Algorithmic Retailing

The Plug and Play Enterprise: Why APIs are the Future of Retail

 
February 12, 2020

Part 1 of a 2-part series exploring why APIs are the future of retail.

Whatever be the underlying causes of the ongoing ‘retail apocalypse,’ there is one definite fallout: CIOs are having to work harder. Businesses are demanding a cut in stores, staff, inventory, and hopefully debt; and their survival will rely on a spike in technology.

Up until November 2019, more than 9,000 store closure announcements were made in the USA. This was 55% higher as compared to 2018. On the other hand, globally eCommerce sales will increase to 16% of all sales in 2020. Amazon is expected to grab 50% of eCommerce in the US by 2021, and has become an iconic digital business that exemplifies innovation and agility—a tough act for most traditional businesses to follow.

While stores are not going away completely, all retailers acknowledge that eCommerce and omnichannel are going to be the large drivers of business.

To be able to afford smooth omnichannel customer experiences, retailers are undergoing digital transformations within. This is a painstaking process especially for traditional retailers bogged down with legacy applications and disjointed systems. One strategy that has been a part of all digital born businesses—retail and elsewhere—is the disciplined use of APIs.

The Future of Retail

Since the beginning, both eBay and Amazon have shared APIs that allowed other businesses to incorporate features of these eCommerce sites to their own, and drive traffic to the etailers in the bargain. If APIs have been around all this while, why talk about them now?

Today, APIs are enabling innovations in retail business models and have become a strong technology strategy. Even traditional retailers are adopting it as APIs are enablers of many of the must-haves in the list of the ‘Future of Retail’:

  • More mobile traffic; more ‘other devices’ (smart TVs, smart watches) traffic: With a huge number of devices connecting to their systems, retailers can collect and provision data, and run analytics and machine learning algorithms to understand patterns and prescribe actions. While the flow of data happens through the high performance messaging layer, the connections are enabled by APIs.
  • Faster delivery of ordered shipments: Pioneering retailers are trying mobile checkouts, swipe and collect at ‘pick-up towers’, drone delivery, etc. APIs enable all of this through easy integration with various internal (warehouses, inventory, and so on) and external ecosystems.
  • New sets of smart shoppers: It is expected that vending machines, fridges, and cars will directly send orders to retailers in the near future. Such a service can be delivered through the Internet of Things (IoT), a complex network wherein developers need to connect to diverse systems without getting embroiled in the intricacies of each end device. APIs enable this painlessly.
  • Extreme personalization: Many virtual dressing room platforms–considered to be the next level in personalized customer engagement online–are integrating with eCommerce platforms through APIs. They can link up to enterprise systems, provided these systems can call the APIs effectively.
  • Voice, touch, mixed reality: Voice and image based searches are going to be a big part of how online or omnichannel ordering is done. Retailers are likely to face the ‘build vs. buy’ dilemma and may typically settle for the licensing or collaboration mode. Target, for instance, has decided to integrate Pinterest’s visual search tool, Lens, into its mobile and web applications. Such integrations are simplified with the use of APIs. 

 

Part 2 will explore how the disciplined use of APIs can make retailers agile and ready to adopt new business models. 

G Suresh Kumar is the Head of TCS CUBO Marketplace, a cloud-first platform that allows creation of business ecosystem through open collaboration with industry partners. An Electrical and Electronics Engineer, he has more than 15 years of work experience in TCS in managing Innovation Labs, large accounts, mobile technologies, and telecom infrastructure marketing.