Headless Commerce Explained

Introduction

The primary objective of headless commerce is to provide a superior customer experience and empower content-led brands with technological freedom. With a headless commerce framework, B2B companies can develop proactively and independently, pushing the boundaries of innovation and creating a great customer and employee experience.

In this article, we will analyze the theoretical aspects of headless commerce, answer the question - of what headless commerce is, provide the definition and meaning of headless commerce and show you exactly how to go headless.
We will also point out the architectural advantages of the headless approach compared to traditional (monolithic) and composable commerce.

We will also discuss the future of headless commerce and headless commerce market size, including making a forecast on the further development of the headless commerce industry.

If you are looking for a headless solution, we recommend reading:

What Is Headless Commerce?

In this section, let's define headless and provide the meaning of headless commerce. We will also explain what headless commerce means in software.

Headless commerce definition

Before going headless, you need to understand what it is and why it is called headless commerce.

Headless commerce is an architectural framework where the frontend is separated from the backend layer.

The frontend layer is the customer-facing part of things (UI), and the backend is responsible for the commerce business logic. And these two layers exchange information and communicate through APIs (application programming interfaces).

Headless commerce meaning is as simple as that - it's all about detached (decoupled) front and back layers that communicate through an API. It's called headless because the online sales channels, aka heads, are separated from the business logic backend, aka the body.

However, the headless commerce term remains one of the most misinterpreted in B2B.

The ideas behind the headless approach are not exactly new – the framework has been used for years when solving complex business challenges. Whenever there's a complex task, there's a solution – to divide the task into smaller and simpler parts and address them separately. The separation of front and backends significantly reduces the cost of developing new applications and allows businesses to deliver a commerce experience to any touchpoint.

What to Consider in UX/UI
When Developing a B2B Front End

How headless commerce works

Since we've settled on the headless definition, let's now understand how headless commerce works.

Suppose you want to try a new sales channel. In such cases, the development process must be fast and easy to allow enough maneuvering for the concept test. Besides, it shouldn't change the existing sales channels' business logic (backend). If the test is successful, you'll want to enhance the new channel further, which requires more development efforts.

Such flexibility and agility are impossible within the confines of traditional commerce platforms, where both the front layer and backend are inseparably connected to the same code base.

Thankfully, with headless architecture, you can peel off the UI (user interface) layer from the business logic, allow them to work independently, and assign each layer to a different developer team, thus making everyone's job more efficient.

The Wright brothers built their Flyer using thin strips of ash for the wing rib construction and automobile parts for the engine. Those parts were already on the market, but the Wrights created something entirely new and previously unfathomable by assembling them.

Headless commerce works precisely like this. You decouple parts and work on each without risking the whole solution.

What headless means in software

Headless software manifests as an architectural approach where the frontend layer, the customer-facing interface, is detached or separated from the backend, the solution's business logic.

In an applied sense, headless architecture commonly refers to content management systems (Headless CMS) and online stores (Headless eCommerce).

Headless Commerce Architecture

Those who adopt headless architecture principles will win in the long run.

As stated above, headless architecture is where the website's frontend presentation layer is decoupled from the backend business logic layer.

An excellent example of headless architecture would be a modern car; the accelerator pedal has no mechanical connection to the engine, nor does the brake pedal has an automatic connection to the brake pads on the wheels.
Since the computer board processes these connections, there is no need to figure out how to run cables for cars with left- and right-hand drives. The pedals can be literally placed anywhere!

In a standard headless architecture, there are three layers of the digital commerce ecosystem: the frontend, the real-time API, and the backend layers. This headless commerce architecture diagram shows precisely that.

Headless Commerce Architecture

This is an example of Virto’s headless commerce architecture.

Now, let's examine each layer in more detail.

Example of Headless Commerce Architecture

Frontend layer in headless architecture

At the very top, there's the frontend layer, typically represented as touchpoints or websites, PWAs, and mobile apps. The key to a successful frontend layer is implementing, seamlessly testing, and improving customer UX/UI. Ideally, the modification of the UI is executed at no-code or low-code development costs.

