Composable Commerce: What is it and why is it important? (2024)

Published 25 July 2023

Estimated reading time minutes

Cloud-native: A software that runs in the cloud; all its functionalities are natively integrated with core components of major cloud providers, such as Google Cloud and AWS. By utilizing the full power of cloud architecture, you can reduce maintenance costs, and achieve exceptional scalability and faster time-to-value. That way, brands are always ready for big moments, boosting performance without limits and constantly responding to a new influx of customers.

It’s key to understand that cloud-native architecture is not the same as “cloud-hosted,” in which legacy applications have been migrated to the cloud but aren’t designed to fully benefit from it.

​​Component-based: A composable system combines independent and interchangeable components that can be added, swapped or dropped at any time. These components (also known as packaged business capabilities or PBCs) like search, cart or checkout work well together as they communicate via an API-first approach. The components are independent of each other, so you can easily plug (or unplug) and play functionalities according to your business needs.

Using independent modules, you can mix best-of-breed services from third-party vendors and homegrown applications, and create a customized technology stack that meets your business needs.

Tech-agnostic: Your business is not bound to any walled garden or proprietary technology. It offers complete freedom of engineering to select, code, integrate, monitor and manage your applications without requiring new languages, specific tech or certifications. In practice, you can use and upskill your existing talent pool to extend your tech stack.

By seamlessly combining component-based, cloud-native and tech-agnostic software, composable commerce maximizes flexibility and freedom for brands to create innovative customer experiences across all channels, quickly adapt to business needs and take advantage of a wide range of features without the burden of legacy technology.

Traditional eCommerce solutions, also known as legacy or monolithic platforms, are indivisible blocks of standardized software that are hard to customize and slow to update. Every time you change or update something, the entire system must be retested and redeployed, which may cause issues or even a complete system crash.

This inherent lack of flexibility and agility doesn’t compute at today’s accelerated pace; consequently, companies struggle to innovate and even hire and retain talent (unsurprisingly, top engineers aren’t eager to work with old technologies). Plus, the cost of running monolithic infrastructures has become prohibitive due to additional fees for upgrades, integrations, etc.

That said, composable commerce is gaining traction because it’s the answer for businesses to manage constant change in their customer experiences without spending a fortune. Companies can shift from a monolithic approach to maximum flexibility in their technology stacks, so they’re adaptable to whatever the future brings.

The story of food and beverage giant Danone perfectly showcases the need for adaptability. By leveraging composable commerce, the company implemented direct-to-consumer (D2C) sales to address the baby formula crisis during the COVID-19 pandemic in 2020, enabling distressed parents to find the right nutrition products for their babies directly on Danone’s website.

The need to become adaptable is echoed by Gartner in its Becoming Composable report, stating that, “Incorporating composability into digital business enables the enterprise or public agency to change and grow despite persistent uncertainty. Instead of avoiding the risk of change, executive leaders must reinvent their thinking to see change as a well-trusted tool for business resilience and growth.”

True composable commerce provides businesses of any size or industry with three main benefits:

Benefit #1 — Infinite scale: You can run multiple brands, expand to new markets, bring in new channels and even try out business models with ease. Also, autoscaling enables you to respond to new influxes of traffic and customers in real-time, so your business is ready to monetize on Black Friday-like moments.

Benefit #2 — Unlimited flexibility and agility: Change a component, not the platform. When something doesn’t work, you can easily replace it or drop it. Composable commerce is all about freedom and adaptability: With modular iterations and best-of-breed, you can add, remove or switch functionalities without vendor lock-in. Innovate faster and adapt customer experiences on the fly, and release new features up to 8x faster than legacy tech.

Benefit #3 — Lower cost: When you invest in financial and technological flexibility, you achieve higher cost efficiency and eliminate technical debt. A true composable system optimizes commerce investment because you can select the components and solutions that meet your requirements. With a versionless solution, you no longer have to pay for forced upgrades you don’t need or that don’t drive value for your business. You can effectively say goodbye to maintenance fees and backward compatibility testing, too.

As the composable approach is a relatively new technology, it’s common for executives and tech professionals to express misconceptions surrounding complexity and high costs. These concerns stem from the misperception that implementing best-of-breed solutions would result in an overwhelming number of vendors, as well as compatibility and interoperability issues. Another worry is whether composability requires a large team of developers, which could incur additional personnel, recruitment and training expenses.

