-end customer experience from the back-end operations. But as we've seen, these back-end factors - often focused on ecommerce order fulfillment - are major contributors to the customer experience.
What would a "headless" approach to operations look like? Let's reconsider our ecommerce fulfillment strategy by unpacking the concept of "headless ecommerce" and what it hopes to achieve.
The objectives of a headless ecommerce solution include:
Flexibility: the ability to adapt to the rapidly changing, always unpredictable ecommerce market
Multichannel selling: selling everywhere your customers shop across any channel or device they want to use
Personalization: meeting customer expectations on an individual shopper level and creating a positive brand experience
Let's take a look at how an innovative approach to logistics and other back-end operations can help meet these objectives.
Flexibility
No one can predict the future of ecommerce.
Who would have thought that...
- In the early stages of the COVID pandemic, ecommerce would achieve 10 years worth of growth in the space of a few months;
- Amazon would limit FBA shipments to essential items, cutting many brands off from their primary source of D2C fulfillment without notice; and
- Buying online then picking up curbside or in-store would be the preferred delivery method for many shoppers.
Flexibility is a key tenant of headless ecommerce.
If you can't predict the future, you need the flexibility to exploit it.
No one can predict where, how or with what device ecommerce consumers will use to shop next.
By decoupling the front-end consumer and device interface from back-end operations, brands don't have to predict. They can react quickly, with little risk, taking using an agile approach, testing and correcting course as they go.
Smart ecommerce operators - whether they have embraced a headless approach or not - need to take a similar approach in their back-end operations.
Ecommerce consumers' expectations are constantly rising. Free delivery is table stakes. Same, 1-or 2-day delivery is the new norm. Perfection in picking, packing and shipment tracking is expected.
Ecommerce waits for no one. There isn't time to do it yourself; building your own facilities and investing in people and the capabilities to deliver on always-growing consumer expectations.
That means turning to partners such as 3PLs; 4PL services such as Warehowz; 3PL fulfillment networks like Etail Distribute; marketplace delivery services like Amazon FBA or Walmart WFS; third-party fulfillment services like Deliverr; or other fulfillment options such as in-store pick up.
Using partners can quickly address gaps in your fulfillment capabilities without the time and expense needed to build them yourself - assuming you could even get approval from your Board given shaky ROI projections based on a future you have to admit you can't predict.
The key to logistics flexibility is not to view the issue as a fulfillment problem; rather it is an integration problem.
Partners are a great solution. But partners also probably have different OMS, IMS, WMS and other systems of record than you do.
Too often, the "solution" is to integrate your systems directly with their systems in what is called a "point-to-point" integration. It's expensive, time consuming and an IT nightmare if one of the systems changes and the connection no longer works. And while it may serve as a simple way to connect one or two partners, scaling is impossible and creates what solutions architects fondly call a "rat's nest" of unstable, tough-to-support, one-off integrations.
Many order and inventory management systems rely on point-to-point integrations. But a few, like Etail, are actually designed around a powerful integration engine. So systems like Etail become the "hub" in a "hub and spoke" integration model. You don't need to integrate partners individually with your system. You just connect your system to Etail, and then connect your partners to Etail. The Etail platform sorts it all out. And because Etail can deal with data in almost any format or protocol, the system is platform agnostic - working with systems you or your partners already have in place. The result transforms a disparate collection of operational systems into a single, centralized fulfillment network that you control.
The advantages are many:
- Keep all options open. Get the flexibility to add, remove or change partners and circumstances, trends and performance dictates.
- Limit downside risk. Take an agile approach to developing D2C ecommerce capabilities.
- Shorten time to market. Find partners who already have the capabilities you need and quickly add them to your own fulfillment strategy.
- Future proof the business. Adding integration capabilities to your ecommerce operations platform ensures you can quickly take advantage of new opportunities as they emerge.
Multichannel Approach
Headless ecommerce systems are designed to reach consumers shopping on various sales channels, giving them the option to use different devices to shop.
This is a challenge because each sales channel and device has its own taxonomy - the way it categorizes and presents information. The challenge multiplies when you consider the back-end requirements where different fulfillment options may have their own IMS, OMS, WMS and other systems of record.
Headless ecommerce systems rely on an API-driven approach to help sort through this babel of data in the presentation layer. But things get tougher in the back end, operational layer because not all sales channels and fulfillment partner systems utilize APIs. EDI and even flat file communications are common.
