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Today the buyer's journey is integrated across channels and touchpoints. If you want to stand out from the crowd you need to be flexible enough to create services and user experiences that makes the buyer’s journey simple, quick, and inspirational enough to the clients. Modern commerce architecture is an architecture based on a more modular approach using microservices. It’s virtually the opposite of a “monolith” all-in-one application.

There are multiple definitions connected to Modern Commerce Architecture such as:

  • MACH – CommerceTools concept stands for Microservices-based, API-first, Cloud-native, and Headless.
  • Composable Commerce – Gartners definition recommends this approach to “strangle the monolith”. The concept builds on an incremental approach to build towards a more modular architecture. Gartners recommends approaching this in three dimensions - Customer Journey, Business Capabilities Tech stack – to “compose” your digital experience.
  • Connected Commerce – like Unified Commerce, means a seamless shopping experience across channels devices. This has been an aspiration for many companies – but now the technology is here to support this strategy.
Modern-Commerce-MACH-Columbus-Unified

Here are 7 things that will make it easier for you to understand modern e-commerce architecture:

  1. Drivers
    The digital commerce market and landscape shift incredibly fast. Consumer behavior can shift completely from one day to another and all companies that want to stay relevant need to be prepared to adapt to these changes.
    The coronavirus pandemic has affected this development – and increased the importance of online sales channels.
  2. Numbers
    According to Gartner, by 2023 companies that have adopted a “composable commerce” approach will be up to 80% faster in their implementation of new features.
  3. Enablers
    Over the past decade – several new technologies have seen the light of the day that enables Modern Commerce Architecture. Most important is the rise of Cloud and API-technology.
  4. Benefits of implementing a modern commerce architecture for your company:
    - Flexibility market responsiveness
    - Time to market
    - A better foundation for innovation
    - TCO – less spend on upgrades maintenance – and more on things that drive sales customer experience
  5. Best-of-breed vs. Hybrid
    Just because you choose a modular architecture does not mean you have to do everything modular and choose best-of-breed platforms for all functionalities. A hybrid approach is probably the way most companies will go. Choose best-of-breed solutions for functionality that makes a difference, and can prove ROI, and choose packaged functionality for more standardization.
    Always put the customer first, they do not care about your complexity – but you should. Legacy IT or a complex business organization is no excuse for a bad customer experience. Always assume a customer-first approach – and truly find out what your customers want to create a world-class customer experience.
  6. Reality
    Let’s be honest – all companies have some form of legacy-IT to relate to. Most companies already have several e-com/MarTech applications running with multiple integrations. A rip-and-replace approach is rarely conceivable, nor motivated. Instead – most companies will have to lay out a road map to successively build towards a more modern commerce architecture. This requires organizations to break down silos and work cross-functionally.
  7. Implementation organization
    There are several trends today in how to build a team to support your digital channels. Some companies have an in-house strategy – to have full control over the strategy development.
    Some companies outsource everything to digital consultancies. In between, there are many variations of mixed teams. The important part is to choose competence that can handle the complexity that a modern commerce architecture brings. There are many consultancies out there that can implement a website or a webshop – but fewer that can implement and evolve a modular eCommerce platform.

We hope that this blog found you well, and feel free to get in touch if you have any questions.

