What is Composable Commerce?

15 Mar 2022 • Technology & Digital Development, Strategy & Business Design

In this blog series on acquiring adaptable business capabilities, this part will cover what is Composable Commerce. Composable Commerce refers to a modern way of doing e-commerce.

What does Composable Commerce stand for?

Composable Commerce is a subset of Composable Business. The term refers to the technical architecture of digital commerce, where a set of applications is assembled from components that communicate with each other through interfaces. Service-orientedness, microservices and MACH have already paved the way towards similar goals, but Composable Commerce takes things even further from a business perspective.

Composability refers to Packaged Business Capabilities (PBCs), which can be freely combined to create a system that meets a specific need. Business Capabilities are like Legos that can be quickly transformed by connecting them in different ways. Rapid adaptability is therefore one of the reasons for choosing the Composable model. Another reason is business resilience, which refers to the fact that the whole architecture does not have to be built from scratch as new needs arise.

The Evolution of Digital Commerce

There are several models for developing digital commerce (or e-commerce), which can be summarised as follows:

• Handcrafted solutions. The first players built their online stores from the scratch when no other methods were yet available.
• Monolithic products. The promise of e-commerce products was to package all in one solution.
• Add-ons. A ready-made e-commerce add-on seemed an irresistibly easy option to add to an existing ERP or website.
• SaaS shops. Open a digital shop in an hour was the promise of cloud services in a nutshell.
• Headless Commerce. Separating the user interface from the back-end system and connecting through an API.
• Composable Commerce. The most advanced implementation model is based on the paradigm of composability, where the modelling level is raised from technology to business.

The evolution described in this chapter creates a right chronological order in the big picture, but it is of course market and segment specific. It may also be possible to mix and match solutions, for example, customisation can be achieved through a range of options.

Let’s compare different ways of doing digital commerce to composable.

Tailored solution vs Composable Commerce

Traditional handcrafting has enjoyed an unnecessarily negative reputation in the market. Craftsmanship is inherently slower, but disappointment is a matter of mismanaged expectations. An advanced digital system that delivers significant value is typically the result of five years of a strong culture of experimentation rather than a single project.

In fact, customisation is typically a strategic choice of delivery method, seeking competitive advantage and maximum freedom to steer development. It is not a choice for savers, for those in a hurry or for those who just want an easy way to bring their offering online.

Amazon.com and verkkokauppa.com (a popular Finnish webshop) give you a perspective on the kind of business you can build strategically with a couple of decades of commitment to developing a bespoke e-commerce business. Over the years, a customised online store often evolves into a complete digital service, combining all kinds of business processes, harnessing the ecosystem and so on.

With tailored solutions you are free to steer the development process in any direction your business takes it.

A composable business differs from tailoring in that it aims to use off-the-shelf components as much as possible, saving the handcrafting of just creating something new. One could sum up the principle of composability to “don’t reinvent the wheel”.

In fact, the combination of an composability and customisation in right places are a perfect match.

Monolithic products vs Composable Commerce

We’ve been doing Magento solutions for over 10 years, both heavily customised and direct-from-the-shelf, and I think the disadvantages of the traditional monolithic product model are starting to outweigh the benefits. The reason is not so much the products, but the rapid pace of change in the market and customer behavior.

A common pain point is found in the most basic processes: how you add items to your shopping cart and progress towards the payment. In a monolithic environment, these processes are quite set in stone, which does not convert well to the principles of multichannel or maximum conversion optimisation. Add-ons can patch things up, but adaptability is limited.

A cloud shop is more cost-effective and faster to deploy, and the pursuit of competitive advantage is more meaningful with more modern models.

The monolith’s greatest strength at the moment is psychological. It gives a strong sense of security through familiarity and there are many specialists in the market for the popular products. Many competitors also have a monolithic product. For those aiming for a maximum digital maturity level of three, a monolith can be a straightforward and relatively easy to compete with.

Headless or composable commerce are likely to be superior models to monolithic when aiming for high digital maturity. Tendering of modern models requires up-to-date skills that are not widely available on the market. As in any project with high digital maturity, deeper and broader business and technical skills are required.

What is surprising, however, is that there is not a very clear cost differential between monolithic and composable. In the long run, the cost of a finished monolith, despite its promise, is practically equivalent to that of more advanced implementations (albeit for slightly different reasons).