However, composable commerce is actually able to reduce complexity and costs:

• Simplified commerce architecture: By leveraging modular and interchangeable components, composable commerce makes the architecture easier to manage and maintain.

• Seamless integration: The adoption of new cutting-edge solutions, such as search and AI tools, becomes faster and more efficient without incurring additional integration costs.

• Real-time updates and maintenance: True composable systems are versionless and continuously updated and maintained in real-time, which eliminates technical debt and renders version upgrades obsolete.

• Scalability: With a cloud-native SaaS solution, businesses no longer need to manage their own servers or handle capacity increases. The system offers infinite scalability to handle a large number of products or increased online traffic.

• Increased developer productivity: Working with modern tech means developers become more productive, enabling the company to innovate at a faster pace.

• An ecosystem of composable commerce vendors: Vendors like commercetools offer extensive partner networks and accelerators that simplify implementation timelines and enable businesses to leverage best practices.

These advantages of composable commerce alleviate complexity and costs, providing businesses with a more streamlined and efficient approach to their commerce operations.

It’s no secret that today’s customer experiences come with high expectations — omnichannel journeys and personalization are key to upselling and cross-selling effectively. Composable commerce is the engine that enables brands to translate these expectations into exciting customer experiences by plugging in the best-of-breed eCommerce components that suit each of these demands.

In addition, consumers also want to discover, buy and engage with brands with fast-loading pages, mobile-first capabilities and so on, provided by the robustness and infinite scale of a true composable commerce platform.

For example, the beauty retailer Trinny London added a component that delivers a more tailored checkout experience by presenting customers with sample options that complement the products purchased, such as an eyeshadow matching the color of a purchased lipstick. At the same time, BMW Group is able to auto-scale online capacity during traffic peaks across multiple touchpoints, such as Connected Drive, boosting omnichannel sales like never before.

B2B organizations are also leveraging the benefits of composable commerce for their buyers, especially as customers in this space increasingly demand stunning eCommerce experiences. Nieuwkoop Europe, a leading interior landscaping company, helps florists and project designers find, select and buy plants with a B2C-like and personalized look and feel. Tamron, a global manufacturer of camera lenses, also moved to a composable architecture to create a D2C solution that lets photography aficionados purchase directly from the company.

Today, consumers expect to find, engage with and buy products from an array of touchpoints that range from the traditional in-store and webshops to social media and augmented/virtual reality (AR/VR).

More than managing touchpoints and device responsiveness, omnichannel commerce is about making those shoppable experiences seamless, no matter the touchpoint at which the consumer starts or finishes the buying journey. According to Harvard Business Review, omnichannel strategies increase AOV (average order value) by 10% and lifetime value (LTV) by 30% compared to single-channel commerce.

This is how businesses can orchestrate their omnichannel strategies more effectively with composable commerce:

• Flexibility and agility: By decoupling the frontends (the customer-facing touchpoints) from the commerce backend, businesses can easily add, manage and even drop touchpoints.

• A single commerce backend: Have one commerce system as the single source of truth for your data (customer, product, inventory and more) to collect, view and analyze data from multiple sources, such as purchase history and inventory, in one place.

• Real-time data exchange: Using API-driven integration to connect different applications enables real-time and consistent data exchange and channel orchestration.

• Flexible data modeling: Structure data in a way that accommodates unique requirements for your business.

For instance, Mars, best known for M&M'S, Skittles and Snickers, implemented composable commerce to provide a personalized experience with a “My M&M'S” online store for customers to create custom bags of candy, as well as marrying the physical and digital worlds with BOPIS (buy online, pick up in-store).

American retailer Ulta Beauty has also created shopping experiences that mirror in-store with digital thanks to composable commerce. The company provides virtual beauty advisor services like GLAMLab for consumers to try on beauty products via the web or app and get personalized recommendations without having to step into a store.

The Canadian luxury menswear retailer Harry Rosen translated its in-store personalized consultation to a digital laydown experience. Their clothing advisors pull together various fashion pieces to create a wholly curated look for individual customers, with the client’s correct size and in-stock items. The recommendations are shared as a digital webpage, giving clients more confidence to buy complete looks fitting their style with an easy option to add their desired items to the shopping cart. This omnichannel approach resulted in 300% growth in orders, a 1.8x increase in basket value and a 3x lower return rate.

