How APIs are Driving Innovation in Retail
Retail as an industry has undergone a significant digital shift since the late 1990s, with retailers competing to attract new customers or maximize share-of-wallet of existing customers.
To stay relevant, they need to quickly adapt to the changing market landscape and provide multi-channel engagement across web, mobile, social and traditional brick-an-mortar stores. Competitive differentiation in the industry is driven by providing contextual and personalized experiences to customers. Successful retailers are the ones who are able to understand customer needs, drive conversion, and ultimately fulfill the order most efficiently.
Core to innovating and transforming their business models is enabling efficient and open connectivity between their applications, partners, applications and customers (which we discuss in our digital transformation API solution). Throughout, the retailer must collect and analyze data to better understand customers and market trends. APIs are a key enabling technology for this essential activity. They are fast becoming a critical aspect of how retailers keep up with the digital shift in their industry.
Why APIs Are Critical to Driving Retail Innovation
1. Retail Anywhere
Brick-and-Mortar only stores are a thing of the past. According to a Harris Poll, 58% of the retailers surveyed agree that brick-and-mortar-only stores will not survive in the future. Consumers now have the power to engage and perform transactions wherever they are through computers at home or work as well as through mobile phones, digital watches and social channels.
To engage customers across all these digital media, retailers need to be able to provide contextual and personalized products offerings and drive immediate conversion through embedded e-commerce offerings. Traditionally, retail applications relied on proprietary protocols, making it extremely challenging to integrate across the ever-growing digital channels.
However, with the advent of APIs, retailers can easily expose their product catalogs, payment wallets and other e-commerce services as standard services. These services can be consumed and integrated by a wide variety of developers and partners who embed them in the digital channels of their choice.
Read more >>What Is API Integration?
2. Personalization, Contextual Targeting, and IoTs
Providing an immersive and contextual shopping experience is critical to drive customer loyalty and conversions. To make this happen, retailers need not only to understand customer demographics and past purchasing behavior, but also grasp the customer’s immediate context and needs, their location and a variety of other factors about the customer’s immediate environment.
The retailer has to collect geolocation context and other parameters that can now be collected through Internet of Things. Companies like GE and John Deere have already been collecting broad sets of data about their machinery and equipment – for instance sensors embedded in a tractor or an airplane engine that continuously collect and send data through APIs. In the GE case, when a plane lands at an airport, the engineer already has all the diagnostic information and specific parts on hand to complete expedited service of the plane.
Similar extensions are being applied to retail, with sensors embedded in future refrigerators that can sense when specific grocery items are going out of stock, and order them automatically though APIs call to delivery services like Instacart or Google Express. APIs provide the essential but secure connectivity between the customer, customers’ immediate surrounding and needs, and the retailer, providing more context and eventually allowing the retailer to increase sales, brand awareness and drive loyalty.
3. Embedded Commerce
Retailers have typically exercised strict control over shopping experience, whether it be brick-and-mortar, web or mobile stores. While there is merit and competitive differentiation in providing an exclusive experience, retailers should not forget that the new digital world opens up new channels and networks to engage and convert customers.
Retailers have to rethink the customer experience and become more in touch with the fact they may not own or have direct control. There are several specialty marketplaces and emerging communities, e.g. infant products or organic vegan foods supplies, which provide immersive shopping experiences, but federate fulfillment through other established retailers. The latest example of this could be Facebook, which will let people shop for stuff without leaving the social network, as described here.
Retailers who provide APIs for embedding their merchandise in other channels will successfully exploit the emerging embedded commerce.
4. Drive Backend Efficiency and Partner/Supplier Integrations
Efficient retailing and building consumer loyalty today is as much about high-touch, multi-channel shopping experiences as it is about building efficient supply chains, integrating backend applications and having tight links with upstream and downstream partners and suppliers. This has been a traditional focus of enterprises, but built on proprietary protocols or aging infrastructure that is based on batch data transfers, heavy monolithic infrastructure like ESBs or traditional data warehouses.
In the new digital era, the number of partners can be exponentially larger, making traditional ways of integrating with them redundant. Standard API-based integrations between partners and both internal and external applications can speed up both the time to market as well as allow retailers to extract meaningful real-time insight which they can further use to fine-tune their business.
5. Predictive and Real-Time Analytics
The digital shifts implies that there is huge amount of context and data that is available about what customers buy, where and when they buy, how they pay, and what they buy along with it, both at an individual level as well as an aggregate level. Since a lot of these transactions are flowing through APIs, more information can be captured along with the related context – e.g. geolocation, type of app, the device transaction is made from, and so forth. This data can be analyzed in real-time either to personalize shopping behavior and provide better targeting or predict future behavior.
API Management for Retail
API Management for Retail allows retailers to adopt APIs across their infrastructure. It assists them in making the digital shift to engage customers across a diverse set of channels and helps streamlines internal business processes. API Management provides four key capabilities for retailers:
- Externalize their catalogs, shopping cart services, payment gateways and other commerce services as APIs so that they can be embedded in different digital channels.
- Drive adoption of APIs both externally and internally by a diverse set of developers and partners who can in turn develop engaging apps for customers.
- Provide a high level of security to protect corporate data and customer information.
- Provide intelligent insights into their business, channels and customer behaviors.
This blogs touches the tip of iceberg when it comes to the potential of APIs in retail. Retailers need to start embracing APIs to offer multi-channel experiences to their customers. The most effective approach is to adopt a holistic management and security approach for their APIs using an API Management platform like the one offered by Akana (you knew my plug was going to come in at some point in time). Click below to start your free trial!