Ecommerce is evolving so rapidly it’s hard for merchants to keep up. So, what do brands need to think about when venturing into the world of headless commerce? Todd Welling and Andrew Potkewitz from Overdose. are here to tell us all about the challenges and opportunities of decoupling the front end from your back end.
Brian Weinstein: Welcome everybody to sipping and shipping. I’m your host, Brian Weinstein. We’ll be kicking it here every other Thursday quenching your thirst for an insider’s take to enhance your customer’s experience. Grab your drink of choice, kick back, it’s sippin’ and shippin’ time. All right, welcome everybody to another episode of Sippin’ & Shippin’. I am your host Brian Weinstein and I’m here guarded and protected as I always am by my trusty companion Caitlin Postel.
Caitlin Postel: Brian, struggling with my name, it’s never a good start. How are you doing today?
Brian Weinstein: I’m doing all right. You know what? I almost said, C post because everybody knows your C post.
Caitlin Postel: I’ll take it.
Brian Weinstein: Yeah, exactly and we have today two special guests, Andrew Potkewitz, who was originally introduced to me as the godfather of eCommerce, my mutual friend.
Andrew Potkewitz: Wow, high praise and definitely oversold, but I appreciate the kind words.
Brian Weinstein: No, we appreciate you coming on and we also have Todd Welling also from Overdose, how you doing today Todd?
Todd Welling: Very well, appreciate you having us on the pod.
Brian Weinstein: No, appreciate you guys coming on and spending the time and this is a subject as I’ve sat here and tried to do some research, I’m like that emoji with the brain exploding, right? So I’m trying to wrap my brain around traditional commerce, Headless commerce, composable commerce and I think I may have found the experts to kind of get us into this, but Andrew, why don’t you start and tell us a little bit about your background and how you got the moniker godfather of eCommerce.
Andrew Potkewitz: Wow, so my background, I come from a background of brick and mortar retail and customer service. So spent many years with the Home Depot on brick and mortar store management and transitioned from there over to a company that was called Covidien and now it’s Medtronic, which is surgical device company working with and running call centers for them have really been in the eCommerce space, going on six years now, working out of a little boutique agency based out of New York have since joined Overdose and director of global partnerships so really my purview with Overdose is to ensure that we as an organization are aligned with the right and best techs and otherwise in this space and that our clients are getting the most out of not just the tech itself, but the teams that support them and I suppose just by being in the ecosystem and being ever present across events, I’ve just gotten to know some folks in this space.
Brian Weinstein: Right and clearly, Ryan Powell’s one of them.
Andrew Potkewitz: Ryan Powell’s one of them.
Brian Weinstein: And Todd, how about you? What’s your background?
Todd Welling: Yeah Brian, my background is originally from investment banking of all places so I used to work over closer to you guys in Brooklyn and in London and over in Singapore focused on writing kind of high end trading systems. Life took me through marriage and babies towards New Zealand where I am now and ran about five and a half years ago, we launched Overdose with my co-founder Ryan who still heads up all of our design and experience practice. We’ve had some incredibly fortunate and very humbling growth. So we’ve gone out from the two founders to a global team now of around about 400 staff across 10 to 11 offices around the world and on a little bit of a tear through that space.
Brian Weinstein: That’s great and so tell us a little bit about Overdose.
Todd Welling: Sure, yeah. So for all intents and purposes from an outside looking in, we look like a eCommerce agency, but we presented ourselves to the market with a very different belief structure. We believed that there was an opportunity to build an organization that was tightly coupled to the outcomes of our retailers. Now, that doesn’t mean that we are locked into percentages or margin players or anything like that. It was actually more of a cultural bias Brian. I always talk about the business in three dimensions of where we want to have a breadth of services, a depth of services and then a geographical reach. So we ideated out this concept of instead of building a big factory that was just churning out websites that we could actually build something a lot cuter.
So we have this concept of a federated business model, which essentially means that when we talk about our 11 offices I think there are now those 11 offices work semi-autonomously and whilst they share 80, 90% of our culture, they actually have that unique special source of local governance and local leadership. What we believed was that what the market required was a stronger sense of retailing understanding. So we weren’t just selling the cars. We were being the pick crew at the same time, really driving business outcomes through there, having that breadth of service so it goes across strategy, experience, data, technology, search, and marketing. So we can understand the full funnel, everything from customer acquisition, conversion, retention, taking them all the way through that life cycle and then being able to touch every part of that digital funnel which drives each one of those disciplines, but then also being able to do that with an agnostic lens and when I say agnostic, it doesn’t just mean the backend technologies that we are using. The agnosticism, is that a word?
Brian Weinstein: It is now.
Caitlin Postel: It is now.
Brian Weinstein: Exactly.
Caitlin Postel: It is now, consensus.
Todd Welling: That’s actually kind of geographically biased as well so if you think about how a consumer converts and engages with a brand in your traditional US market when you bring that over to Europe, when you start talking in different languages, when you start going into Asia, Australasia, there is a fundamental different dynamic of how a user conversion and sort of a brand adoption happens in each one of those markets. So what I didn’t want to do was get into this environment where there were a couple of guys at the top that were just saying, “This is the future of commerce.” It’s actually so much more nuanced than that, right? And having that depth of capability across those international markets was pivotal, and then when it comes to the technology, being agnostic doesn’t just mean that, “Hey look, we know how to code on five or six different platforms.”
