Guide to Composable Commerce in 2025

Are you thinking about moving to a composable solution? If so, this guide is for you. In this blog, we’ll cover:

• Evolution from monolithic to composable architecture

• Benefits of composable architecture

• Should you consider investing in composable commerce?

• A composable commerce check-list

• An incremental approach to implementation

• Potential implementation challenges

• Integrating and managing best-of-breed components

• How Damstahl switched to composable commerce

• An API-first solution for your composable stack

A brief history of the evolution from monolithic to composable architecture

In the relatively brief history of ecommerce, monolithic platforms came first. Monolithic applications are built on a single code base. They’re simple to update and manage, but can put limits on what’s possible. 

In the early days of the internet, monolithic architecture was the best way for a retailer to get started selling online. Implementation was fast and easy, all the functions you needed were there, and you only had to deal with one ecommerce solutions vendor. 

While these systems got companies up and running with ecommerce, they soon revealed significant weaknesses. The single codebase meant that functions were often tightly coupled. Even simple changes to front-end customer-facing functions could inadvertently affect back-end functions, and vice-versa. As a result, marketing teams were limited to a template-based “cookie cutter” front end that didn’t always meet their needs. If they wanted to make changes, the IT organization had to be closely involved, which impeded companies’ ability to react quickly in fast-moving, highly competitive markets. Another problem was that monolithic platforms had limited scalability.

The first step towards composable ecommerce was the creation of platforms with so-called “headless” architectures. In these systems, front-end display and presentation functions are decoupled and operate independently from back-end functions. This means that individuals responsible for marketing can add new UX features or content without worrying about crashing the system. 

The principles of headless architectures were codified by the MACH alliance, which was founded in 2020. MACH is an acronym for the four principles of headless architecture, although they apply equally well to composable architectures..

M: Microservices. These are independent software modules, often provided by different vendors, that perform specific functions such as log-in or payment. Developers combine these “mini-applications,” often referred to as packaged business capabilities (PBCs), to build an ecommerce platform that meets a company’s specific needs. 

A: API-first. The concept here is that the ability of a microservice to fully integrate with other microservices and make all its functions available to them is the number one priority. API’s (Application Program Interfaces) make this possible. 

C: Cloud-native. This term means that an application is built specifically to leverage the advantages of cloud computing. One of the most important aspects of cloud-native applications is their scalability, which is important to ecommerce companies as demand can scale dramatically for events such as Black Friday.

H: This stands for headless, which was an innovation five years ago.

Composable architectures take MACH principles to their logical conclusion by implementing all the functions as PBCs. Developers “compose” the entire ecommerce platform – front end and back end – using these modules, which are interconnected in a fashion that’s often compared to LEGO blocks. This  is an apt analogy since the PBCs are specifically designed to easily connect with one another via APIs.

Benefits of composable architecture

Composable commerce platforms evolved because they give businesses with an ecommerce channel several advantages.

Revenue growth. With the ability to integrate various best-of-breed solutions, a business can optimize every aspect of its customer journey to focus on increasing conversion and revenue. For example, a retailer might integrate a top-tier recommendation engine that personalizes product suggestions based on individual customer behavior, leading to an enhanced shopping experience and ultimately higher sales.

Flexibility. With composable commerce platforms, companies can quickly adapt. For example, the ecommerce team can easily modify product presentations without having to involve IT, or choose to replace a payment processing system that isn’t performing well in a new international market without disrupting the entire system. Even more important over the long run, companies can pick best-of-breed components for various functions (search, content management, etc.) so they can best meet their specific needs without being restricted to a single vendor.

Customization. Composable commerce allows for deep customization of the commerce stack to meet specific requirements. For example, a luxury goods retailer might want to create a dazzling product display, aligning with its brand identity and meeting shopper expectations. It could integrate a specialized CMS and front-end framework that supports this.

Scalability. Because composable commerce platforms are cloud-native, any module in the system can easily (and independently) scale to meet peak demands with no risk of poor system performance. For example, if a website is hit with a surge in traffic, it can scale up its payment processing without affecting other parts of the system.

Faster updates. Modular components can be updated independently, meaning quick implementation of new features and improvements without having to wait for the full system update a monolithic solution would require.

Lower total cost of ownership. Over time, implementing only the components you actually need can lower the total cost of ownership. Furthermore, the SaaS business model of these components means you only pay based on your actual usage. 