Embracing composable commerce doesn’t require a complete overhaul all at once. Brands can start by addressing their main pain points or missed opportunities, such as enhancing an unstable checkout flow during high-traffic periods. Such incremental changes enable companies to tackle issues one at a time and realize business value faster.

This phased approach is commonly known as the strangler pattern, a monolith-to-composable migration method that enables brands to break their platform into small pieces as microservices and slowly replace those with single components incrementally. Over time, the monolith will start to “suffocate” and eventually disappear.

Take the example from Trendhim: The Scandinavian retailer chose commercetools as its centerpiece to connect every aspect of the customer journey. Next, the team at Trendhim selected a low-risk system to migrate first — fulfillment — and plugged it. This gradual rollout also allowed the company to optimize constantly, unplug components when something went wrong, and stay on top of its migration roadmap with minimum disruption to the business.

With composable commerce’s inherent modular design, a phased migration via the strangler pattern provides a great choice to re-platform in contrast to the Big Bang method (also known as “Greenfield”), which requires businesses to rebuild the complete commerce architecture and release it entirely in one operation. Not only is the Big Bang a more risk-prone option due to unpredictable errors and downtime but it also requires thorough planning and realizing business value/ROI takes a lot longer.

While composable commerce and MACH architecture are sometimes used interchangeably, they are not identical concepts.

In simple terms, MACH serves as the technical backbone for composable commerce with the combination of multiple technologies including microservices, APIs, cloud-native and headless that allow brands to tailor experiences to the exact needs of your business and its customers. Dive deeper by exploring the differences between MACH and composable commerce.

The reason why composable holds the future of commerce is due to three main reasons:

1. Constant change, business complexity and economic headwinds

The last few years brought a pandemic, recession, high inflation, international conflicts and supply chain disruptions. Managing constant change is a top-of-mind topic on the agenda of business and technology leaders.

1. Customer expectations are on the rise

Customer expectations continue to grow with shoppers across B2C and B2B looking for seamless omnichannel experiences, fast-loading and mobile-first interactions, and meaningful brand engagement.

1. The tech many businesses use is outdated

Businesses need to move faster to capture new opportunities, but they’re hindered by the complexity and cost of legacy all-in-one platforms. While these suites provide a fast time-to-market, they offer massively standardized functionality that is hard to customize and slow to update. Companies that need to create unique customer experiences, expand internationally or even test new business models face issues to meet their goals.

All of these developments shed light on the exponential growth of composable commerce (alongside MACH) and how this approach can help companies navigate an ever-evolving marketplace in a cost-efficient, flexible and scalable way.

Gartner predicted in 2020 that, “Monolithic digital commerce applications cannot support the agility and flexibility needed to support fast-moving digital business. Organizations will need to move toward composable commerce to keep up with the pace of change in customer demand.” Since then, composable commerce continued to grow at a fast pace, with the analyst now forecasting that by the end of 2024 composable will become the new paradigm in commerce:

• 70% of large and medium-sized enterprises will have composability as a key criterion for new application planning.

• 20% of global 2,000 CEOs will report an increased appetite for risk and improved resilience, both attributed to modular [composable] business redesign.

• The mantra for new SaaS will be “composable API-first and API-only,” relegating traditional SaaS vendors as “legacy.”

Beyond commerce, “composable thinking” is set to revolutionize how businesses respond to an environment of constant change. The rationale is that if unpredictability is an inherent part of our lives, businesses should embrace change and use it as a tool. To achieve this, Gartner recommends that business leaders apply “the core principles of composability (modularity, autonomy, orchestration and discovery) to the foundations of its business architecture (the business model, enterprise operations and strategy in order to master the risk of change and reach untapped business value.”

In conclusion, the stories of Harry Rosen, Ulta Beauty, Mars, and various leading businesses that already tap into composable commerce to succeed, showcase how this new technology is poised to grow and become the dominant force of commerce in the years to come.

Ready to dive deeper into composable commerce? Check out the guide How to Compose Your Commerce in 2024.

Manuela Tchoe

Senior Content Writer, commercetools

Dasha Cherniavskaia

Head of Product Marketing, commercetools