Commerce architecture is more important now than ever before

Internet Retailer, an ecommerce research company, released a data-driven report of the current ecommerce vendor landscape. This report, titled 2019 Leading Vendors to the Top 1000 Retailers Report, surveyed ecommerce executives to gain insight on trends relating to using vendor vs. in-house solutions for various technology needs. The report covers ecommerce platforms, email marketing, online advertising, payment processing, personalization, cloud services, analytics, and much more.

Some of the highlights from this research include:

66% of retailers opted to use a vendor when implementing new technology rather than build it in-house in 2019, up 51% in 2018.
65% of retailers say they turn to vendors because they don't have the in-house expertise to build e-commerce technology.
49% of retailers say their ecommerce platform is their top budgeted priority over the next year.

While the research reveals who the top vendors are for each segment analyzed, another big takeaway from this report is that an online retailer's commerce architecture is now more critical than ever before.

66% of retailers opted to use a vendor rather than build in-house

This percentage, up 14% from the previous year, is a massive indicator of the importance of the right commerce architecture.

To quickly recap what commerce architecture is, it's the entire ecosystem of software that a business uses to run its digital operations and how they work together. This includes any ecommerce platform, ERP's, CRM's, OMS's, PIM's, marketing suites, analytics, reporting, etc. Different architecture types have different strengths and weaknesses, so it's essential to know which is best for your unique business.

The fact that most retailers are increasingly using third-party vendors for each component is important. For an online business to truly excel, all of these components need to work together and pass data between them efficiently. Without this, massive data bottlenecks will appear, affecting the business's bottom line as it grows because additional staff is needed to keep up with the data. I've outlined this in a couple of previous posts (here and here), but the bottom line is that scalability, not growth, is the only way forward for businesses trying to reach the next level. Scalability happens when a company grows but has automation is in place to handle the increase in data exchange. It's only achieved by understanding the commerce architecture best suited to the business and defining a working strategy around it.

Defining a strategy centred around commerce architecture helps businesses navigate the world of third-party vendors. By knowing the architecture and how it applies to the company, business operators will know which components must integrate with their ecommerce platform (or other platforms) vs. one that doesn't need to. If a business is not building the component in-house, it's now more important than ever that the vendor-supplied component meets the requirements of the commerce architecture.

65% of retailers say they turn to vendors because they don't have the expertise to build ecommerce technology in-house

This stat illuminates another indicator of the importance of defining a commerce architecture strategy. Most retailers simply don't have the in-house expertise to build the technology they need.

When a business is not in control of what the technology needs to do but is searching for solutions, their stuck comparing features and benefits while deciding which vendor or solution to use; while this may work for minor components, it's not the right way to go for the major components as you typically won't see any of the negative aspects searching this way. Instead, by knowing the business's commerce architecture and how the component should fit within it, companies will be better positioned to ask the right questions and find the best technology for the business.

If operators make the wrong choice, that's ok. One of the main concepts when thinking in terms of commerce architecture is that you can, and should, swap components from time to time as better solutions are found. This is one way that agile technology companies, including online retailers, stay on top of their competition.

49% of retailers say their ecommerce platform is their top budgeted priority over the next year

Nearly half of all respondent's surveys indicated that their ecommerce platform is the big-ticket item to invest in over the next year. Many retailers know that the customer experience they provide differentiates them within the marketplace, so it's no surprise that the ecommerce platform is a top priority.

Improving your commerce architecture makes your ecommerce platform better. Why? Automation and scalability. The more that an ecommerce platform talks to the other components within the architecture, the more streamlined and efficient operations will be. The business bottom line will benefit as sales increase because automation processes data between systems that would have otherwise been done manually by human staff.

Are you using the right architecture?

We recently created a couple of valuable tools for retailers to help them gain insight into their business.

My suggestion, run through each tool above to gain some valuable insight. Give it a try (and let us know what you think). They're quick and won't cost you a thing!