How APIs are transforming the e-commerce industry

According to BCC Research, the global e-commerce market is estimated to reach $5.8 trillion by 2022. At the same time, the growth of APIs in recent years has opened many new opportunities in e-commerce. In this article, we will examine recent trends in e-commerce that have been enabled by APIs, the challenges often encountered when managing these APIs, and how to meet these challenges with proper API management

The changing landscape of e-commerce

In the early days of e-commerce, customers engaged with online stores through their desktop computer. Over time, this has shifted to smartphones and tablets. Now, omnichannel engagement requires engaging with customers on a variety of devices, including cars, watches, and even refrigerators. Anytime a customer has an internet connected device, there is the potential to engage in e-commerce. Connecting these various devices into a seamless shopping experience requires APIs. 

  • Omnichannel engagement using headless e-commerce

As omnichannel engagements flourish, the API takes centre stage. This has led to another trend in e-commerce, headless e-commerce. Platforms that offer e-commerce capabilities are no longer required to provide a storefront. Instead, they offer a headless experience for e-commerce vendors by offering all of the necessary API operations to support the full e-commerce experience. Customised interfaces may be built on top of headless e-commerce platforms to meet the needs of customers on any device. No longer are users restricted to a specific template or strictly desktop and mobile browsers, e-commerce engagements happen anytime, anywhere, on any device. 

  • The growth of voice commerce

Voice commerce is the use of voice-based interaction, usually via a mobile or smart home device. According to Shopify’s “The Future of e-commerce” report, voice commerce will top $40 billion in the U.S. by 2022. Integrating with voice-enabled devices often requires building custom applications to take advantage of voice APIs that are able to convert a customer’s voice interactions into commands sent to e-commerce APIs.

  • Integrations, collaborations and personalisation

E-commerce requires more than just an online store designed for omnichannel engagements. Marketing efforts require integrating with drip campaign solutions, automated integration of advertisements, and coordination between point-of-sale, inventory systems, fulfilment and shipping services. APIs are integral to unifying these systems into a collaborative solution for your customers.

Personalisation helps to build a bond with the customer pre-and-post sale. According to Smarter HQ, 72% of customers only engage with personalised messaging. This means knowing more about your customers by leveraging third-party solutions that offer insights into their interests. It also requires using APIs for recommendation engines, often powered by machine learning. Integrating APIs from popular social media platforms help to convert product reviews into sales. APIs power a variety of different collaborations between service providers, vendors and your e-commerce platform. 

Role of API management platforms 

By our estimation, e-commerce stores require at least 25 APIs to integrate marketing, ad management, omnichannel experiences, inventory management, shopping, payment, fulfillment, shipping and returns processing. The number of APIs may be 50+ when you consider the multiple APIs used to track customer browsing habits, newsletters, drip campaigns, sales tax calculations, fraud detection, cloud hosting and many of the other operational requirements involved in supporting an e-commerce platform. This introduces a number of challenges to API management for those operating an e-commerce platform. 

  • Limiting outbound data to third-party APIs

Given the large number of third-party APIs that e-commerce platforms must integrate, monitoring and managing these integrations is important. An API reverse gateway can be used to protect all outbound traffic to third-party APIs. These reverse gateways avoid sharing sensitive third-party API access tokens with developers and server infrastructure by allowing them to manage the third-party integration on their behalf. Selecting an API management layer that is capable of not only protecting inbound API requests but also outbound API requests is important for e-commerce APIs. 

  • Unified data views

It is important to have a complete view of your e-commerce operations, from a 360-degree customer view to surfacing logistical issues. With the variety of in-house and external API integrations required, this can be very difficult. Unifying data across these disparate data sources is essential to monitor your operations. There are now solutions emerging to combine these data elements into a single API to provide a 360-degree view of your customers and operational requirements. GraphQL-based APIs are one method of offering this consolidated view through the use of a universal data graph (UDG). 

  • Protecting data with data entitlements

Role-based access control (RBAC) is commonly implemented at the API management layer. By using the OAuth 2.0 framework and its scopes feature, API operations may only be used by those authorised to do so. Customers may perform basic functionality, while partners may be able to access real-time inventory data not available to shoppers. Selecting an API management layer with support for granular access control prevents access to API operations, before they reach the API server. 

  • Avoiding usage spikes through Rate Limiting

As the API programme grows and more integrations are established, internal systems may become overloaded. Implementing an appropriate policy to rate limit API consumers is important to prevent e-commerce systems from grinding to a halt under excessive load. These rate limits may be adjusted to allow some integrations, such as those from partners, to make more frequent API calls while others to have lower limits and perhaps lower priority. 

Tyk is a leading cloud-native API and service management platform complete with an intuitive dashboard and a simple developer portal, both powered by an open source API gateway. In addition to the capabilities mentioned above, Tyk also provides: 

  • The Universal Data Graph (UDG) enables you to combine multiple APIs into one universal interface. With the help of GraphQL you’re able to access multiple APIs with a single query. It’s important to note that you don’t even have to build your own GraphQL server. If you have existing REST APIs all you have to do is configure the UDG.
  • Support for Open Policy Agent (OPA) which enables the creation of custom permissions for different user roles
  • Tyk Pump is an open source analytics purger that acts as an observability layer and moves the data generated by Tyk nodes to any back-end internally to the dashboard or to 3rd party analytics, monitoring and BI tools. 

With API adoption picking up in the e-commerce industry making it easy to access information in a simple yet powerful way, the right tools like an API gateway coupled with a dynamic API programme could further drive growth and innovation in the industry.