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How to face the e-commerce challenges of today

online shopping
Tim de Kamper
Tim de Kamper
VP eCommerce Europe
Length
8 min read
Date
19 October 2022

E-commerce is booming

From 15% of total retail sales in 2019, global e-commerce surged to 21% in 2021 in response to the restrictions caused by COVID-19.

Research companies like Morgan Stanley, Statista and McKinsey forecast further growth of up to 25%, despite an overall slowing of economic activity.

But to continue thriving and staying ahead of the growth curve, organizations need to tick a growing number of boxes. From marketing and technology to data and creativity, there are key challenges to address to keep e-commerce growth going.

online shopping

Last year, global retail e-commerce sales reached $4.9 trillion and are expected to exceed $7.4 trillion by 2025. This year, B2B e-commerce adds $14.9 trillion on top of that.

While many factors contribute to this continued digital growth, the two leading factors are the emerging digital presence of companies and the accelerated consumers’ digital maturity. The way companies sell and people shop has changed permanently.

However, this doesn’t mean that the e-commerce pie is shared equally. 

Fiercer competition requires better experiences

The e-commerce landscape is getting more competitive as more companies pivot to launch or optimize their digital commerce operations. In the race to gain consumers’ attention, the cost of advertising has increased and the return on ad spend (ROAS) has decreased.

CPMs on Facebook rose 47% in 2021 when compared to 2020, and Google, YouTube, TikTok and Snapchat are demonstrating a dramatic increase in advertising costs year-over-year. Smaller players with less financial means find they cannot rely as heavily on advertising as before. Additionally, advertising data is becoming less valuable as privacy concerns lead to stronger regulations and restrictions on third-party data worldwide.

The best way to stand out from the crowd is by creating exceptional digital experiences that inspire and attract consumers:

  • 54% of shoppers enjoy browsing and discovering online more than in-store. 
  • 74% of consumers are likely to buy based on experience alone, according to a recent Forbes study on the value of CX. 
  • 32% of customers would consider breaking up with a favorite brand after only one poor customer experience.

The standard for a good customer experience is rising every year. So it is no small wonder that customer experience was named a CEO priority for all respondents in an IBM survey of 3000 CEOs across 50 countries and 26 industries.

The big challenge to realizing a differentiated customer experience has the right technology architecture in place.

Technology drives e-commerce growth

Delivering optimal digital experiences is difficult when tools and technology are outdated, inflexible, and disconnected.

Research by Gartner finds the CMO’s top concern for 2022 is, therefore, rebuilding the marketing engine for flexibility in a changing environment. Customer journeys today have become complex, spanning a proliferation of devices and touchpoints. This results in new marketing challenges like managing content, keeping branding and messaging consistent, and connecting the marketing teams that work with their own systems.

True omnichannel – integrating all the channels into one seamless customer experience that is both relevant and high quality – is challenging to pull off. Meanwhile, new channels keep coming and gaining momentum, from podcasts, AR, VR, and Metaverse, to voice assistants, smart home devices, and car commerce. 

Marketers also see more urgency to launch digital products and iterate in today’s rapidly changing digital world. The ability to experiment, analyze, pivot, and deploy at the right time depends on agile solutions. All these developments lead to the need for a higher level of involvement from back-office technical roles. Because in today’s modern marketing environment, technology has become a cornerstone of doing business.

Every company is a tech company

The growing dependency on technology has led the marketing department to collaborate closely with the IT department.

From data collection to personalization and hyper-targeting to focusing on high-value customers, technology enables it all. The IT department has seen its responsibilities grow to support a growing number of systems, including CMS, CRM, data warehouses, and now CX platforms. The traditional gatekeeper role of the IT department has evolved to become a business driver.

Every company is turning into a technology company, because, as Forbes puts it, “Today, no company can make, deliver or market its product efficiently without technology.”

Historically, the leading choice for numerous organizations has been ‘monolithic’ platforms that contain a general solution for their most frequent marketing and e-commerce needs. These suites provide an all-in-one answer that addresses prevailing challenges with out-of-the-box solutions that ‘fit all.” The monolithic architecture is also associated with various cons, such as slow go-to-market timelines, inflexibility, lack of agility, complexity, and scaling issues.

In response to these concerns, a new approach arose that decoupled the front end and the back end.

The rise of headless

The term “headless” comes from the analogy of chopping the “head” (the front end) from the “body” (the back end).

By decoupling the presentation layer from the back-end processes, content can be easily served to whichever digital channel is connected. One head becomes many heads. This means that developers can build whatever they want and however they want, without having to worry about how it will be presented to the customers.

The rigidity of a coupled system is replaced with the flexibility of having two or more systems, loosely coupled with APIs. By going headless, developers can also address the pain points that have appeared due to increased smartphone adoption and create a mobile-optimized shopping experience. The flourishing of mobile commerce is one of the key reasons why headless became so popular. When headless solutions entered the market, the available full-suite solutions proved inflexible to address the growing mobile traffic and the growing matrix of buyer touchpoints, unlike headless.

Other cited technical reasons for choosing a headless architecture are flexibility, faster time-to-market, and stability. Companies also prefer not to be too dependent on one system and one full-suite supplier to reduce vendor lock-in.

For essential marketing practices like loyalty, A/B testing, and big data analytics, they want the solution that is best in its class. A headless architecture allows you to integrate these kinds of tools into an ecosystem. When a tool becomes inefficient or outdated, replacing it is relatively easy in a best-of-breed approach. This way, headless addresses a prime dilemma for organizations today: adapting to change without having to overhaul the whole architecture.

Headless comes with challenges

With all its pros, headless architecture also comes with cons. You must build what you want from scratch, which requires vision and ongoing development. This also means that marketing becomes IT-dependent for making content changes and running campaigns.

The biggest pitfall of going headless is doing it blindly and losing your head. Want to know more about these challenges?

Read our other blog “What is composable commerce? to learn more about the composable approach or download the whitepaper The Ultimate Guide to Headless and Composable Commerce. In this extensive guide, you will learn how the composable architecture builds on the headless approach and puts marketing back in control of the front-end experience.

Going headless with content and commerce

“The term headless typically refers to a headless CMS that organizes and stores all the content data (images, text, and videos). Popular headless CMSes are Sanity, Strapi, DatoCMS, Builder, Kontent.ai, Prismic, and Contentful.

“The content is delivered via an API to a front end, which can be custom-coded to fit specific needs. In headless commerce, the body consists of an e-commerce platform, which can be a full-suite solution such as Magnolia or Salesforce or a specialized commerce platform such as BigCommerce, Shopify, and commercetools.

“While full-suite platforms offer a native front end, this can come with the disadvantages of using a suite solution. That is why full-suite platforms are now moving towards developing front-end capacities that match better with the headless approach.”

Tim de Kamper, VP e-commerce DEPT®

Headless is booming – for enterprises

In 2016, there was only one headless vendor in the Gartner Magic Quadrant for Digital Commerce. The Magic Quadrant for 2021 now features eight vendors offering headless solutions. The adoption of headless is booming globally, and headless is often called the future of e-commerce. According to research by Vanson Bourne in 2021: 

  • 64% of enterprise organizations are now using a headless approach, a nearly 25% increase from 2019. 
  • 92% of respondents state that implementing headless technologies makes delivering a consistent content experience easier.
  • 92% of respondents recognize digital experiences as essential to their organization’s success.

Still, only 2% of all websites worldwide use headless, primarily enterprises. Why are midlevel and SMBses not embracing headless with the same fervor?

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