It was actually about the right sizing. So it was actually working with retailers and helping them understand what are the products you should be buying for your business based on the logistics, the dynamics, the internal capabilities, the roadmap of where you want to get to and it’s literally do you need the Bugatti or it’s actually the Toyota exactly what you need. So fitting or what we refer to as rightsizing the technology solutions, the channels, the marketplaces, selecting that whole suite of how you take a product to market digitally, that’s kind become a real core part of the whole service offering, and I guess we do that in our own very unique way. We have that very interesting blend of having a real startup hoodies, T-shirts, and ping pongs kind of culture, right? But they balance with some real depth of enterprise capability and having 400 humans under my watch, that keeps me awake at night, but also sets a pretty clear precedent for the standard and caliber of work we’re expected to deliver. So we always talk about let’s look and feel boutique, but actually deliver enterprise.
Brian Weinstein: Interesting. So in your role in your organization, you need to be out in front of very rapidly changing technologies and I see it now more so than ever, things are changing so rapidly and for us and for the layman, they may not understand what you guys are already starting to get involved with is a transition from a more traditional eCommerce platform right into this more Headless scenario or composable. So maybe we can take a step and talk about what traditional is versus where sort of the market is headed.
Andrew Potkewitz: Well, it’s interesting to say that and sort of from what Todd was talking about with this sort of global footprint and having boots on the ground in different markets exposed to different technologies, different cultures, different ways of shopping. What we’ve actually seen here is this sort of Headless concept is something that’s been sort of bandied about for the past two and a half, three, almost four years, just a conversation around it.
The conversations evolved over time, but we actually started seeing it. It’s interesting to see how trends touch down in different regions and we’re actually able to sort of track that across our global footprint. So we sort of saw this trend after years of discussion really touched down in EMEA, in mainly central Europe for us, maybe 10, 11 months ago, where it started becoming a real thing and then fast forward three or four months and then it sort of hit APAC, maybe five, six months ago, and in North America really in earnest three, four months ago, but maybe before we get into what Headless has, Todd if you want to talk a little more about traditional commerce.
Todd Welling: Yeah, for sure. So let’s have a bit of a dial back in history of time when we used to buy software on CD ROMs and install them on our desktops and run virtual local machines and stuff. So we went from that space and then we started heading into the open source space, probably Magento defined the market in that. There were several others that were in that space. It made commerce accessible, okay? So it meant that everyone could start getting into running enterprise style environments without necessarily having such a high price tag on those. What happened through that environment was there was this natural lean Brain to what comes out of the box and if you look at your traditional RFP that a merchant will send out to market, whether they realize it or not, even still today in this world of moving in composable directions, the majority of RFPs are actually looking for a monolithic stack.
It’s a does your solution do X, right? And it’s a tick boxing exercise, and there is this ethereal hunt for the silver bullet of what solves all of my problems that is the cheapest, the fastest way to market through there and open source really enabled that growth of the monolithic eCommerce stack. You started with this environment where Magento delivered you the core of an environment. It provided you the three main things you needed to be able to sell online, which was a database. So you’ve got an admin console that’s coming in there, it’s storing all of your data models, it’s an extensible data model. So you can start to add your own attributes. You can record different things about customers, and it’s not just a closed, fixed model, it’s about having an environment which you can extend upon. You then have an API layer.
So somehow to talk to that application, and then you have a front end, which is essentially what appears on the website. So if you took those three core pieces, the vernacular started to change from being called the front end being called the presentation layer, okay? And then you had your API, your comms layer, your database, your knowledge layer, okay? So you’ve essentially got presentation, communications, and knowledge. What was then happening was that people were building extensions and plugging more things into each one of those environments so be that your payments, be that your marketing platforms, search and merchandising, anything which was extending your ability to advance your customer’s experience. As we got further and further down that path, one of the problems with open source is that it’s open, right? And the fact that anyone can get their hands in there. So whilst you see some of the most incredible eCommerce websites in the world, five, six, seven years ago were coming out on this Magento platform.
There was also some of the worst as well, right? There was people trying to spin up versions of Magento on Bluehost and HostGator and $5 a month kind of hosting environments and you got into issues of speed. You then have people that were throwing 20, 30, 50. I’ve even seen one that had 100 extensions on there, right? And so you start getting into these nascent issues of where you started creating this huge technical debt and you started getting very associated to one particular developer that had built that platform out, and you lost that portability. You lost the ability to really keep evolving that platform forward because you’d kind of put so many strands of spaghetti in the pot that looked nice and straight and they went in when they’d been cooking, we had this big curly bowl of spaghetti off the back of that.
Andrew Potkewitz: And that’s sorry to cut you off Todd, but it’s ironic because one of the reasons why the ecosystem moved away from custom web applications was because of just that being handcuffed to a one off person who God forbid they won the lottery and disappear. You’re really screwed because only they only know your tech stack. So this real out of commoditized tech that Todd was talking about was just sort of helped solve that, but then people wanted more and more and plugged more in, all of a sudden it became again, a bespoke really custom build application.
Brian Weinstein: Right, sounds like a giant outlet extension where you’ve got all these extension cords plugged in and it’s only at some point.
Andrew Potkewitz: Tons of extensions.
Brian Weinstein: Right, exactly.
Todd Welling: And look, that’s where we were sort of five, seven years ago, right? So big monolithic stack, you tend to run your own hosting. You started running into being able to keep up your speed of innovation and alongside that, it took a fairly long time to get those products to market because you were building them from a ground up environment and you had these problems with speed in a front end space, right? So websites taking 10, 15 seconds to load through there. So what evolved off the back of open source? The next kind of evolution we had was SaaS. So this was your Shopifys and your big commerces and your press to shops of the world and really where they came and hit the market was from a bottom up perspective and that was much more about increasing the accessibility and commoditization of commerce, right?