Real-time API layer in headless architecture

The main requirements for the headless real-time layer or API layer are high performance/high availability and the implementation of unified business logic. Besides processing customer requests in real-time, the layer scales up and down according to premeditated criteria like the time of day, season, or another specific event. It's critical to allow developers to easily modify the headless layer without losing performance and scalability.

Backend layer in headless architecture

The backend layer in headless commerce architecture manages digital channels and data. It has comparatively fewer performance requirements as it deals with internal operations and business logic.

The separation of backend logic from frontend allows the two to coexist independently and peacefully and add new experiences without compromising the work of the established practices and processes.

In a headless environment, developers can swiftly add or modify frontend experiences while backend elements remain intact. Such flexibility is possible thanks to APIs, which provide an easy pathway to business processes and third-party data.

GraphQL, an open-source data query and manipulation language for APIs, is inarguably the hottest trend in API development, which is the ultimate API endpoint for a touchpoint.

What is a headless API

The key to successful headless architecture is API performance. The speed of data exchange is one of the essential things regarding headless technology.

So, what are headless APIs, and what is their role?

Simply put, headless architecture encapsulates the backend business logic and capabilities in APIs and makes them accessible so that any frontend touchpoint can connect with them and deliver the intended customer experience for that touchpoint.

Headless commerce architecture achieves the fastest data exchange over API in the following cases:

  • It uses real-time data sources, i.e., those having a response time within 150 minutes - the shorter, the better.
  • It consolidates and caches data from non-real-time data sources, such as ERP or legacy systems like warehouse logistics/products. These data sources are not ready for instantaneous data upload upon data exchange request.

By creating real-time connectors for legacy systems, you will find that your headless platform becomes a good place for commerce data consolidation and enrichment.

GraphQL as a new type of API for headless architecture

Is REST API headless? The short answer is yes; REST API allows you to connect with the backend and frontend layers. However, the question is incorrect.
Initially, the Virto Commerce development team relied on the REST API.
Frontend web services that comply with the REST architectural style are known as RESTful web services with interoperability between software modules of various computer systems.

The REST API approach works — it allows you to build access to business processes and data from external applications and other third-party sources. All data and business functions are available as modules and via API.

But dev technologies are moving very quickly. In 2015 when Meta (formerly Facebook) started providing publicly available GraphQL, an open-source data query and manipulation language for APIs, it became a lasting trend in API development. Built on updated principles, GraphQL API has 3 benefits:

  • Speed ​​— Because we indicate what data we need, it becomes possible to optimize queries to data sources over the network. For example, if the prices are not requested, there is no need to load them to the front layer.
  • Link tree — The links between objects allow you to get all the required data with one request. For example, you can request the cart, the number of products, and the user profile.
  • Harmonious integration — It allows harmonious integration into modern client applications. GraphQL already has client libraries for modern frontend development tools.

Despite GraphQL having no integration development tools yet, we at Virto Commerce are betting on GraphQL as the primary API endpoint for a touchpoint.

Why Headless Commerce: Benefits and Challenges

How and why headless technology changes commerce? The most significant reason headless eCommerce is so popular and continues to change the digital commerce landscape is that it offers businesses unprecedented flexibility, agility, and scaling potential. Let's look at headless commerce's advantages and disadvantages.

The benefits of headless commerce

Global "Headless eCommerce Platform Software Market" research report 2022 reveals that the headless commerce software segment has seen tremendous growth from 2017 to 2022 with the highest CAGR so far. This growth and constant headless funding announcements are evident indications of many benefits that headless commerce entails.

