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Shopify has long been known for helping new and emerging brands get off to a fast start in ecommerce. To kick off 2023, the software company is planting a flag in the enterprise market.
The news: Shopify on Tuesday launched Commerce Components by Shopify (CCS), a product offering that allows larger, more established brands and retailers to access parts of its ecommerce infrastructure. With the new package, Shopify is aiming to provide a modular approach for enterprise retailers that typically require more customized systems to run their digital commerce operations. “Enterprise retailers can take the components they need, and leave what they don’t, and developers are free to build with any front-end framework they choose,” Shopify writes.
What's in it? As part of CCS, Shopify said it is rolling out new back-office management that is designed specifically for enterprise retailers. At launch, the product offerings include:
- Checkout: Shopify’s checkout will be available to enterprise brands. This will also open up access to customers who use Shop Pay, which is Shopify’s checkout service for storing payment info and tracking orders.
- Flexible APIs, which now have no rate limits. These allows brands and retailers to integrate existing services with Shopify components.
- Infrastructure: Shopify says it has over 275 network edge points globally, which enables speed.
- Ecosystem: Shopify has a dedicated account team with solutions architects, specialized support and a network of seasoned agency partners and system integrators like Deloitte, EY, and KPMG.
- Find a full list of the 30+ components here.
Key quote: “Commerce Components by Shopify opens our infrastructure so enterprise retailers don’t have to waste time, engineering power, and money building critical foundations Shopify has already perfected, and instead frees them up to customize, differentiate, and scale,” said Harley Finkelstein, president of Shopify, in a statement.
Who is using it? Mattel, for one. The Barbie and Hot Wheels maker is bringing its entire portfolio of toy brands to Shopify. The companies first worked together on a creator platform called Mattel Creations, and are now expanding their work together.
Shopify goes bigger: Tuesday’s launch is a product-level outgrowth of rhetoric that has been emerging from Shopify in recent months. With existing clients like Coty, Spanx and Staples, Finkelstein recently told analysts that growth of enterprise clients using the existing offering Shopify Plus outpaced that of Shopify’s overall GMV in the third quarter. Coupled with recently-launched hardware that powers in-person retail, the strategy reflects an aggressive roadmap for Shopify that sets up the Ottawa, Canada-based company to serve markets beyond the digitally-native, direct-to-consumer brands and small businesses with which it has long been associated. This comes as DTC brands are facing challenges following post-lockdown shifts in shopper behavior, Apple’s App Tracking Transparency changes and a pullback of once-plentiful venture capital. Many in retail are also bracing for a difficult year as a result of inflation and interest rates. Landing larger clients can deliver sizable and stable recurring revenue from brands with established footholds in the market. That’s a good way to ride out the storm.
Let’s be clear: Shopify is not alone here. There is already a big, existing market for enterprise ecommerce, and more platforms are gearing up to make a splash in it. In recent weeks, BigCommerce also shared plans to shift its entire sales and marketing infrastructure toward growing its enterprise account. Both companies conducted layoffs in 2022 as they shifted course.
Trends to watch:
Composable commerce. Remember the term. This launch also points to a trend in ecommerce software: Brands and retailers, especially on the larger side, are increasingly opting to build commerce technology stacks by combining elements from a number of different providers. They want to create their own systems that meet their needs, and they want the different parts to be able to easily work together. This points to an environment where choice is prized, and the best components get selected. With CCS, Shopify is signaling that it believes it can stand out with checkout. In turn, partnerships with consulting firms like Deloitte, EY, and KPMG show it is tuning for how these solutions are sold in the market.
Land and expand: The progression with Mattel shows how enterprise sales presents the opportunity to take a "land and expand" approach, as Finkelstein put it to analysts. Start with one part of a brand's work, delight them and there may be a chance to bring in the whole account.
Trending in Retail Channels
CI&T and Crownpeak partnered to build accelerators that allow online merchandising to advance with consumer expectations.
The expectations that consumers bring to a shopping experience are constantly evolving.
Look at the last three years: People shopped more online during the height of the pandemic. They became accustomed to the selection and access to different brands offered by ecommerce. There was a wider return to stores last year as restrictions lifted, but digital tools remained key to the shopping experience. Shoppers don’t think twice about conducting research online before checking it out in-person, or ordering an item on their phone to pick up later.