Should you consider investing in composable commerce?

There’s no question that composable commerce gives companies an advantage in highly-competitive and rapidly evolving markets. But is it right for you?

On the plus side, a composable ecommerce platform give you more control over the customer experience, with potential for a high degree of personalization. You can achieve a level of market differentiation that monolithic platforms can’t offer. Scalability is unmatched. And you can count on being ahead of the curve when it comes to new features and enhancements

On the other hand, you need a technology stack that’s ready (or can be readied) for many new components from multiple vendors, and an IT department that has the expertise and resources to handle the transition from a monolithic platform. There may, for example, be new security and compliance issues.

The most important overall consideration is the business case. You need to estimate the TCO of a composable ecommerce system as  accurately as possible, and then weigh that number against the potential business benefits. Will the new approach deliver an acceptable ROI, and in what timeframe?

This is not an easy decision, and it involves long-term commitment. Here are some yes-or-no questions you can ask to determine whether or not it makes sense to explore the composable option.

A composable commerce check-list

BUSINESS NEEDS

• Do you have multiple markets or market segments that would be better served by varied front ends, e.g. by language?
• Are your efforts to personalize the customer experience limited by your platform?
• Are there features you would like to add, such as new payment methods or delivery options, that your current vendor doesn’t offer or IT says they can’t do?
• Do you want part of your brand identity to be associated with cutting-edge features like augmented reality (AR) or voice-activated buying or others that may appear?
• Are you worried about the scalability of your platform during peak periods?
• Are you concerned that vendor lock-in will limit your options over time?
• Are you concerned that you’re paying for features or bandwidth you don’t really need?

READINESS

• Are you comfortable dealing with multiple vendors to support your ecommerce platform?
• Does your IT organization have the expertise to handle multiple integrations via APIs?
• Does your IT organization have the bandwidth to deal with frequent upgrades from multiple vendors over time?

An incremental approach to implementation

If it seems like a composable commerce solution does indeed make sense for your business based on these questions, the next step is to define that solution so you can move forward to implementation.

The biggest decision you need to make at the outset is whether to go fully composable – the “rip and replace” approach – or take an incremental approach. The answer will depend on what specific new business capabilities you’re looking for and how much complexity IT can handle.

To review briefly, the first step towards a fully composable solution is a headless architecture, which separates front-end functions from the back end. Fully composable architectures further break down the back end into functional PBCs that handle order management, customer accounts and so on. If, at least for the present, you want to upgrade a front-end function, like search, then headless makes sense. If you want to upgrade a back end function, like inventory management, full composable is your only option. One possible path to explore is a four-step incremental approach.

• Front-end separation

• Search and personalization enhancements

• checkout and payments

• backend modernization

The search and personalization improvements made possible by front-end separation will yield early positive results. Backend modernization can follow as budget allows.

Potential implementation challenges

• Data consistency: A composable commerce solution makes use of data from several sources, and it’s important to maintain consistency among these sources. (Even product names may differ.) You need to implement a data management system to maintain this consistency, then regularly audit data quality and synchronize updates across systems to prevent discrepancies.
• Staff training: Many of the components of your system will have been designed for use by non-technical employees, but they will still require training. You can set up a structured training program that includes both initial sessions and ongoing learning. You can use online courses, workshops, and hands-on training to ensure that your team is comfortable with the new system.
• Integration complexity: You may want to work with experienced systems integrators and use middleware or integration platforms specifically designed for this task. Strong API expertise is an absolute necessity.

Integrating and managing best-of-breed components

Best-of-breed components deliver benefits throughout a composable commerce system – they are by definition full-featured and flexible. Putting them to work involves making important preliminary decisions: which to implement first, and which vendors to partner with. Here are the major components that will be involved.

• Search. Since 43 % of visitors to retail ecommerce sites go directly to the search window, this is an extremely important function. A full-featured search capability can boost sales and profits.
• Shopping cart. This is a page where customers can store items they intend to buy, although there’s no commitment. Sometimes checkout functions are included in this page but not typically.
• Checkout. This includes several functions.