Let's outline the top 9 benefits of headless commerce technology:

  • Greate page speed and acceleration
  • Flexibility and efficient development process
  • Scalability & performance
  • Easy test&try of new technologies
  • Full ownership and control of the platform architecture
  • Marketing efficiency
  • Speed-to-market with multi-regional or multi-regional rollouts
  • Improved customer acquisition
  • Omnichannel experience

To have a more in-depth look at each benefit of the headless approach and examine the differences between headless and traditional commerce, check out our article on headless eCommerce.

The challenges of headless commerce

One does not want to absolutize the headless architecture. Technology is changing very quickly. You can plan a perfect 3-year digital strategy only to realize that it needs to be thrown away.

Many companies go headless in the hopes of scalability and architectural agility. From an economic standpoint, this is very promising. However, it carries some challenges that brands must be ready to face.

  1. Here are the shortcomings of headless commerce:
  2. Keeping developers on the same page
  3. Ensuring security for multiple layers Lack of WYSIWYG (what you see is what you get) editor
  4. Increased complexity and risks with limitless scaling
  5. Fewer out-of-the-box functionality

To have a more in-depth peek at each drawback of the headless framework, check out our article on headless eCommerce.

Headless Commerce Market Size and Forecast

Investors have recognized the huge potential of headless technologies to influence the direction of the digital landscape for a while now which has resulted in increased funding for headless Commerce and headless CMS platforms. The commerce market expands rapidly at a CAGR of 6.9%. The forecast is it reaching US$3.5 trillion by 2025. But what is the size of the headless platform market?

The Headless Commerce platform software market is expected to experience a growth at a CAGR of 6.5% during the forecast period 2022-2028 according to Headless Commerce Market Insights 2022.

Since 2019 headless commerce industry has raised more than $500 million. Headless CMS companies have attracted even more funds. Contentstack, Strapi, and Sitecore have only raised more than US$ 1.3 billion in 2022 so far.

By combining these figures the headless commerce market is estimated to be around US$ 1.8 billion in 2022 and is forecasted to grow at CAGR of 6.5% during 2022-2028.

Attributes
Details
Headless Commerce Market CAGR (2022-2028) 6.5%
Headless Commerce Market Size in 2022 US$ 1.8 Billion

Headless CMS Software Market Size and Forecast

The demand for an endless number of frontends, flexible frontend design, and the availability of dynamic data, as well as the ability to incorporate numerous programming languages and continuity through decoupling, are driving the global growth of the headless CMS software industry.

headless cms software market size

According to recent research, the headless CMS market size for 2022 is US$ 605 million with a CAGR of 20.1% and is forecasted to reach US$ 3.8 billion. Another study by Research and Markets states that the headless CMS market was valued at US$ 328.5 million in 2019 and will reach US$ 1,628.6 million by 2027. A CAGR of 22.6% from 2020 to 2027 is expected.

Attributes
Details

Headless CMS Software Market CAGR (2020-2027)

22.6%
Headless CMS Software Market CAGR (2022-2032)

20.1%

Headless CMS Software Market Size in 2019 US$ 328 Million

Headless CMS Software Market Size in 2022

US$ 605 Million
Headless CMS Software Market Size Forecast in 2027 US$ 1.626 Billion
Headless CMS Software Market Size Forecast in 2032

US$ 3.8 Billion

How to Implement Headless Commerce

What is headless implementation?

Headless Implementation means decoupling or separating the front layer from the backend business logic layer. It’s a specialization of decoupled architecture.
Let’s understand how actually to implement headless commerce.

How to go headless: a 5-step guide

After discussing all the definitions, pros and cons of headless ecommerce architecture, the next logical question is how to implement headless commerce.

There are two ways of going headless:

  1. Build your headless platform from scratch;
  2. Use platforms that already have headless architecture.
Switching from traditional commerce to headless software sounds easier than done. We have prepared a step-by-step guide for B2B companies to go headless successfully.

Step 1. Define your business objectives

Before starting the headless commerce vendor qualification, the most critical step is clearly defining the business objectives you’d like to achieve with headless commerce.
The B2B companies will usually want to emphasize operational simplicity while keeping the door open for future growth. However, businesses need to understand the challenges of the headless approach clearly.

