Unpacked   //   May 15, 2023

How composable became the hottest buzzword in commerce

More tech vendors are trying to make flexibility one of their main selling points in their quest to win over e-commerce brands — and are using a new vocabulary in order to do so. 

There’s been an uptick over the past couple of years in vendors pitching what they call “composable” solutions. Last week, three e-commerce tech companies — Rally, Pack Digital and Swell Commerce — teamed up and announced a new “Go Composable” initiative, trying to pitch e-commerce brands on using all three of their solutions in order to build a truly “composable” tech stack. Meanwhile, in January e-commerce giant Shopify released a composable solution of its own. Called Commerce Components by Shopify, the new offering is meant to target enterprise retailers who might not want to move their entire tech stack over to Shopify, and, instead, only pick and choose which features they want to use. 

At its core, composable commerce is about allowing e-commerce brands to choose every single part of their tech stack — from their loyalty program provider to their checkout system — without being beholden to the restrictions of one provider or platform. It’s a move towards unbundling after the past decade of e-commerce has been marked by bundling. Platform giants like Shopify and BigCommerce rose to prominence by pitching young startups on one-size-fits-most solutions that helped them launch their websites quickly and easily. 

Developers and vendors say that composable commerce allows brands and retailers to build an e-commerce experience that is better suited to the needs of their particular company, but is less expensive and resource-intensive than custom building every single component themselves. However, other developers cautioned that a composable approach might not make sense from young brands. And even the most ardent proponents of composable commerce say that there are still a lot of barriers preventing a lot of brands from taking a truly composable approach. 

“It’s the direction that commerce is going in terms of how you build commerce experiences,” Mike Lowndes, vice president analyst at Gartner, said. 

What is composable commerce?

The term composable commerce was first popularized by Gartner in 2020. Lowndes said he was looking for a term to describe taking a more modular approach to e-commerce, read a report from another colleague at Gartner about “the composable enterprise,” and thought “that is a perfect description of the direction this is going.” 

Before the rise of platforms like Shopify and BigCommerce — which launched in 2006 and 2009 respectively — companies that wanted to sell their products online essentially had to build everything custom themselves. These platforms made it easier for anyone to launch an e-commerce website by providing a suite of services to manage everything from payments to sending customers shipping updates. They also launched third-party app stores to outsource some of the features they didn’t want to build themselves, and give e-commerce brands multiple SMS providers or review management systems to choose from.

As a result, “the apps we were using grew and grew… and became very large platforms with lots of capabilities inside of them. But the downside of that approach was that they became very slow,” Lowndes said. In theory, one of the upsides of taking a composable approach to building an e-commerce website can be faster. 

And while merchants do have some freedom and choice when it comes to how they build their website, most merchants that use Shopify are still limited to, say, which post-purchase providers exist within the Shopify app store. 

But with composable commerce, “you can use anything you want for any part of the experience, and you don’t have to say, ‘OK I’m using Shopify for my orders, I’m also using Shopify for my products,” Mark William Lewis, co-founder and chief technology officer at Netalico Commerce said. And “instead of [everything] being custom, everything can be some sort of other SaaS service you can connect to.” 

Is composable the same thing as headless?

The rise of composable commerce comes on the heels of a similar trend that’s been bubbling up in e-commerce. A couple of years ago, headless commerce also became a popular term among brands and retailers also looking to build a more customized e-commerce experience. Jordan Gal, founder of Rally, described composable commerce as “a different term for something similar [to headless].”

Lewis said that headless simply refers to decoupling the front end of an e-commerce website from the backend.

Whereas, he said, the term composable commerce is “trying to basically encapsulate that everything can be split apart — reviews and SMS and all the services that you use.” In the January press release announcing its new composable stack, Shopify gave the hypothetical example of an enterprise retailer using some of Shopify’s most well-known components, like its checkout, while still integrating with the “retailer’s preferred back office service.” 

One of the benefits of headless commerce was that — as with composable commerce — it could, in theory, result in a faster website. But headless commerce websites are also more technically complex to build. 

In turn, Gal said that he feels like headless commerce has gotten a bad rap as merchants who have tried to implement a headless commerce solution have found it technically frustrating, for variety of reasons. For example, Gal said that he’s heard of “merchants trying to go headless on Shopify, [when] it really was not meant for that.” 

In turn, some vendors are using the term to “composable commerce” to attract brands who may be wary of headless, but still want customization and flexibility. 

What are the benefits of composable commerce? 

Gal, one of the founders spearheading the “Go Composable” initiative, said, “what we want to show here is an achievable, realistic approach to succeeding when a merchant is frustrated with a platform and the restrictions that go along with it.” 

Gal’s company, Rally, launched in 2020 and announced a $12 million Series A round last month, led by March Capital. Rally offers brands what it says is a “composable checkout” solution in that it provides support for multiple back-end and front-end platforms, payment processors and payment methods. 

For example, Rally integrates with multiple buy now, pay later providers like Affirm and Afterpay as well as with commerce platforms like BigCommerce, Salesforce Commerce Cloud and commercetools. It does not, at the moment, integrate with Shopify. 

When asked what makes Rally different from other checkout providers, Gal said that “in some ways, the most important part is that it’s independent.”

Composable commerce providers tout similar KPIs that most tech vendors use when trying to convince brands to use their solutions: that is, they claim their solutions lead to higher average order value, or higher conversion rates. But the high level talking point that many composable commerce providers refer back to is that it gives brands freedom and independence, without having to build everything custom themselves.

Lewis said that, as with headless commerce, composable commerce is also in theory supposed to result in a faster website – but that is not always a given. 

Why isn’t everyone adopting composable commerce? 

Gal said that one of the limitations of building solely on platforms like Shopify is that “a brand can’t just go off and create another checkout because you feel like it.”

But not every brand wants to or needs to build their own checkout. To that end, many developers and agencies said that composable commerce is a better fit for larger retailers who don’t want to be beholden to one platform, and have the time and resources to invest in a truly composable experience.  Shopify, for example is marketing its Commerce Components offering squarely to enterprise retailers, announcing Mattel as the first customer. 

“If you’re an e-commerce startup, just selling socks or shoes, it might sound sexy to have, you know, the coolest, supposedly fastest website, right?” Lewis said. “But, to be frank, they probably shouldn’t make that kind of tech investment in the beginning and focus more on the marketing side of things.”

Even proponents of composable commerce acknowledge that it is still early days in the movement. Eric Ingram, co-founder and CEO of Swell Commerce said the ultimate goal of the composable commerce movement is to make building unique e-commerce experiences “as easy as Shopify, as easy as Squarespace” in terms of ease of set up. But that also would require the biggest platforms themselves becoming more flexible on what integrations merchants can use, and how they can customize various parts of their website. 

“That’s what we’re working toward,” Ingram said.