Integrated Native Checkout vs. Automated Order Processing
What is the single architectural decision that has the greatest impact on the success of a native checkout experience?
Welcome back to our blog series where we tackle important questions about creating a scalable and efficient native checkout. In this post, we will dive deeper into the topic of delivering Native Checkout, which is an essential part of any successful ecommerce experience. In case you missed our previous post, we covered the different types of checkout and why Native Checkout is the superior option over other less desirable checkout flows, such as affiliate redirects. We understand that creating a seamless checkout experience can be challenging, but with the detailed insights and expertise in this post, we aim to guide you toward the best approach for building a truly integrated native checkout flow. Fundamentally, we’ll focus on one question:
What is the single architectural decision that has the greatest impact on the success of a native checkout experience?
Importantly, we’re talking about architecting a native checkout solution where the app or other digital experience does not actually hold inventory, fulfill orders, or handle issues like returns. These products and experiences constitute a new category of Anywhere Commerce where shoppers can purchase products right where they discover them.
Why Isn’t Native Checkout Everywhere, Already?
As highlighted in our previous blog post, native checkout aims to retain users within a specific digital media experience, decrease friction, and boost conversions. So, why isn't everyone implementing it? At its core, it's because it's difficult, and establishing a proper infrastructure demands considerable effort. Until now, such infrastructure did not exist as a service, and, until recently, there hasn't been a widespread agreement on how to develop a functional native checkout solution.
A native checkout feature in an app or service should meet some fundamental requirements:
- Checkout must be completed within the channel
- Channel does not handle inventory or fulfillment
- Channel mirrors merchant settings through each step of checkout
- Merchant handles returns or exchanges
We will address more nuanced requirements shortly, but these four are typically the main concerns for a channel seeking to provide a native checkout experience. Occasionally, channels might compromise on some basic requirements, resulting in unscalable solutions. For example, some channels might manually reorder products on a merchant's site after users have made the "purchase" natively within their own app. We've discussed these issues extensively here. Avoid this at all costs!
The ideal approach to building native checkout involves direct integrations with merchants and their ecommerce platforms. However, this requires time and money. A development team must create and maintain these platforms. Depending on the architecture, normalizing data from each platform into a unified schema may be necessary, which becomes increasingly challenging with each additional platform.
Even with a basic native checkout experience across one or two platforms, achieving the breadth of platforms (and related merchants) necessary for a scalable solution that unlocks revenue gains can be elusive.
Furthermore, even if a product successfully integrates with a wide array of ecommerce platforms and merchants, crucial decisions must be made regarding the infrastructure that supports native checkout. These choices have far-reaching implications for all stakeholders, from users and channels to merchants.
All of this complexity results in a paradox for any given channel building native checkout in an Anywhere Commerce product: They can ignore that complexity and focus only on showing products and writing orders - resulting in a brittle solution that risks disappointing customers. Or, they can embrace that complexity and tackle the task of building a fully integrated checkout solution - resulting in longer timelines, more complex system integrations, and more limited platform coverage.
(There is, however, a better way).
Native Checkout vs. Integrated Checkout
In order for a native checkout solution to meet the challenging requirements above (no inventory management, no order fulfillment, no return/exchange management) the system must interact with a merchant in some way. Fundamentally, the system needs to submit orders to a merchant so they can be fulfilled. These orders need to include accurate product information - which ideally should mirror the information inside a merchant’s catalog. It must also include customer information, tax amounts, and shipping/fulfillment information which need to be both presented and selected inside the checkout process in a channel's native checkout flow. All of these needs make it clear that the way a channel interacts with a merchant’s systems and/or data is vitally important.