So it was how does at a very early starting point, how does mom and pop take a lemonade stand style retailer into an Commerce world, right? So if you look to kind a column of water in terms of the ocean SaaS very much starts from the lowest common denominator and works its way up. Open source kind of covers the whole column of the market. Anyone can do anything, but just because you could doesn’t necessarily mean that you should and with the evolution of those SaaS products, it took off quite a few variables from the table. The first one was it took off speed to market. Much quicker to get a Shopify website up and running, okay? It took off scalability, right? So everything was scalable. You were living in these cloud environments. You didn’t have to go and run your own hosting environments.
If you wanted to do these big burst sales where Magento websites back in the day used to fall over if you threw 10,000 concurrent at those sites in a Shopify environment, it just auto scaled through there, and then thirdly and I think probably one of the biggest things that took off the table, but has discussed the least is actually security because as eCommerce rose, all these Magento sites were starting to get hacked. They had these little tiny MCE injection points that would appear through these rogue extensions and things like that, and by living in a cloud environment where you can’t touch many things inside the box, it drove a very high level of security and if you are a small single source retailer, someone comes in and steals all your credit card data that can literally kill your entire business.
Brian Weinstein: Todd, just to ask a question, so this is the evolution of traditional?
Todd Welling: This is the evolution of traditional, but it’s important to understand about why you want to go composable. So you’ve got on one end of the spectrum with a monolithic open source environment, you have complete flexibility Brian, you can do whatever you want with that piece of kit, but what comes with that is problems, right? And it comes with that is that you need a professional team that’s running the show for that and it needs to be constantly touched and massaged to deliver you those particular results. Other end of the spectrum, SaaS. SaaS is then giving you speed to market, fast things, really easy plugins to make your business accelerate. However, you lose some of the complete control of flexibility. In a SaaS environment, you have to make some of those tough decisions as a merchant to fit your business into the tech.
In an open source environment, you build your tech around the business, right? So what slowly happened is that those two pieces of the world slowly started gravitating towards each other. SaaS started getting better. They started having more features. They had what we call multiplicity. You could have multi-location, multiple currencies, multiple languages, right? You’ve got the evolution of things like Shopify Plus. The evolution of things like big commerce with open APIs. On the open source side, they then started developing what they call Pass platform as a service and that’s where people like Adobe started building relationships with AWS and saying, “Hey look, instead of you trying to work out how to host your own platform.” And again, a mom and pop retailer doesn’t know how to optimize an SQL database or define better case structures. They started saying, “Right, we are going to bring this into a completely productized environment.”
Now, what happened with those two forces coming together is that the next evolution was into this space that we call Headless. Now, Headless is part of composable, but isn’t, but is not fully what composable means. Now what Headless means is that you wanted to separate out the presentation layer. Now think about that, if you’ve got your own Shopify website, you go into one admin console and that admin console is where you put your API keys in there, you’ve got your database, your customers, your products and then you click through a few pages and you’ve got your theme files, right? It is still in many ways kind of monolithic. It’s not truly monolithic because monolithic tends to define the physical server architecture, but if you looked at it from purely a software environment, it is kind of monolithic because you’re doing everything inside one screen.
Andrew Potkewitz: Hey Todd, I think it’s important to note that when we think about the traditional tech stack and you think about these all in one platforms, one of the biggest challenges that all of them had was that they lacked a robust front end. They lacked a robust content management system, a CMS. So you could get by with either custom development of that theme and that front end, or you could drop in sort of a plugin that was sort of a drag and drop page builder, but again, they were really limiting. You really couldn’t bring all your brand content into that eCommerce experience. Sorry Todd, go ahead.
Todd Welling: And you’re exactly right Andrew and what was happening at the same time there, Brian was that you had these more advanced, mature retailers that not your Amazons of the world that were pure commerce, but brands that were content driven environments that were running on a content first environment. So they were running on platforms like Adobe experience manager, a site core, an EPI server, right? Where they were a content first space and then all of a sudden they realized oh damn, I can go direct to consumer. So those platforms started trying to build commerce capabilities. Everyone was essentially gravitating towards this same space Brian, but no one could get to it, which was trying to have completely customizable commerce and content in one singular environment, okay? So all of these forces running towards this same space. What Headless was, was separating out that presentation layer and a demand from particular merchant saying we want a few things here.
Firstly, we want complete extensibility customizability of our consumer engagement layer, right? We want to be able to really dramatically control that client experience. Secondly, we want to be able to use our commerce and our content in some non-traditional environments. We don’t always view that the future of the world is just websites, right? I want to be able to push this into in-store kiosks, Alexa skills, iWatch apps, right? Can I not have a big screen that sits outside my retail store in the window so when my store is closed at 5:00 PM, people can still order a pair of jeans or a T-shirt or add them to their wishlist or send to a friend, right? So it was trying to kind of go into that IOT internet things, democratization of where conversion happens and when you start thinking about social and conversational commerce, it gets a lot more interesting, right?
Of how do I actually run and to be honest, the easiest way to think about Headless is actually Facebook stores, right? If you think about that where I am selling my scented candle on a Facebook store, but that transaction flows back into my Shopify, my Magento, my Salesforce, that’s Headless call, right? The conversion happened elsewhere, but it was all powered by a backend engine that was an API first environment that was feeding up my listings into these different spaces. When you send a listing from your Magento store up into Amazon, that’s kind of Headless as well, right? Because we’re actually doing a multichannel kind of concept, but Headless in a tech world is slightly different. So Headless in a tech world was taking complete control of your front end environment and it usually evolved around the output of a PWA. So PWA, progressive web application, a whole set of standards and structures around how you should be building modern front end experiences.
