How Adding a Middle-Tier Creates a Sustainable Vendor Ecosystem
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In the post-COVID era every B2C brand knows that digital sales are key to their growth. At the minimum, customers demand a seamless e-commerce experience. Even this is not a destination but a journey as e-commerce customer expectations evolve rapidly. Moving beyond the minimum to delighting the customers is where competitive advantage lies. Now you might start to ask yourself: "How can I keep up?"
Fortunately, there are many pre-baked vendor options that can give you many powerful tools in this area. If this sounds a bit too good to be true, you are not wrong. Every new vendor you work with adds complexity and the potential for vendor lock-in. These two things can lead your fresh and engaging experience to become expensive and stale. Or, in the worst case, impossible to maintain if one of your vendors no longer supports the product you are using. So, what is a solution here? Cue the middle-tier.
A middle-tier allows you to introduce the powerful concept of abstraction to your vendors. Abstraction, in this case, is the practice of understanding what constitutes your brand's e-commerce experience and adapting your vendors to that, rather than having it dictated to you. The middle-tier is a software service that you own and translates your e-commerce experience in the specific technical language of the vendor via APIs. For another general explanation of a middle-tier check out the "hub-and-spoke architecture" section of Integrations Are Everything, an article written by my colleague Adam Ritzel.
This may not seem like a large benefit initially. Take for instance the two diagrams below.
Look pretty much the same, right? But consider now that your loyalty provider, POS system, and e-commerce engine will need to communicate. In the "simple" world you now must create a one-off integration between the e-commerce engine and the loyalty provider, and one between the loyalty provider and the POS system. This problem tends to spread rapidly as you attempt to increase the fluidity of the experience for your customer. Many systems will end up in a place where nearly every vendor integration will have a one-off integration to all the others.
There are multiple problems that arise as your vendor integrations become numerous and tightly coupled with one another:
- As the integrations add up so does the price tag: Often you will need to pay your vendor to create each integration and maintain them over time.
- Vendor lock-in is likely: In the case where you need to replace one of these vendors you must now redo all of the integrations with a new vendor which is expensive and slow.
- Lack of user data ownership: More on this in a second.
Let's look at the middle-tier diagram again.
You may notice that the middle-tier is already connected to all parts of the system. This allows it to act as an integrator for all the systems, letting you easily swap out any individual vendor with no need to re-write one-off integrations. The benefits of this are numerous:
- Speed to market: Rapidly introduce new capabilities or replace old ones.
- Limits vendor lock-in: Changing vendors will always have some costs, but this approach minimizes those costs.
- Own your customer data: Because all data is flowing through a system you control, you can begin to build a comprehensive customer profile.
Let's dig a bit more into that last point. When many of your integrations are point-to-point between vendors, you often lose the ability to gather a cohesive picture of your customers. This where we come full circle back to creating a competitive advantage through delighting your customers. Without the ability to understand your customers and their behaviors, it is going to be very difficult to create a delighting customer experience.
There will be times when a middle-tier will not be the best option. If your e-commerce landscape has either of the following characteristics then it may sense to forgo a middle-tier:
- You are using very few vendors/integrations.
- E-commerce is a minimal part of your sales and there is a factor that limits the growth of the part of your business.
WWT Digital specializes in helping you achieve the best possible digital outcomes. We do this by helping you strategize, maximize the value of your vendors and even building custom software. Reach out to hear how we can help your brand "make experiences that matter."