An increasing number of retailers are exposing core parts of their business through APIs, delivering a more cohesive customer experience across a variety of touchpoints, making it easier to streamline internal operations, and opening opportunities to interface with external channels.
First off, it's worth recapping what we mean by API, or Application Programming Interface, to use its full name.
An API allows systems to easily talk to one another. APIs can allow an e-commerce store to send an order to the warehouse for fulfilment, or an EPOS system to understand what stock is available in the store.
More modern applications are often API ready out of the box, but legacy applications can sometimes cause sticking points.
Historically, applications connected via proprietary protocols. Different vendors had their own standards, and connecting different systems was often a laborious exercise that involved licensing more proprietary software.
Worse is that some software systems are "walled gardens", where they, by design or through lack of investment, won't interoperate with other systems. This isolates their data and functionality from the rest of the organisation.
In today's world, customers are demanding a cohesive experience that this isolationist approach can hinder.
Customers are interacting with retailers through an increasing array of touchpoints, from web, to mobile, and in-store, perhaps even third party marketplaces.
An organisation that has adopted an API ready approach will find integrating new channels a much easier experience. If the e-commerce platform already exposes an API for accepting payments, half the job would already be done in allowing a new mobile application the same functionality. Likewise, if the warehouse system already provides an API for stock levels, showing live stock data on the e-commerce storefront is largely solved.
Centralising customer data into a CRM system that can be accessed via APIs allows a customer to be more easily recognised across the retail touch points and can enable the shopping experience to be tailored to them. A salesperson who can see a customer's recent browsing habits and online purchases is much better able to make recommendations. Likewise, if the data feeds both ways, customers can be retargeted with relevant advertising online based on their offline behaviour.
Many retailers already have significant maturity in providing APIs for core parts of their operation and are realising the benefits.
As noted, we observe many organisations, particularly lead by those with a strong online presence, adopting an API enabled strategy.
Perhaps the most notable moves Jeff Bezos made at Amazon was to mandate that every service must expose an API (and you'll be fired if you don't!). That mandate was responsible for sewing the seeds of Amazon Web Services, now itself a $12 billion a year business.
On a smaller scale, startups are entering many industries and adopting or building modern, API enabled software to do so. Payment processor Stripe has significantly lowered the barrier to entry in processing online payments, in part by how easy they've made it to integrate with your application. Algolia offers a search platform bettering many existing enterprise offerings, enabling developers to be up and running within an hour.
Offering APIs can open opportunities outside of the organisation too.
Integrating with third party services easily can be a compelling benefit. Enabling commerce anywhere (think "shop the look" on Instagram), or exposing product catalogues to price comparison or aggregation services without the need for a standalone channel manager to power an integration.
Opportunities can be opened to work with partner organisations with complementary offerings, or to encourage third party developers to interface with your systems. Reportedly 60% of eBay's revenue is driven by API calls, and for Expedia the number is said to be as high as 90%.
Established environments always offer up additional challenges in adopting modern technologies. The need to continue to run Business as Usual, and a legacy of platforms from various technology eras, can put existing players at a disadvantage compared to newer players in their ability to innovate quickly.
Technology purchasing decisions in the past have often found comfort in procuring large "all in one" solutions that try to provide functionality for many areas of the business wrapped up in one oversize shrink-wrapped box. Too many of us have observed the multi-year SAP rollout that is already considered legacy by the time it launches.
One of the biggest opportunities for established retailers comes when looking to replace all or part of an existing system.
When purchasing or commissioning the build of new technology platforms, future integrations should be a primary consideration. Ensuring platforms have existing capability, or can be easily extended to provide the capability to expose their data and functionality via an easy to consume API can offer a strong commercial advantage.
As the technology landscape continues to quickly evolve, there's benefit in having the ability to easily integrate with and leverage as yet unknown platforms.
Many retailers have been actively pursuing an API enabled strategy for some time, aware of the benefits it offers, both in connecting systems within the business, and in opening opportunities to connect to external systems.
There are often additional challenges when introducing an API strategy into an established retail environment, as legacy systems, and Business as Usual needs can slow down any new technology adoption.
The commercial benefits, both in operational efficiency and in opening new commercial opportunities should at least provide encouragement to explore this strategy.