There are multiple approaches to powering native checkout to meet some of the nuanced requirements above. For illustration purposes we’ll categorize these into two buckets. The first, we’ll call Automated Order Processing, and the second we’ll call Integrated Native Checkout. These options are very different and are NOT created equal as you’ll see below:
Automated Order Processing
On one end of the spectrum, an app can create a native checkout experience simply by doing automated order processing. This means that the app is ingesting catalog data from the merchant’s ecommerce system (often via product feed), then it’s executing its own set of operations in isolation from the merchant’s system prior to creating an order. These steps include:
- Creating a cart
- Processing / verifying a shipping address
- Processing / verifying a billing address
- Offering and selecting shipping methods
- Accepting a payment
- Executing the purchase
The crucial difference here is the shopper is buying the product from the channel, not from the merchant. The channel is then responsible for purchasing it from the merchant, usually via an invoice, and managing that process through its own system. This is often referred to as drop shipping, or some version of a marketplace.
The Automated Order Processing approach presents some critical challenges:
Out of stock
Product feeds can suffer from inconsistencies and inaccuracies in product data, such as incorrect pricing, incomplete descriptions, or outdated information. As inventory levels fluctuate due to sales, returns, and stock replenishment, it is crucial to keep the product feed updated to reflect these changes. Failure to do so may lead to discrepancies between the actual inventory and the information displayed to customers, resulting in inaccurate orders, customer dissatisfaction, and/or potential loss of sales.
Another challenge lies in integrating multiple data sources, especially when dealing with various suppliers or sales channels. Each source may have its own data format, requiring the harmonization of data into a unified format for seamless syncing. Additionally, the frequency of updates from different sources may vary, complicating the inventory management process. This requires a robust and flexible system capable of handling diverse data formats and ensuring accurate and timely inventory updates across any channel.
Handling tax calculations is difficult for several reasons. First, tax regulations can be complex and vary significantly between countries, states, and even municipalities. Keeping up-to-date with the ever-changing tax laws and rates can be a daunting task for channels that may not have the necessary expertise in tax compliance.
Different products and services may be subject to distinct tax rules, exemptions, and rates. Channels need to be aware of these nuances to ensure the correct tax is applied to each transaction. This can be particularly challenging for channels who display a wide range of products across multiple jurisdictions. Consuming catalog data often doesn’t provide the level of information required to correctly calculate tax, introducing new liability to channels.
The tax liability may differ based on the merchant's location and the customer's location. Determining the appropriate tax rate to apply in each scenario can be complicated and may require a deep understanding of tax regulations.
Implementing accurate tax calculations demands significant investments in time, resources, and technology. Channels might need to develop or adopt specialized software to manage tax calculations and reporting, which can be costly and time-consuming, particularly for smaller channels with limited resources.
The automated order processing approach also introduces numerous challenges when it comes to accurately displaying shipping options for a shopper. Fundamentally, the variability in shipping costs and delivery times, depends on factors such as the product's size, weight, destination, and shipping carrier. Channels need to consider all these factors to even present accurate shipping estimates.
In order to create accurate orders, though, the channel needs to know the range of shipping methods offered by merchants. Some merchants may offer multiple shipping options, such as standard, express, or overnight shipping, while others may have only a single method available. This diversity in shipping options can make it difficult for channels to provide comprehensive and accurate information for all the products they promote.
Channels also often work with multiple merchants, each with their own set of shipping policies, rates, and carriers. Aggregating and standardizing this data for seamless presentation to a shopper can be a complex task, as channels need to be well-versed in the shipping practices of each merchant they work with.
International shipping adds another layer of complexity. Channels need to be mindful of the different shipping regulations, customs duties, and taxes that apply when shipping products across borders. Accurately displaying these costs and requirements to customers is crucial to avoid potential issues and dissatisfaction.
Finally, maintaining up-to-date shipping information is an ongoing challenge. Shipping rates, carrier options, and delivery times may change frequently, necessitating constant monitoring and updating by the channel. Or worse, the channel puts this work onto the merchant! This is the usual course of action and prevents one the greatest barriers of entry for merchants. This process is duplicative of what the merchant already has in their ecommerce store. And yet, they often enforce a manual process which can be labor-intensive and prone to errors. This may lead to inaccurate information being displayed to customers, ultimately affecting the channel’s credibility and customer satisfaction.