You’ll often hear words thrown around like a single page application, right? It’s starting to use much more modern tech in terms of how do you render a really fast website and it started to leverage quite a few things. So first part of that was doing what we call server side rendering. So it was actually trying to do as much of the intelligent thinking on the server side and not on the browser side, right? So you then layer that with some speed tools for things like your caches and your CDMs. Then on the front end, you would start instead of having traditional PHP, CSS, JavaScript, inline SQL kind of websites, you would move into the environment of where all of your websites are reading in modern JavaScript languages. So typically those tend to be React or In View. Two kind of languages, both kind of output the same thing. That sort of then semi does the old school concept of really kind of compiling a website, right?
Which is how you start moving into A of PWA of where your website becomes more like an application running on a website whereas a normal website is actually hitting a server, asking for a lot of information and then trying to render that as quickly as possible. In a PWA, it’s almost kind of compiled and running inside your browser and using all of those tech like your browser storage environments as well. Now, the long shot of that is that you start to get very quick websites, right? And you get very quick websites and you get a much more app-like experience and this also played into that dynamic of where everyone was becoming mobile first in they’re thinking about commerce, right? It’s now I recall back in the days where people started getting hairy when it was 20 and 30%. I’d say probably our average across our whole portfolio is probably north of 60% now in terms of traffic that comes through mobile to those websites.
And obviously, we are moving into a world of 5G, those challenges have got faster, but there’s actually been this interesting battle about how do you make your websites move faster whilst actually network speeds are increasing at the same time, right? So we are kind of getting into the customer expectation is these snap loading, two, three second page loads and to a point now where the expectation is almost an app like experience. So that’s what Headless really was Brian. We’re separating a presentation layer, giving you complete flexibility, really fast websites and to a certain extent, not having to build native apps. So you didn’t need to go and build an IOS or an Android app to get those styles of features and engagements on the front end. There’s some downsides to all this tech though Brian, right? Which is that Headless was bloody hard.
Todd Welling: Right? There was literally six pieces of tech that you had to be building in there and there were some crazy smart dudes who were building this stuff up, but if you recall back what I said about one of the problems with open source is that it created exactly the same problem again where there was not an immense amount of controls or portability in how you were building these things, right? So you got very stuck with one developer. You couldn’t kind of change from agency to agency in terms of I don’t like these guys anymore, these guys seem to be bolting. You couldn’t pick up and move your product with them, and you were pretty much building all of those things from scratch. So those developers started to kind of slowly build out their own frameworks and a few products started to appear on market essentially taking the concept of Headless and slowly productizing it.
And that’s what’s happened in the last sort of six to 12 months that Andrew was talking about was the productization of Headless. Now that leads into another acronym because we need more acronyms on a podcast, which was FaaS. Okay, so the newest one is FaaS, F-A-A-S, which is front end as a service and essentially what front end as a service is doing is taking all of those technicalities and difficulties of running a Headless environment so your integrations, your API, your service side, rendering your CDM, your cloud hosting, your JavaScript front end environments, all of those nascent integrations you need with your core kind of platforms of your search, your merch, your marketing, your payments, bringing that all into one product set. Now that has evolved into a few products going and raising some really interesting capital in that space. So as Andrew said, a lot of this dynamic was actually led through Europe, Germany, and the Dutch markets pioneered a lot of this.
So in fact, a lot comes from Poland as well. No idea why, but there’s quite a lot of these guys have shops in Krakow and Warsaw. The three that kind of appeared from the European market as these dedicated fast product called fantastic deity and view storefront. You then had a few other guys that had bolted a little earlier and started to mature more of a DX product. So you got people like Bloomreach in that space. Then more recently over in the US markets was recently a product called Fabric. I think they raised 150 to 180 million or something like that on an 800 million valuation for a two year old company, and essentially that’s what they were doing. They’re productizing this Headless space, and it’s that new role of commerce?
Brian Weinstein: So Todd, let me ask you a question because one of the things that you mentioned you went from the traditional and it was more like that Magento and then it went into like the SaaS, but in the SaaS environment, you sort of had the constraints that sounded to me like you had that constraints of here’s what you could have and there were certain limitations to that. Is there a same risk here with this FaaS that you’ve run into those same type of constraints as things continue to evolve?
Todd Welling: Yeah, so there’s a yes and a no answer to that Brian. So the first good thing about a fast environment is that you keep your back end. So you don’t throw your Magento away, right? Fast environments are fundamentally dumb. The whole concept is that they don’t hold really any business logic in them. They hold presentation logic, right? In terms of when you hover over this, make it flash, but they tend to not hold much business logic. They tend to containerize that and accept that logic from their backend environments. So you still need that big backend chunky piece that’s holding your products, your cart, your catalog, your customers, right? You still need all of that. When you look at the future of where we move from a fast into truly composable environment, the truth is that you are removing all of those limitations, right?
However, there are nascent limitations that come with time rather than with the actual product and the time is how quickly are those other partner products evolving into this space and how are they bleeding in this API first logic into how they are making their product accessible. So as with all these things, there’s some nuance in there as well. So if you look to something like a Shopify, right? Shopify’s most powerful product is their checkout. It’s this universal checkout. It’s the ability to connect multiple customers with a single customer record and essentially look, that’s where Shopify makes its money. It monetizes through the transaction. So in a Shopify environment when you try to go Headless, you can still talk to all of their APIs Brian, but you can’t actually go and take over their checkout, right? You have to run your Shopify checkout for now.
