Measuring the cost vs. value ratio of headless commerce

4 min read
August 1, 2023

The Intellyx take on Nacelle and the modern approach to headless and composable commerce - Part 4

Written by: Jason English,
Partner & Principal Analyst Jason, Intellyx

Retailers evaluate their performance in terms of total sales, new customer acquisition, and revenue per customer, offset by any sales costs, including the cost of the goods themselves, goods, and marketing and promotional expenses.

In practice, no matter how well a company does, there’s always room for improvement. That’s why such self-evaluations often result in the same mission: “We need to build a better website to improve the customer experience.”

But what is making ‘a better website’ really going to take? Is it worth the cost and effort? And which features should we build first?

For a modern retailer, the Total Cost of Ownership (TCO) of a new e-commerce presence means the total labor, software, service and infrastructure cost of building and supporting a truly responsive, dynamic, accurate data-driven website that can quickly give customers the products and experiences they are looking for.

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Getting the facts straight: mastering composable
commerce, featuring Forrester

Reducing pipeline time for customer-facing features

In this series, we’ve discussed how GraphQL's unique ability to allow users to ‘ask for what they need’ from servers and services simplifies interoperability. We have explained how a canonical data model for assortments of products and offers can speed up digital merchandising and how Nacelle's approach to managing headless commerce with GraphQL speeds up integration.

Now we've come full circle as we seek to justify the value of our investments and prioritize developing future features that could influence customer experience.

Industrial science has long understood the "bullwhip effect," in which a business continually reacts and makes changes to policy due to current conditions like stock outs or abandoned orders. This thrashing back and forth throws the entire business out of sync as a wrong decision driven by a customer touchpoint cascades to affect upstream supplies, production and logistics capacity.

In e-retail terms, this effect is more than quickly supplying product information and customizing offers at the point of sale. It's about shortening the pipeline or the length of the 'bullwhip’ that can impact the timeliness of data and releases delivered to the customer now and in the future.

No retail website or web app is an island unto itself. Each customer session may pass through third-party API services and components for predictive recommendations, inventory, referrals, reviews, customization, and feedback – not to mention the site's performance and error-handling telemetry.

Retailers want the added customer experience offered by many marketing services, algorithms and partner plugins. However, each additional segment added to the pipeline takes its own bite out of customer response time and potentially creates a performance bottleneck that must be addressed. 

So the time it takes to build a new site, the time it takes to make changes to the workflow in the future, and the time spent wrangling with data and components all contribute something to the cost of the site in terms of revenue and value gained or lost.

Add business agility 

Nacelle’s GraphQL architecture offers a flexible approach for making API requests across multiple backend systems. Using GraphQL, the underlying e-commerce system can change to meet customer needs without requiring rebuilding the front end of the storefront, or extending the delivery timeline to 'rip and replace' parts of the infrastructure.

This gives merchants a competitive edge by reducing technical debt, lowering switching costs, and increasing agility. 

How do modern retailers realize value by implementing headless commerce?

Conversions and order size. You can't change the fundamentals of retail – it's still all about selling something. The primary value of making the exact right personalized offer in near real-time helped Enso Rings achieve a 26.5% increase in order conversions and a 12.5% increase in value per order.

Faster implementation time. Gimme Beauty went from concept to a total redesign and re-architecture of their commerce application in just 90 days. Even at that breakneck speed, the resulting improvements increased their conversion rate by 20%, with zero downtime.

API-driven development flexibility. Global florist network FTD took a platform-first approach to modernizing its built-in-house website to improve developer efficiency. Using Nacelle's headless commerce approach, developers compose progressive web applications that make API calls to fetch product and commerce data, as well as rich content and media. Site speed and conversion rates were improved, but more importantly, the company addressed technical debt with a new system that allows quicker UI/UX experimentation, earlier testing, and faster releases to meet customers with improved functionality.

The Intellyx Take

When considering the standard metrics like TCO and ROI for modernizing a web property, it's essential to take a step back and consider the potential costs and risks of not moving to a truly dynamic headless or composable e-commerce system.

To compete, retailers may continually add new features, specials and offers in an attempt to retain customers. If those new features create interminable wait times, customers will search elsewhere for answers.

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Boost Ecommerce Performance with
Headless Commerce

Fortunately, we are experiencing a renaissance of computing power, bandwidth, automation, and the advent of very flexible, high-performance API-driven data layers like GraphQL. Forward-thinking retailers can now flexibly deliver on the promise of headless commerce to improve customer experience without the pain or sticker shock of a big-bang rip-and-replace implementation. 

©2023 Intellyx LLC. Intellyx is editorially responsible for this story. No AI chatbots were used to generate the content. At the time of writing, Nacelle is an Intellyx client. Image source: Shutterstock

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