Merchandising adds another layer of complexity as an individual SKU may be identified in different ways across different trading partners. Products may be sold in different configurations, such as an individual unit, as part of a multi-pack, or included in a bundle with other items. That makes forecasting and replenishment a challenge, and if not handled correctly results in stockouts, overstocks and poor inventory ROI.
Your multi-channel strategy is only as good as the data you can collect...and manage.
A back-end logistics system needs to be able to aggregate data from across your ecommerce ecosystem and then normalize that data for use in forecasting, planning and analysis.
Advanced inventory management systems like Etail solve the problem by using a single item master SKU to track products no matter how they are identified by various sales and supply channels or configured for merchandising. That ensures accurate inventory management, forecasting and reporting.
Personalization
The success of an ecommerce business doesn't just rely on how fast you can adapt to new sales channels or shopping devices. Success comes through meeting your customers' expectations regarding the brand shopping experience.
From a headless ecommerce standpoint, this means utilizing personalization technologies to enhance the individual shopper's experience by offering recommendations, suggesting preferred payment options or tailoring content each time the shopper interacts with your brand.
From a headless ecommerce fulfillment point of view, advanced product information management capabilities tied to regional inventory visibility also can be used to personalize the shopping experience with a major additional benefit: It can protect margins and improve ecommerce profitability.
Here's how it works.
At a high level, all ecommerce sales channels require five pieces of information to make a sale an process an order:
- Product description
- Product price
- Inventory availability
- Order and payment detail
- Tracking information once the order is shipped
Advanced back-end operational systems like Etail can manipulate the product description and pricing - based on inventory availability - in order to improve the customer's experience and maximize the profitability of every order.
As we've seen, consumers expect delivery to be free - even for relatively low dollar order amounts.
A growing number of consumers expect to get their orders in 1-2 days or to have the option to pick up their orders locally.
For many products, the best way to ensure they reach the customer in a day or two at an affordable shipping cost is to distribute the orders to multiple fulfillment locations. The locations could include your own warehouses or DCs, fulfillment partners like 3PLs, marketplace services like Amazon FBA or Walmart WFS, distributors or even your retail locations. Stocking the product in multiple locations to be as close to as many potential customers as possible cuts shipping time and expense.
This is called distributed logistics. It creates a huge opportunity to profitably meet the 1- to 2-day ecommerce delivery challenge. But it also involves several operational challenges:
- You need to track inventory availability in real time at multiple locations - and many locations may not be using the same order management, inventory management or other systems of record that you use. To make distributed logistics work, these systems need to be integrated and automated to communicate inventory status and fulfill orders.
- The price of the product and fulfillment may vary by location. The product price may be affected by the cost of shipping and storing the product at each specific location. The fulfillment price will be affected by the cost of picking and packing the product and the various shipping options and costs available for each location.
- The shopper themselves becomes a major variable. For example, the sales channel they choose to use has unique commission rates, delivery requirements and shipping policies that will affect the order cost. And of course, the closer the customer lives to a stocking location, the lower the shipping cost is likely to be.
Advanced back-end systems like Etail use several technologies to address these issues:
- Distributed Inventory Management (DIM): Etail's inventory management system provides real-time tracking of inventory at each stocking location as inventory is bought and sold. Etail integrates and automates the process no matter what other legacy systems are still in place.
- Regional Shipping Templates: Regional shipping templates are basically shipping maps that reflect the cost of shipping a product to geographical zones around each stocking location.
- Distributed Order Management (DOM): When an order is placed, Etail instantly calculates the total delivered cost of the product from every possible fulfillment source and then routes the order to the lowest-cost source that meets the order's delivery requirement. That means you maximize margin on every order.
How does this contribute to improving the customer experience?
In many cases, the sales channel "knows" the shopper's location even before they order. The shopper may be logged in as a member, such as with Amazon Prime. The shopper may have ordered from the channel before and their system has been cookied. Or the channel uses data such as the customer's IP address to locate them.
On the channels that support regional availability, Etail leverages this location data to help shape the customer experience and protect your margins.