Those Shopify 2.0 is coming. They’re starting to evolve that product set. If you looked at a big commerce. Big commerce don’t make those same constraints and generally that comes down to how they charge for their platform. They aren’t charging as the payment gateway, they’re charging you based on the number of transactions or the volume that you put through their piece of kit. When you go into a Magento environment, you do the bloody hell whatever you want through there. Now, the other limitation through there Brian, as you say is that you’ve still got choke points essentially, right? It’s like that’s all well and good, but if someone hasn’t built that integration into that platform then either I’ve got to sponsor there, I’ve got to build it so on and so forth. So we are seeing over the next two years the evolution on both sides there. These fast platforms are really quickly accelerating what out of the box pieces they have as native integrations.
So for example, most of them will have gone and said, “Look, we don’t want to go and build an integration for every payment engine under the sun, we’ll go and work with some of these amalgamators. So they go and work with Amalgion, a checkout.com, right and they say, “Look, let’s go and actually go with Amalgion and that gives us 10 payment methods straight off the bat, right? So that kills that bird with one stone, but then when you get into those localized markets and it’s what we’re seeing in Australia here, there’s some payment methods where if you don’t have Afterpay, Zip Pay, Humm in market here, you’re kind of not relevant. Same in New Zealand, you have to have Lay-buy in New Zealand, right? So as these platforms are diving into each of these micro markets, they’re having the oh shit moment of we thought we’d cracked it.
Because we thought that if you’re not American or if you’re not British, then you kind of don’t count in the world, but if you want to enter into Singapore, Japan, let alone Northern Asia, you have to start again with a lot of those pieces, but that’s not just the FaaS platform that has to do that, that’s also all of the rest of the ecosystem has to evolve into this what we call MACH, M-A-C-H, which is this view of how do you build products for a new composable world, right? So it takes two to tango essentially Brian, right? So what MACH means and if people look this up and you look up for the thing called the MACH Alliance is where a lot of these tech providers have got together and said let’s start building our solutions with a set of applied standards around them.
So MACH is microservices. Now what that essentially means and this is where we start getting into composable chance. Microservices means that you make your product discrete. It means your product does one thing and it does one thing exceptionally well. So if you are building a reviews platform, you just be a reviews platform. You don’t try to be a reviews plus a loyalty plus a subscription plus a personalization platform, right? You can have those four products, but they need to exist as separate independent microservices. So that whole concept of taking this big monolithic beast that we had at the start Brian and literally exploding that into 1000 pieces, that’s what composable is. Every feature and facet of your website becomes a discreet microservice. Now whether that microservice is built by you as a company internally because you need a microservice for some funky shipping rules or if it’s a microservice, which is linking into Klaviyo, Mailchimp, .Digital, right?
They’re essentially microservices as a concept. The A of MACH, API driven. So you can talk over APIs and there are standard protocols in there. At the same time as it’s evolving, people will probably have heard of this concept of GraphQL being thrown around GraphQL is kind of the modern accepted API language in the MACH environment. We used to talk through REST and SOAP and before that we were doing FTPs and sending up big files and CSVs. The concept of using an API environment to a discreet service is that we’re asking for only what we need right now, right? So I am not going and asking a service, “Please give me all of the details of all of the sofas. I want this detail about that sofa right now.” And if you think about the payloads that you’re moving around the internet, you’re basically sending lots more parcels, but you’re sending much smaller parcels.
And when you’re then trying to render those on websites, you’ve literally got less work to do because you’re not clawing through all of that data, you’re getting the exact data that you want and trying to apply that logic on the back end. The C is cloud native. So cloud native essentially means that all that cool shit we talked about with SaaS that it’s scalable and it just grows, we’ve got no hosting that we own. It’s distributed, it’s resilient. If one server falls over, it’s okay, I’ve got another 50 in my cloud. That’s the next part of MACH, and then the H essentially stands for Headless, right? Which is that we are agreeing that because our services are discrete. I don’t know, but I also don’t care where my data is being used. So again, if we go back to that concept of a reviews platform, the reviews platform doesn’t care if you’re sending that out to a website or to Facebook or integrating it to Google reviews or Alexa skill of read me the last reviews about the Tesla3, right?
It doesn’t care. It’s just, “Hey, I’ve got some content and I want to expose that.” So Headless is more not just about building faster websites, it’s about distributing your content and commerce across as many platforms as you can. So for us to truly move in this environment Brian, we have to remove those choke points and the only way to remove those choke points is that everyone plays nicely in the sandpit together. Now that brings up a bit of interesting sort of political play as well because we’ve got all of these guys running independently, but you’ve also got some absolute behemoths in the market, right? We’ve got your Adobe, Salesforce, Oracles in the market, right? Adobe as an organization is a hugely accepting of where the market’s going in terms of modern technologies, but they’re a NASDAQ listed company that wants you to buy more Adobe products, right?
And one of the concepts of composable is that you are always using the latest best in breed product, right? You’re literally signing a month to month license to use something like an Algolia to do your on site search instead of signing a three year license, right? So what that means is it keeps Algolia accountable to be best in breed and market, right? So they’ve got to keep progressing forwards and it means you as a retailer merchant, you have a lot more flexibility to hop and change your mind. Adobe and Salesforce, I’m not calling out Adobe at all, but these big behemoths, they support the direction that technology’s moving, but they want to get you into their environment of using their pre-integrated products. So my last acronym for the world that’s coming out today is this concept of a DX Cloud, right? So you’ll have seen this from everyone.
