Headless Commerce & Modular Commerce: Comparing the Key Facts

Cropped image of woman inputting card information and key on phone or laptop while shopping online

Everyone is talking about headless commerce. But what many people don't know: Headless and headless are not always the same. For instance, there is a big difference between shop systems that only offer a headless front-end connection and commerce platforms with built-in flexibility and scalability in the backend. These platforms are based on a modular architecture and make modular commerce an interesting alternative to conventional headless commerce. After all, modular systems are headless, but not all headless solutions are modular. But which system offers the greatest advantages for who? Let's take a closer look at this in comparison to traditional shop systems.


Traditional Shop Systems: Dependencies Rule

In a classic monolithic shop system, back end and front end are tightly interconnected. This means that individual system components have numerous interdependencies. Changes to the front end usually have a direct impact on other system areas. For example, adjustments are also necessary for the back end, CMS or checkout. Therefore, updates become more time-consuming and often more expensive. The whole system becomes more prone to errors. If you use a traditional shop system as a complete solution without customizing it further, it usually works quite well. Therefore, small shops, in particular, prefer this solution.

By contrast, larger companies need a higher degree of individualization that scales. They not only sell a large variety of products to different target groups. They use various sales channels and tools that require more flexibility so that large companies quickly reach their limits with a traditional shop system. For them, it often pays to switch to headless or modular commerce.


Headless Commerce: Decoupling Is Key

The most fundamental difference between a traditional and a headless system is its architecture. Back end and front end are decoupled and can be developed independently of each other. Data is exchanged using APIs (interfaces). All information is centrally and uniformly provided by the back end. How the front end interprets this data is not determined in the backend, but the front end. This way, for example, the website can undergo a redesign without having to make major changes in the back end.

Headless commerce is already essential for many e-commerce businesses. And for many, a simple headless approach is also sufficient – especially when it comes to maintaining the status quo or adding some new features. However, high-growth online and omnichannel retailers have special requirements. Because it's all about speed, performance, and scalability. Seamless synchronization. Automation. Integration of optimized processes. In general, headless commerce already offers good basic prerequisites for all this. However, it's the little things that count.


Modular Commerce: Modules Provide Flexibility

As the name suggests: A modular system is designed to connect different modules to the back end. These modules are integrated encapsuled, i.e. they work and are maintained independently of each other. This speeds up updates, reduces the susceptibility to errors, and increases the response speed. Modules can be added or removed as needed. They exchange data through interfaces (API) and handle various advanced functions in the back end.

Some of the possible modules are:

  • Product information management (PIM)

  • A/B testing

  • Dynamic pricing

  • Promotion management

  • Personalization

  • Order management

  • Checkout & payment handling

  • BI tools

  • Risk and credit assessment

Enterprises can also connect their own modules to the interfaces of a modular shop system and do not have to do without tried-and-tested solutions that are already in use. Those who rely on a "best-of-breed" strategy can thus perfectly implement it and use only what nurtures their company goals. Omnichannel retailers, in particular, can benefit from this approach because it provides maximum flexibility, e.g., when integrating new touchpoints such as pop-up stores. This enhances corporate agility but also enables individual teams to work more independently because module updates do not affect the entire system.

These advantages also seem to convince the experts: the research and consulting firm Gartner predict that 30 percent of organizations will be using a modular architecture for their e-commerce applications by 2024.


Headless and Modular: The Best Option?

A shop system with a modular headless approach is particularly promising for fast-growing companies that want an agile and adaptable solution. The system can grow with them and thus always meets the latest requirements. Companies that are growing internationally or are active in a fast-paced industry also benefit from the flexibility of this approach.

However, a modular headless system can also be highly demanding in terms of resources – especially if you have to maintain the system yourself, as in the case of an on-premise solution, for example. As the front end and back end are developed and maintained independently the flexibility is increased but it may require a certain number of developers to make it possible. Cloud solutions, on the other hand, require far less in-house effort. They are maintained by the provider and hosting is included.

For companies, the transition can also entail some structural and cultural changes. Since individual modules are largely independent of each other, it often pays to have smaller, agile teams with clearly defined scopes of responsibility. In some cases, this will require restructuring, which takes some time. New roles will be created and appointed, and employees may need to specialize even more. This transformation is a challenge, but also a great opportunity.

As always, it's important to weigh things up carefully: What is the total cost of ownership and what are the benefits of the transition? Is the change still worthwhile on closer examination? In addition to the current situation, the long-term strategy also plays a role. For example, is an expansion planned in the next few years? Or are changes emerging on the market that could make a modular approach indispensable? If so, an early transition is advisable to ensure a competitive advantage.


Conclusion: Which Approach Suits Whom?

In most cases, a traditional shop system is sufficient for small shops, as the structural and personnel costs of the other approaches are hardly worthwhile. Headless commerce can already meet many requirements for larger shops if the company wants a certain degree of flexibility. In this case, however, the company should already have a clear understanding of what it needs now and what it will need in the future.

In comparison, modular commerce is an interesting alternative when scalability plays a major role and features (and thus modules) are subject to constant change. Companies should analyze their needs and estimate the costs for the system and in-house workloads. In this way, they can determine whether the approach is worthwhile. When selecting a suitable provider, it should be considered which modules are available and how well the own modules can be integrated.

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