Shoppers are comfortable moving across channels. According to the Connected Retail Report from CI&T, consumers are splitting time almost evenly between channels – 48% online, and 52% offline. Even as they toggle between mediums, they want to have similar experiences in both. The report found that 86% of respondents have the same expectations across channels.
As CI&T Chief Strategy Officer Young Pham put it, shoppers want an immersive experience.
“People are starting to realize that their behaviors have changed,” Pham said. “So for retailers, the opportunity is, ‘How do I meet that behavior?’” The lesson for retailers is that they must not return to a time when they didn’t anticipate those changes taking place.
It requires examining what elements work in a specific channel, and how they can be applied across both. That means there is room for ecommerce to apply some of the advantages of the store. Online shopping can be transactional, but it can learn from how the store excels at merchandising, and guiding them through the store.
Where associates may ask questions to understand a person’s needs and show them products, digital tools can make recommendations and personalize the shopping experience. Where there may have been an in-person bike road test or makeup try-on, user-generated content sourced from social can help to show a product in action. A dynamic video could replace a window display.
Increasingly, there is also room to work across channels. Store associates with downtime can help to assist customers online through virtual consultations.
This approach has changed how retailers set up the foundations of ecommerce, such as checkout. Now, Pham said there is also room to bring composable architecture to how retailers build the experience of shopping online with elements such as personalization and user-generated content.
To do so, CI&T partnered with digital experience provider Crownpeak to launch the Retail Experience Platform. Combining CI&T’s experience in the retail industry and digital transformation with Crownpeak’s technology, the organizations are building retail management accelerators to expand access to composable commerce for specialty retailers. While many enterprise retailers are embracing composable, CI&T and Crownpeak see room to grow this approach in the middle market.
A personalized tech stack
This shift has all kinds of implications for the technology and infrastructure that powers commerce. The pandemic brought rapid digital transformation, especially at specialty, mid-size retailers. Bike shops that were destinations for Saturday shopping had to ensure they had online offerings to continue to reach customers, too.
Ecommerce tools were moved into place seemingly overnight, and in-store systems were configured to allow for modes that moved between the channels, such as pickup. But now that patterns have settled back out, there is room to think about how brand extends into the way that people move through an ecommerce store.
“I want to spend more time now thinking about, how I can have a better customer experience…How do I create a relationship?” Pham told The Current on the floor of the NRF Big Show.
Change will be a constant. The digital tools that allow this to happen will continue to evolve, just as expectations do. It requires an architecture where brands and retailers can choose the right technologies that allow them to reach customers, and deploy quickly. It means they may mix the best tools from different tech providers, and change them out as new tools come along.
Known as composable commerce, this represents a shift in ecommerce software. Previously, ecommerce systems for retailers were often custom-built and frequently monolithic. Changing out individual parts often required rebuilding whole systems. But the arrival of the cloud, API-driven technologies and headless content management has brought about the ability to create an interchangable stack of best-in-class technologies that is personalized to the retailer.
'Adjust, adapt and grow'
The shift to composable architecture can bring change on two levels, Pham said. Technology capabilities that will be advanced, and Crownpeak specializes in this area.
“Having the right technology in place that can adjust, adapt and grow with the needs of the customer over time is what we bring to the table,” said Crownpeak Chief Marketing Officer Michael Robinson. “We provide the ready-made building blocks and the right tools to create something that fits to the customer's needs.”
But there are also business considerations. On an organizational level, retailers will be able to use composable architecture adopt new features that can change the shopping experience for customers, and do so in a way that provides flexibility to pivot and improve. This involves not only the internal teams that will prioritize and design experiences, but also suppliers that must move products into place. This will bring a shift internally, and there must be a willingness to embrace it.
“The speed to market is the ideas. It's not the technology,” Pham said. “If you want to look at how you're changing your commerce journey, it's not a whole revamp for a year.” By being able to componentize with composable commerce, “I'm talking weeks and months, versus years,” Pham said.
Once the initial components are in place, the technology allows retailers to grow as these experiences become more common.
“It also allows you to scale,” Robinson said. “If you think about more personalization, more variants of content, different stories, and how you would like to reach out to different audiences, this requires the necessary tools to deliver these experiences.”
In the end, it underscores a mindset shift taking place. New technologies are continuously launching, and consumers are expecting the capabilities they provide to be embedded in the shopping experience. Retailers must be aware of what customers want to use, be able to adapt their technology quickly and integrate it into one dynamic path that moves across in-store and digital channels.