And this is essentially a strategy that all of these large multi-tenanted multi-product environments are pushing to market is where they can have all of those parts of a commerce stack. Let’s pick on Adobe, they’ve got Adobe commerce, right? They’ve got Adobe experience manager, that’s your content environment. They’re building Adobe PWA on the front end. They’ve got products like engage, which allows you to do new marketing. They’ve got their own analytics tool, right? They’ve got Sensei, which is doing all of their AI and stuff like that. So they’re building that whole internal ecosystem and they just refer to their version of composable with the same logo above the door is essentially DX Cloud. It’s exactly the same as composable, but it’s composable making sure you stay inside the same political party, right? So what you’ll find is that those product suites, they’re a bit of a hatchet job, right?
Where there is lots of acquired products in there. Very few of these large behemoths in our space have actually built their entire stack from the ground up. They’re a combination of acquisitions that have been relabeled and it takes a good solid two to three years to reintegrate those products back into the ecosystem. The only one that’s doing that subtly different is actually Shopify where they tend to be building nearly all of their own product in house. They did buy this product handshake to do B2B. I’m not quite sure where that’s at actually Andrew, we thought it was going to launch in 2021, it never quite happened. I think COVID changed the world and they then started building fulfillment centers, but I’m sure it’s still happening out there somewhere. So I just want to go onto one last thing Brian. So what is true composability in the future?
True composability, now many of you will be familiar with the concept of decoupling essentially that is separating out one tool from the other so that you can interchange them without really having to worry about the other. So one of the benefits about going into that Headless environment and building your PWA is that you are essentially decoupling your front end website experience away from your massive big database and the knowledge engine that sits behind there and they’re talking through a universal API layer. So that means that in the future if we’ve built an amazing PWA together Brian and we’ve fallen out of love with one product and we want to move from a Salesforce commerce cloud to an Adobe comp commerce, we don’t need to change our front end, right? Now, that’s been a pretty standard understanding in the world of ERPs, right? Where you’d have a middleware product, you’d buy a MuleSoft, the Dell Boomi, right.
And that’s been satisfied in recent times as well and essentially we’ve started to decouple the front end of our lives. So now in a modern stack, you have an ERP at the back, a middleware in the middle that is connecting your data, an eCommerce engine, then APIs that connect to your front end. So we’ve added an extra stack in there. True composability is when nothing talks to the other product unless it’s gone through a middleware environment. Now, that is achievable today, but by God, it’s a lot of work. So that would be where you would not go and have an add-in plug in to Magento and then talk to it through your front end. Everything would go through a middleware orchestration layer and then what we are starting to do is we are rationalizing and normalizing a data model that is completely universal.
So if you think about the concept, we talked about reviews earlier, right? If you talked about the concept of a review, whether your reviews have come from Google, a trust pilot, reviews IO, there’s hundreds of these things, right? What you actually end up doing on your website is you put a little plugin in and you say here’s my reviews.IO plugin and it shows you all your reviews.IO reviews, right? It’s actually quite difficult to bring together three different review platforms and get them to talk together, but if we actually separated the logic out from what is the native data model of how each different platform has a review and we centralize that and we decouple our front end away from the reviews platform, that means we can move to any other reviews platform in the future and say I have this thing called a review.
Here is my customer’s name, my four stars, my description, my receipt, my skew, all of those things that gets put into a structured universal data model. Then your front end can start talking to that product and literally the front end doesn’t even know where that review came from, right? What they know is there is a review here for me to display and everything is inside this orchestration layer. The way that I found this easiest to explain to a lot of merchants is that it’s like looking at an orchestra and you have all of your different departments of your orchestra. You have your wind section, your timpani, your brass, right? In a monolithic world Brian, if you wanted to change the brass section, you tended to have to replace the whole orchestra, right? You’d literally stack the whole orchestra because that no longer fits in my environment.
And I bring in a whole new orchestra. We then got to a situation with Headless where we’d say right, I can now just change my wind section, right? I can just get rid of that particular section. I’m going to move that. In a composable view of the world, I just changed the oboe player, right? And I can pick out individual players in that space and that’s what true composable commerce is allowing us to do is complete flexibility and we’re still a long way away from being there in market Brian, a long way away. However, it’s where the future is going and Headless now is the bridge into that space, and FaaS has made that accessible for the masses now and I expect in two to three years time, we’ll be working in ever more complex environments because the one thing that comes with flexibility and customizability is complexity.
And what you get in a composable environment is instead of having one Shopify admin login screen to go and do all of your tasks through, you will end up having 12 tabs across your browser for each one of those different little composable tools that you’re working with and then we’ll get back into that natural concept of design thinking that happens in market where the market flares outwards. So at the moment, we’re in flare mode of where guys living off ramen noodles in Silicon valley are building the next greatest merchandising product that we’ve never heard of buddy and it’s suddenly going to hit the market and come it as like force will then have the funneling of when those products start to get acquired and they start to come back together and you get a centralized platform kind of evolving through there. We’re even seeing that in payments recently, right?
You’re starting to see, just yesterday Square acquired a great Australian startup Afterpay for $29 million, right? And we had seen exactly this in payments. All of a sudden we went from zero buy now pay laters to one to suddenly in the Australian market, there’s like about 30. Now it consolidated back down to two or three that then flood out globally, and now it’s being reconsolidated globally and I think that’s just a trend of digital technologies. It’s not really anything to do with commerce. It’s just where tech goes is people innovate, they get acquired, it gets integrated into a DX Cloud. Then the new guy appears from absolute nowhere and bolts in that direction as well. So the world always consolidates it back down. Now I’ve either enlightened you or just confused the absolute bejesus out of you Brian.