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In the previous article in our Climate Conscious Commerce blog series, we looked at Green UX practices that can be used on e-commerce sites to inform and support customers to make more sustainable purchases. In this article we will look at the infrastructure around e-commerce, focusing on delivery, packaging, and data. E-commerce relies on many services and products to be able to package and deliver their goods to their customers. As e-commerce has grown, so have these services. There is a huge potential here to reduce the environmental impact of e-commerce and make customers more aware of the environmental implications of their purchases from cradle-to-door. We spoke to logistics expert Martin Jungerts to help us gain a deeper insight into the current challenges and opportunities. Today, Martin works as a logistics consultant, and he has previously held positions at Swedish food retailer Coop and Swedish fashion retail group RNB Retail and Brands. The last mile The last-mile describes the complex and expensive last part in the transportation of packages from hubs to final destinations. There is a myriad of delivery options that a customer can choose from when buying online. Swedish pharmacy Apoteket has nine options to choose from, e.g. 1–2-day delivery to your postbox, express collect at store, evening delivery by courier, express home delivery by courier, home delivery by courier, collect at store, collect at a parcel box, collect at a delivery point (phew!) So which option is the greenest? Martin Jungerts believes it is very hard to say which is the best choice. “It very much depends on the context – who is the customer, what type of products are ordered and where does the customer live? It is impossible to say that 'option X is always the greenest one.' For example, home delivery in cities could be the most environmentally friendly since you can provide them by bicycle or electric vehicles. At the same time, it could be the worst option in the countryside if you are delivering one package over a long distance. Pick-up-at-store could be efficient, if the store is close to the customer’s workplace, but inefficient if the customer needs to take his or her car just for the order pick-up. What I can say is that consolidation is good. Any option where you can consolidate as many shipments as possible in one delivery or one truck will inevitably create less emissions per package. So, you could argue that pick-up-points or parcel boxes are options where your delivery is consolidated with quite a lot of other deliveries. The delivery companies put them in locations where they know that they can aggregate a certain number of orders.” These options are most effective if they are in a location that is close to you or somewhere you pass. “The possibility for the customer to choose which pick-up location they want their order delivered to is a way to nudge towards sustainability since they are most likely to choose an option that is close to them.” The focus for e-commerce has been fast and free deliveries to as many customers as possible, the consumer has been spoilt. No-rush deliveries could be an alternative, allowing more orders to be aggregated and delivered to the same area or customer. But how willing are customers to change their behaviour and how effective is this option? “Focus is now shifting, but to be honest it goes too slow. Sure – there are surveys showing that 40–50% of consumers are more likely to shop with a retailer that offers sustainable delivery options, but it very much depends on how you pose the question. For example, when Swedish postal company Postnord asked how customers would rank different delivery options for their 2021 Q3 E-barometern, the “sustainable” option with a longer lead time finished last – the “flexible,” “fast,” and “precise” options were all more popular. And Sweden is quite a progressive country when it comes to sustainability awareness. Thus, the willingness to choose greener deliveries has a limit. Therefore, I believe that a certain amount of incentivising and nudging is necessary.” This is where UX plays an important role in how the options are presented and incentivised. As we said in the previous blog post the sustainable option should be clearly marked with a name and symbol. If the green choice is the default option, it suggests that this is the best choice, the customer must actively choose too not be sustainable. The difference between the most popular choice “flexible” and “sustainable” was not that great, only two more days, but the difference of the environmental impact was 50%. A number is not enough, what does 50% less mean? For example, you could say: Option 1 produces 50% less CO2 emissions, if all customers chose this option in the past year, it would remove X kg of CO2, the same amount of CO2 an average petrol driven car produces driving X km. We should visualise what the impact is in a way that consumers can understand and is seen as a clear benefit. Customers are more likely to act if they can see the positive effects of their behaviour. You could also consider using social influence, in tests it has been shown to be one of the most effective ways to encourage positive environmental behaviour. By telling e-commerce customers that other shoppers were buying sustainable products led to an increase of 65% in customers making at least one eco-friendly purchase. Martin continues: “Maximising fill rate and minimising air in the last-mile distribution vehicles are key initiatives, even if the vehicles are not electric, this will have a great effect. Sustainable “no-rush deliveries” would be fantastic to offer, especially for home deliveries, to aggregate deliveries to the same area or household. Imagine