• Collect billing information
• Collect shipping information
• Preview order
• Confirm order

• Payment gateway. Accepting payment for an item in an ecommerce environment is a somewhat complex process typically handled by a third party payment processor. The payment gateway connects the website to the payment processor’s system in a secure and compliant manner.
• Digital asset management (DAM). The DAM function is critical for allowing companies to locate and display the images, product descriptions and all the other digital assets that go into the presentation of products and services on an ecommerce site. Typically a DAM system will function not just for the ecommerce platform, but for the whole enterprise. DAM is essential for large enterprises.
• Content management system (CMS).  This system is used to create and publish content, but has limited management capabilities. Many web platforms use both DAM and CMS.
• Order management system (OMS). Once a sale is made, the OMS logs and accepts the order, routes it appropriately and handles picking, packing and shipping label generation. This module also tracks the shipment’s progress to the consumer in real time. Two other important functions are inventory level monitoring and customer communication, e.g. “Your package has shipped.”
• Customer account management. This system collects personal data, payment preferences, order history and other data points such as membership in a rewards program. It’s extremely important, as this data can be used to personalize offerings when customers visit a site. 
• Pricing engine. As an alternative to manual pricing, pricing engines automate the process based on competitors’ prices, supply and demand, customer behavior patterns and other factors. They can be used as the basis for a dynamic pricing strategy. 
• Catalog management. This system, which can be highly automated, allows companies to store and retrieve product names, descriptions, prices, images and everything else associated with products being sold via ecommerce. 
• Inventory management. This system tracks and manages the flow of products from stocking/restocking through storage to customer delivery. 
• Promotion engines. The functions of promotion engines include the creation and scheduling of promotions as well as the management of loyalty programs and other discount systems.

In addition to integrating these components, it may be necessary to link with existing legacy systems. Here are some key examples.

• Enterprise resource planning (ERP), which has its roots in manufacturing, houses data related to products, inventory, sales orders and more, all of which impact what an ecommerce system can sell.
• Product Information System (PIM) systems are a more comprehensive solution for product management, and may be used to “feed” the catalog.
• Customer relationship management (CRM) systems are vital because they contain all the customer data required to personalize the ecommerce experience.
• Order management system (OMS). As the name implies, this system manages orders – but most likely for every channel, not just ecommerce. To provide a satisfying multi-channel experience to customers, OMS integration is required.  

Dealing with these systems is made more complicated by the fact that they often overlap, both in terms of data and functionality. For example, ERP systems can manage orders, and PIM systems can often handle DAM functions. Setting up a composable commerce platform means deciding exactly which functions will be handled by which systems, and also who will own the data.

Once your composable ecommerce platform is up and running, it should be managed with the best practices for any business system. This means establishing a governance framework, maintaining timely upgrades and, most important, tracking results for continuous improvement. 

A case study: How Damstahl switched to composable commerce

Damstahl, a Denmark-based stainless steel wholesaler, needed to streamline purchasing for buyers in industries such as dairy. The company, along with its digital agency and systems integrator, investigated headless commerce in order to provide the flexibility to more easily modify software applications to meet changes in market demand. And to enhance the B2B customer experience and boost business performance, it launched a new ecommerce site adhering to composable commerce principles.

The team managed integration seamlessly with Damstahl’s ERP and PIM systems. Damstahl achieved these key results:

• Better search: With the site’s search functionality powered by Algolia, business buyers gained the ability to add their item numbers to queries. Now, to easily find what they need, they can highlight key product attributes such as diameter, radius, and thickness.
• Faster order processing: Compared with the traditional ERP method, the company’s sales reps can now process orders 60% faster.
• Direct ordering: The company was able to introduce a “punchout” system that lets buyers place orders straight from their ERP systems.
• Personalization: By analyzing clickstream data, marketers can now personalize buyers’ search results to show the most relevant items.
• A better buying experience: They substantially improved the purchasing experience and increased operational efficiency.
• Higher revenue: Gross profits are now higher for web orders than traditional offline orders.

Read the full case study here.

An API-first solution for your composable stack

For all the reasons we’ve discussed, composable commerce is the secret sauce that can take an ecommerce site to higher performance levels. With a modular architecture, you can create a customized, scalable stack that meets all your site’s needs, setting you up for a prosperous future.

Want to jump in? At Algolia, our robust APIs deliver fast, personalized search that helps drive shopper engagement and conversion. Get in touch for a demo of how you can take your site experience to the next level and capitalize on the benefits of a composable commerce framework.