Brian Weinstein: Well, I think it was a little bit of both and honestly the orchestra analogy helped me a lot. Again as I mentioned earlier, I’m a little dense so it took a little while, but we got there.
Todd Welling: I’ll just say Brian, there’s another version of that orchestra analogy that can be quite useful for people to understand.when you think about APIs and those concepts of discreet services, think about that oboe player, the sheet of music that oboe player has in front of you is just what he has to play. The oboe player doesn’t know what the actual total sum music is, right? They only know their particular part and then if you consider the conductor is kind of like your orchestration middleware layer, right? He’s telling each part when to play, he’s pulling in all of those discreet messages. I’ve got my oboe, my violin, my cello.
I combine that together and I make a beautiful piece of music. Now furthermore than that, the conductor then chooses who gets to consume that final music, right? Now that may be that we are at a theater, but that could also be going out onto a CD. That could be going onto a podcast, that could be going into radio aTunes and chops up again, right? And I think it’s actually quite a useful analogy to understand there’s one person looking at the whole sheet music and then there’s somebody else that’s looking just at their individual discrete part.
Brian Weinstein: So now for brands that are now let’s say they’re in a more traditional environment. When is the right time for them to start to consider evolving themselves and starting to move towards this composable environment?
Todd Welling: So I think we’re literally now even the fact that we are having this conversation I think we’ll probably look back in a couple of years time Brian that this was the crossing the chasm kind of moment, right? Where we’ve gone from innovators into the early adopters phases and whilst the market’s only really gone nuts about this for the past sort of six to 12 months, there’ve been guys that have been grinding away at this for years. That whole concept of the MACH Alliance was actually pioneered by a product called Commerce Tools where essentially they built an enterprise SaaS environment that had no front end. It was purely API environment. It was actually started by the guys who left SAP that built HYBERS and they’ve been grinding away for I think going on 10 years now buddy.
Right and so it’s been waiting and waiting and it feels like kind of Vesuvius ready to explode, right? I think that when we are talking to merchants now, it’s not a must have at the moment Brian, right? You don’t have to go and do this. If you are a merchant that is looking for that really true competitive advantage where you are in a highly competitive space. So let’s just say you are a white goods reseller and todd.com has got the same fridge’s that brian.com has got, right? And I’m looking for that small competitive advantage where I’m willing to go and spend some not insignificant amounts of money to make this happen. It’s not cheap to go and do this, but that the commercial results of me finding a five to 10% jump on brian.com serves me an extra five, 10 million bucks worth of revenue. Those are the kind of retailers that are really grabbing into that space now.
Brian Weinstein: Yeah, I was just going to ask so from a cost perspective just as a percentage difference, going traditional versus composable route is it three times, four times as much?
Todd Welling: No, if you looked at going from a traditional to a Headless first so one of these fast products, it’s probably going to cost you in terms of your agency build somewhere between 25 to 50% more because we’re still only building the front end once, right? There’s a few more bits to plug in and there’s a few more moving cogs in the machine, but it’s not extensively two, four times more expensive. I think if you wanted to go truly composable and actually break down the whole environment and become just obsessing over your systems architecture, you can start getting into doubles and triples through there, but you get into some pretty quick diminishing returns of, “Hey, do I really care that I’ve completely normalized my reviews data because I never planned to change my reviews platform anyway and there’s a plugin so hell, just go with that one.” Right?
So you just have to find those parts of where there’s actually a fiscal return in the beautification and let the ecosystem drive itself so that in 18 months time, that’s just normal, right? You don’t need to be the guys that are breaking the normal with all of that.
Andrew Potkewitz: Although I will say alongside this, we’ve seen a really interesting trend, which is if you think back to say three, four years ago where brands needed three digital properties, they needed their brand website, they needed their direct consumer, their B2C website, and then if they were B2B, they had their B2D digital property, whatever that was. Maybe three ish years ago we started seeing merchants able to start combining their B2C and their B2B properties into an complex open source platform like Magento, like eCommerce is trying to do as well, but now with this decoupling of the front end and these flexible front end solutions, you’re not able to do brand content like you were never able to do before on eCommerce website. So now we’ve gone from three separate properties five years ago to two properties to now you can actually have one property that’s your brand website, that’s your direct to consumer website and your business to business website all together in one. So in that respect, you actually are gaining some scale there.
Caitlin Postel: So scale up versus the startup there it seems gearing towards.
Todd Welling: 100% Caitlin. Yeah, 100%. This is either I think there’s two paths where this makes sense. You’re either a brand new funded startup that has a bit of cash to burn and really needs to kind of impress on the markets a different view because when we think about those PWAs Caitlin, it’s not too far away from building a native IOS and Android app, right? You can actually start to wrap your PWAs. There’s a few restrictions in there, but you can start to deploy those out to market without having to build in Swift and you know, C+ and applets and things like that or if those retailers that are probably already at 10 to 20 million plus and they’re looking for that step change game. It’s probably not the right thing for a two, three year old brand that’s looking for the next change. There’s usually other efficiencies that can either drive traffic or conversion through there.
Caitlin Postel: So betting on Headless isn’t necessarily betting against Shopify. They’re not necessarily at odds. It’s just more to come. We have to see how Shopify, BigCommerce how they’re going to evolve to get to that next level.
Todd Welling: 100%.
Caitlin Postel: Or be involved in the equation I guess even.