- When a customer searches for a product, Etail's DIM system determines if there is inventory in place near the customer. If no inventory is available, no listing will be shown. Over-selling inventory is a major source of customer dissatisfaction - and sales channel penalties. With Etail, you won't show listings and pricing that you can't successfully fulfill.
- Etail determines if the inventory available meets the customer's shipping expectations. For example, if a shopper were a Prime member and inventory can be delivered from a stocking location to them in one or two days, they would be shown a Prime listing. Otherwise, they would be shown an alternate listing and delivery estimate.
- Etail leverages the regional shipping templates to calculate the total delivered cost of the product - including the actual cost of fulfillment from that specific stocking location. That cost will be used to determine the price shown to the shopper on the product listing, protecting your margin and ensuring a profitable sale.
- Once the order is placed, in microseconds Etail's DOM system checks every possible fulfillment alternative and routes the order to the location with the lowest fulfillment cost. This is useful where customers can't be geographically identified or where the final order includes multiple items and profitability can be improved by splitting or combining orders.
As digital commerce takes up an even bigger slice of the retail market, brands are funneling more resources into headless ecommerce in an effort to boost sales through creating a personalized, customized user experience. But once the order is placed, logistics and fulfillment step up to become the major drivers of a positive experience and customer loyalty.
A headless ecommerce strategy - one that embraces logistics as a means to ensure and enhance the customer experience - allows forward-thinking companies to quickly embrace and adapt to new opportunities and challenges, grow their brand and improve their bottom line.
Next Steps
We hope you found this approach to logistics for headless ecommerce helpful. Now that you understand how a headless ecommerce point of view can be used to shape your D2C fulfillment strategy, we want to make sure you have all the information you need to see if Etail is the right ecommerce operations partner.
Please feel free to book a consultation with one of our ecommerce fulfillment experts if you are interested in learning more about:
- Pricing options
- Fulfillment tools and automation
- Our 3PL ecommerce fulfillment partners and network
- How we compare against other vendors you might be considering
- Or any other questions you may have or advice we can offer on starting and optimizing your 1- to 2-day fulfillment program
Headless Ecommerce Logistics FAQ
What is headless ecommerce?
Headless ecommerce is an ecommerce architecture where the front-end, customer-facing experience is decoupled from the back-end ecommerce and operations management functionality. This frees marketers and developers to tailor the front-end customer experience to specific devices or sales channels without worrying about affecting the back-end operational systems and databases.
Why use headless ecommerce?
Headless ecommerce provides a lot more flexibility and options when presenting ecommerce offers to consumers across the many devices and selling channels they might use. Sales channels not only include traditional marketplaces and shopping carts, but social media channels like Facebook or Instagram, YouTube, or emerging options like TikTok. This makes a headless ecommerce strategy useful for experience-focused brands whose brand strategies are often content-led, such as lifecycle products; direct to consumer brands; and brands using social media, influencers or native advertising.
What is headless ecommerce logistics?
Headless ecommerce decouples the customer-facing experience from the operational platforms. However, the customer's fulfillment experience has been shown to be a major factor in overall customer satisfaction. Headless ecommerce operations focus on using the basic tenets of headless ecommerce - flexibility, multichannel selling and personalization - to optimize the fulfillment process and improve the brand's overall customer experience. Done right, headless ecommerce logistics provide the same "future proof" protection and ability to leverage options to the brand's operations and fulfillment functions that traditional headless ecommerce provides to the sales and marketing functions. Both are designed to do this with minimal impact on IT resources.
What makes headless ecommerce different?
Ecommerce platforms were originally built for desktop-based shopping. That was the only platform available for many years. Back-end and front-end components were tightly coupled. But with the growth of mobile and other devices, brands and retailers needed to find a more flexible approach for publishing content to different devices. Headless ecommerce decouples the front-end customer interface from the back-end components. The front- and back-end components communicate through an API (application programming interface). That gives application designers and marketers a lot more freedom and control in designing the customer-facing experience.
What is a headless ecommerce platform?
A headless ecommerce platform is a content management system designed to deliver content and ecommerce functionality to a wide variety of consumer touchpoints. Selecting a headless ecommerce platform is a function of the content options you need, the amount of ecommerce functionality available and your budget. For small- and medium-sized brands, many shopping cart platforms, such as BigCommerce, Magento and Shopify, offer headless capabilities that build on what you already have in place. Etail supports integrations with these shopping carts.