Companies that want to increase their competitive advantage or adapt more quickly to market changes are looking at aggregation.

E-commerce add-ons vs composability

The aim of the model is to seek to capitalise the investments already made to a software system. Some form of e-commerce add-on is already starting to exist for a very wide range of systems. For example, SAP ERP or WooCommerce on a WordPress website.

The strengths of add-ons are the above-mentioned maximisation of investment and the weaknesses are their limited functionality and limited customisability. In principle, plug-ins could be classified under the former category, as their host system is usually a monolithic model. An additional challenge may be scalability, when the core of a monolithic host system is loaded with a large amount of user traffic via an add-on.

As an alternative, a network trading add-on is often a safe choice for straightforward purposes (see monolithic). It is therefore worth being realistic when comparing product features with more advanced alternatives. An add-on on top of a host system is an easy quick fix, not the choice of someone looking for advanced customisation or competitive advantage. Indeed, composability serves the seeker of a different type of solution.

Composable Commerce vs cloud shop

Cloud commerce has developed rapidly. Just as in the publishing market, a number of excellent off-the-shelf products have stabilised the market for those wishing to trade online. Shopify, for example, is a good “patent solution” if the goal is simply to get products out quickly and ensure that the supplier bears the cost of ongoing product development.

On the other hand, the product supplier also has sole control over the direction in which the roadmap develops. If you feel that the new features of a product that used to hit the mark so well are now being targeted at someone else, you are at the heart of the matter. Indeed, maintaining the continuous growth of a cloud product usually means attracting new customer segments, which means that you may unwittingly fall off the product development bandwagon.

A cloud shop is a great option for anyone looking for a quick and inexpensive solution.

Actually, composability does not preclude off-the-shelf cloud stores, assuming they implement modern API-first principles. More on this topic in later articles, but since the MACH architecture is one of the foundations of composability, the use of cloud products comes into the picture as a kind of self-evident fact. Off-the-shelf product vendors may not want to (/partly) take over the overall digital systems architecture, so you need a vendor with sovereign control over system integration, composable paradigm and such.

Headless vs Composable Commerce

Separating the user interface from the back-end system (headless commerce) is a model that seeks flexibility in e-commerce implementations. The model is a kind of hybrid, as the backend system may well be monolithic product, but the UI may be a fully customized implementation around some popular UI framework (e.g. Magento backend + React UI).

In the Headless model, the implementation may also be based on a modern API-driven backend system, exemplified by Contentful. In any case, headless is modern as a template and offers, depending on the need, numerous variations for the implementation. One of the strengths of the headless model is its broad adaptability and its reliance on API thinking to separate the user interface from the backend services, so it is quite close to the business case to be assembled.

However, the Composable Commerce is even more flexible because it takes modularity thinking to a more sophisticated level than Headless. Instead of two main components (user interface and backend), composability is based on Packaged Business Capabilities (PBCs) that are freely combined as needed. Both implementation models require a wide range of skills and experience from the supplier, due to the seamless use of multiple technologies, interfaces and systems.

The Headless model can be seen as a step towards composable architecture.

Microservices vs composable components

When thinking about Composable Commerce, it is easy to see how the microservices architecture could be interpreted as a convergence of ideas, because the concepts are very close. Both are based on API-driven thinking and consist of interconnectable components. However, they are two different models.

In a nutshell, a microservice implements a single low-level service and a packaged business capability (PBC) may combine several microservices to create a single business-level entity.

A microservice is a single technical service unit, composability packages technology to a business unit.

One can think of it in terms of the freedom to use microservices for creating composable commerce, without being limited to them. Composable pardigm is free to use all kinds of products, components and implementations, and is thus so far the best response to the current requirements of the hybrid world. Where opening an online store may have previously required maybe a revamp of current systems, composability builds seamlessly on top of existing software layers.

Summary

Well, what is Composable Commerce? It is the future of flexible digital commerce. It is a model that will be adopted by online retailers looking for the best the market has to offer. Unlike many other models, it is also suitable for those who have moved beyond, say, the headless phase and would like to bring their monolithic digital infrastructure to the forefront of the market.

Read also the other parts of the blog series:

Part 1: Adaptable Business
Part 2: What is Composable Business?
Part 3: What is Composable Commerce? (this blog post)
Part 4: What is low-code and no-code?
Part 5: What is Culture of Experimentation?