Todd Welling: 100% and all of those platforms will be doing one of two things. They’ll either be saying, “Hey, we are part of a composable MACH Alliance and we are going to let other people build the FaaS view of it.” Or they’re more of that DX version, which is kind of the new monolithic, right? Which is composable, but in a political party view of the world and you’re seeing that with Adobe’s building theirs, Shopify have announced that they’ve already aggressively progressed that. So natively you’ll see that come 2022, the only way you’ll be building new Magento Adobe websites will be Headless, but it’ll be Headless inside an Adobe world as opposed to Headless in a full see what the world has to offer me and bring together a United nations of products. So the whole market’s moving this way Caitlin and you’re naturally going to evolve into this space. It’s just whether you are using all of the world or one political party, yeah.
Brian Weinstein: So just to kind of conclude, if you are a brand that’s trying to make a decision direction to go, what would be some of the key facets that you should be asking yourself as an organization before deciding to make that pick a direction if you will?
Todd Welling: Yeah, so I think there’s a few key parts there Brian. The first is that you genuinely need to go and talk to a tech enabled partner that will do a true business value prop of what does this value bring to my business not what would you just like to be building on? So I think there’s two parts to that. One, is there a commercial benefit? So if I could increase my page load times by two seconds, what would be the anticipated result to my brand? If I could syndicate my content with all these other channels, what does that mean to my brand and you should be able to rationalize that through analytics to say is there a direct monetary ROI on this work that I’m doing and when should I see those results? The second part to that should be am I the brand that wants to be the innovator or the adopter or the FaaS follower through those?
There’s a lot of benefit in being the fast follower and not the early adopter, right? There’s a lot of benefits there, let other people break the back of that in six, 12 months time, those platforms will have progressed so aggressively now and people have sponsored that your speed to market and cost of implementation goes down dramatically through there. The third one should be what do I want to be as a brand in three years time? And this is about building a framework, a structure, the foundations of where I can start to have all of my different conversion channels funneling through one environment and essentially not letting technology hinder my speed of innovation. So if you’re starting to look at omnichannel exercises. Now in the future, I see us having kiosks in the future. I see people scanning barcodes and QR codes in store and signing up for a subscription instead of buying that product now, right?
If you truly see yourself building out apps and different levels of customer engagement and re leveraging a data in ways that are not just a website.com, those are the kind of people that are saying, “Hey, maybe this is the right time.” And there are versions of this, right? There’s baby steps that can be brought in to say, “Right, let’s do the first round of decoupling and then I can make those decisions in the future.” But it also means that you kind of have to think two or three horizons ahead Brian of where I want to get to, but realistically only really have a three to six month plan of how I’m going to achieve each step because the technical market is evolving so fast that trying to choose what I’m going to do in Q3 of 2022, it’s just dumb because none of us know what those tech capabilities and products available to us are.
So it’s using what I can see and digest and understand in front of me and then reassess that kind of every three to six months and say, “Do I want to keep up with the market? Am I holding back?” And when is my ROI coming into my business, but fundamentally the core there is taking your technology decisions and rationalizing those against the P&L forecast of does this make sense for me and not be the guy that in three years time is paying to catch up, which is where Andrew and I make a living at the moment is taking B2B brands through digital transformation.
I had a guy call me the other day and say, “Hey, that thing you said I should have bought 18 months ago, I think it cost me $20 million that I didn’t buy it because I missed the whole COVID bump, and now I’m playing catch up.” Right? So just finding that right timing and as you start to see those other inspirational brands that are moving in that direction, it’s probably taken them a good year to two years to get there. You can probably do that in six months, three months by leveraging where they’ve pushed that market forward. So just timing’s key in everything Brian.
Brian Weinstein: Yeah and I mean it seems like it offers a tremendous amount of flexibility to the brands to really control their destiny, but at the same time, there’s a lot that you have to stay out in front of, you have to make sure that you’re making the right decisions on, it seems like a lot of smaller component parts, right? You’re not buying that one stop package, but yet little different components and you really have to stay in the loop on it.
Todd Welling: You have to have a broader view, and getting out to trade shows, listening to podcasts like this that starts to kind of set that cadence and Brian, look at what you can get from Shopify for 24.99 a month, right? Literally 10 years ago I’d have charged you half a million bucks to get exactly that same feature set and so the evolution, it feels like dodgy Brain, right? A quarter in the eCommerce world feels like a year in the normal world and COVID’s only accelerated that as well and there’s new innovation coming out everywhere.
Brian Weinstein: Yeah, I mean listen, tech as a whole, I mean it’s amazing. Every year it gets faster and faster and to stay out in front of that takes a lot of work and effort, but the rewards can be very fruitful.
Todd Welling: And that’s being driven a lot by the VC cash that’s going into these new product sets and it feels a little bit kind of internet bubble kind of stuff. Some of the valuations we are seeing, but they’re investing on future value so it’s all good for us because we see that investment going in, that excites us because we know that the product evolution will happen even faster and the market wins through that.
Brian Weinstein: This has been tremendous Todd. I really appreciate it. Todd coming on and giving all this detail. For me, this is a complete learning experience as I said before, it was just sort of trying to even do my research on this to be conversational was difficult so appreciate you coming on. Andrew, thank you as always, I know you’ve had me on to your platforms as well and I really enjoyed having you on here. Both Todd and Andrew are from Overdose so please feel free to check them out and thanks again for coming on, really appreciate it.
Todd Welling: Tremendous guys, thank you.
Brian Weinstein: Thank you. All right Caitlin, you want to take us out?
Caitlin Postel: Sure. Thank you, Todd. Thank you, Andrew and thank you everyone for tuning in. Check us out at sippinandshippin.com or on your favorite podcast platform. We’ll see you two Thursdays from today, thank you guys.