Step 2. Determine if should replatform or not

The most effective strategy for small businesses may be to add APIs to your commerce without replatforming. However, most mid-market companies or enterprises usually transition to a SaaS (software as a service) or PaaS (platform as a service) solution if they are on traditional monolithic platforms.

When replatforming is a must?

Step 3. Choose a headless commerce platform that fits your requirements

There is never a one-size-fits-all ultimate headless platform that perfectly fits all the requirements and business objectives.

Take your time to study headless commerce vendors based on their functionality, pricing, and successful cases. You can see a compilation of the Top-16 headless commerce vendors, their pros & cons, and their pricing options in this article.

Step 4. Choose a headless CMS software

Headless commerce, and headless CMS systems are better together, so it’s time to look at the headless CMS providers after choosing your headless commerce platform.

There are lots of peculiarities in how to choose a headless CMS. We recommend you check out this headless CMS guide or look at the Top-17 vendors we have compiled for you here.

Step 5. Synchronize your headless CMS and APIs

To ensure smooth data flow and let the headless magic happen you need to connect your headless CMS with your APIs. Headless Commerce solutions are powered by APIs, making integrating them with new and existing systems much more straightforward.

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How much does headless commerce cost?

Let’s cover how much headless commerce costs. These three factors will determine the price of your headless solution:

  • Headless commerce platform license cost
  • Implementation & replatforming costs
  • License Cost of third-party technologies

Headless Commerce Platform License Cost

If you are changing your traditional commerce technology to a headless platform, it will be cheaper.
Different headless commerce vendors offer different price points. It typically ranges from $45,000 to $500,000; however, it can get significantly more depending on the customization level.

Currently, there are two typical pricing approaches on the market:

  • GMV-based Pricing or volume-based pricing;
  • Based on the number of orders processed.

The current commerce market standard is the Gross Merchandise Volume (GMV) based pricing. It’s usually 0.2% - 4% of GMV, depending on the agreement with the vendor.
The less common pricing method is based on the number of orders. It’s unpopular since the order value can change significantly from one brand to the next.


Implementation & Replatforming Costs

Although complete replatforming can be very expensive and time-consuming, some brands need to get rid of their old platform to realize their full digital potential. Investing in a future-proof headless commerce platform with infinite adaptability is essential.

Replatforming with Virto Commerce is not going to be your final replatforming project. Virto is the only affordable enterprise-grade platform with infinite adaptability that Virto Aromic Architecture™ powers.

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The expenditures associated with implementation make up a considerable amount of the replatforming costs. Businesses can outsource the implementation to system integrators (SI) or in-house. Although SI can be more expensive, they are usually more knowledgeable and have streamlined processes that could save a lot of time.

License Cost of third-party technologies

The beauty of headless technology is the ability to connect to many heads through APIs. All these available third-party technologies can become a significant portion of the cost.
While planning your headless commerce transition journey, you must consider all the license fees of these third-party applications.

Is headless commerce right for all businesses?

Is headless the magic cure for all digital pains?
There is no one-fits-all approach to digital commerce. But the headless architecture addresses particular problems that arise as complexity increases. Read our article to understand who should invest in headless eCommerce.

Conclusion

Whether or not you are going headless, it is important to understand the beautiful and efficient concept behind headless architecture.

The growing market size of headless commerce platforms and the multiple advantages demonstrate that it’s more than a trend or another digital buzzword. Going headless is a company-wide project that must be carefully assessed and planned. While headless commerce is very promising for ambitious B2B brands, it entails many challenges and can sometimes be expensive.

Choosing the right headless commerce platform and an expert team will be the cornerstone of your successful digital strategy. Virto Commerce offers a natively headless commerce platform and digital strategy support along your journey to level up your digital game and grow online revenue.

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Mary Gabrielyan
Mary Gabrielyan
linkedin icon CMO