if you could just push say 20–25% of the deliveries towards that option – that would reduce last-mile deliveries a lot. However, I don’t believe that responsibility should be put on the individual e-com, with a very limited number of parcels to consolidate when you look at deliveries on a household or street level. The big effect would come instead if the delivery and transportation companies came up with such a service – they are the ones that could aggregate shipments from multiple e-coms at local distribution terminals and offer a consolidated home delivery option with for example a fixed weekly delivery day, and they are also the ones that would cut costs by doing it. Then the e-coms could offer that service in their checkout and highlight it as a sustainable delivery option, free of charge or at an attractive price level. National postal companies already do this today with traditional mail services in low-density areas in some countries, so it is doable.” “Speaking of postal services – deliveries to mailbox with traditional postal services is also a good option to offer for e-coms selling small articles. First, it utilises the traditional mail service infrastructure, which already suffers from reduced volumes and thus lower fill-rates on terminals and in trucks. The infrastructure is already in place and can be offered at a competitive cost level. Secondly, it forces the e-coms to minimise packaging for the parcels to fit in the recipient’s mailbox. Thirdly, it is a very convenient option for the customer. When I worked with children’s clothing, a very large share of customers chose that option when available. Children’s clothes are well suited to receive in your mailbox, soft, small items that can be delivered to your door. This really creates a win-win-win-win situation (for the delivery company/postal service, the e-com, the customer, and the environment).” How smart logistics could reduce over-production A recent report from Accenture stated “The last-mile supply chain made possible by local fulfilment centres could lower last-mile emissions between 17–26% by 2025.” Martin Jungerts thought this was a great development and had some thoughts about some additional environmental benefits. “When the pandemic struck, many multi-channel retailers were forced to deliver from their local inventories, because they had to close their stores due to restrictions. They suddenly had a lot of local inventory hubs (stores) that they just had to find a way to sell and deliver from. Green and fast last-mile deliveries from local stores was a positive sustainable side effect.” “However, the climate impact of making your local inventory available online doesn’t stop there. For a traditional retailer with a network of local stores in combination with e-commerce, an even higher climate effect can come from reducing over-production and unnecessary consumption. For example, a retailer of sneakers with 100 local stores and a central DC (distribution centre) for e-commerce has historically only been able to sell local store inventory on each store’s local market. Since all stores need to carry a wide assortment of styles and sizes, and since it is impossible to predict sales down to each unique article on a local level, the inevitable result is that each local store and the e-commerce DC at the end of each season will end up with excess inventory of some articles and run out of stock on others. Historically, the cure has been to over-produce to local safety stocks (the stores), and to dump the prices of local excess inventory in aggressive end of season sales. This drives both over-production and over-consumption, which is a bad combination for the environment – in the end, the best way to reduce emissions is to produce fewer articles.” “By enabling ship-from-store or ship-from-local-DCs that sneaker retailer could in one stroke suddenly make their whole total inventory available for the total market. Sure – they should ship locally, when possible, to reduce last-mile emissions, but by being able to also ship that last pair of that odd sneaker in that odd size from a local store across the country to an e-commerce customer in another city they will also match supply and demand much better, thus reducing the need for both local and central safety stocks across the full assortment. The combined environmental and business effects could be huge: 1) lowered last-mile emissions by prioritising local deliveries, when possible, but also 2) significantly reduced over-production, over-consumption, and waste, 3) happy customers that find what they need, and 4) a reduced need for aggressive end of season sales leading to reduced profitability for the seller. I think this is a great example of how smart logistics could be used to make companies more sustainable and profitable.”
According to Nielsen Norman Group ‘User experience (UX), includes all the aspects of the interaction between the end-user with the company, its services and its products.’ So, we can see how UX design can be fundamental in making it easy for consumers to find and purchase products and services that are more sustainable. You may think that it is delivery and returns where we can make the biggest impact, but we will show that you can make a difference throughout the entire purchase flow.
When we at Columbus started discussing sustainability and its connections to e-commerce many years ago it was still something that was considered challenging. Since then, a lot has happened and sustainability has become part of our vision statement "Digital transformation for a better tomorrow", and we now see that sustainability is a question of survival, both for our planet and for the existence of businesses.
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