Inaccurate Order Writeback
The challenges, and potential inaccuracies, with inventory, tax, and shipping information increase the likelihood that orders may get processed via automations that don’t reflect the business rules required to provide a quality customer experience and profitable margin for the merchant. The discrepancy between the orders via automated order processing and orders originating from the merchant’s website is stark. These inaccuracies mean the merchant will have to handle many orders with a separate process that will introduce complexity, confusion, latency, reduce margin (due to work-arounds like free shipping) and likely disappoint customers. These challenges make any given merchant much less likely to want to work with a given channel, and thereby massively reduce the assortment a channel can offer to its users.
All of these issues are solved by a more integrated approach:
Integrated Native Checkout
A fully integrated native checkout process seamlessly connects with all aspects of a merchant's ecommerce system, offering a streamlined and consistent shopping experience for customers in any experience. This integration connects with all of the critical elements of a merchant’s own ecommerce system including inventory management, pricing, tax calculation, shipping options, payment processing, and order fulfillment, all while allowing the customer to complete their transaction within a single channel.
PDPs and Carts
The customer begins by browsing through the available products and adding their desired items to the cart. The system accurately displays up-to-date inventory levels and product details, ensuring that customers have access to the correct information.
Checkout & Tax
As the customer proceeds to checkout, the integrated system reflects accurate pricing from the merchant’s ecommerce platform, including any applicable discounts or promotions. It also determines taxes based on the customer's location and the product type, ensuring compliance with various tax regulations.
Checkout & Shipping
Next, the system presents accurate shipping options to the customer, taking into account factors such as product weight, size, destination, and the merchant's shipping policies. It may also display estimated delivery times for each shipping option, helping the customer make an informed choice.
Upon selecting a shipping method, the customer moves to the payment stage. The integrated native checkout process securely processes payments through various methods, such as credit cards, digital wallets, or other popular payment gateways, all without redirecting the customer to a third-party website.
Once the payment is completed, the system communicates the order details to the merchant's order management and fulfillment systems. Because all of the previous steps were integrated with the merchant’s system, these orders will be seamlessly accurate and appear as if they had been created on the merchant's own website. This ensures a smooth handoff of information, enabling the merchant to process, pack, and ship the order promptly.
Throughout this process, the customer stays in the channel’s experience, enjoying a seamless and consistent checkout flow. The native checkout process's full integration with the merchant's ecommerce system enables a frictionless and efficient shopping journey, ultimately boosting customer satisfaction and conversion.
So why isn’t everyone doing Integrated Native Checkout?
Fundamentally, this is a problem of platform coverage. Writing a full featured checkout integration to support an Integrated Native Checkout flow is hard enough for even just a single platform...but writing full featured checkout integrations across a whole host of platforms is extremely challenging for a number of reasons:
Diverse platform architectures
Ecommerce platforms differ in their underlying technologies, architectures, and data structures. Integrating with multiple platforms requires developers to understand and adapt to each platform's unique characteristics, which can be time-consuming and resource-intensive. It can also require constantly changing your own architecture each time you add a new platform.
Each ecommerce platform has its own set of APIs with varying levels of documentation, functionality, and complexity. Developers must familiarize themselves with these APIs to build successful integrations, often leading to increased development time and complexity.
Different ecommerce platforms use distinct data formats, field names, and data structures. Integrating with multiple platforms requires normalizing this data into a unified format, which can be a complex and error-prone process.
Version control and updates
Ecommerce platforms may release updates or new versions that introduce changes to APIs, features, or data structures. Developers must monitor and adapt their integrations to accommodate these changes, which can be challenging and time-consuming.
Scalability and performance
Handling multiple integrations simultaneously requires a robust and scalable system. Ensuring consistent performance across all integrations can be challenging, especially as the number of platforms and associated data volumes increase. Look no further than API rate limits to see where this can become a real issue.
Security and compliance
Integrating with multiple platforms involves handling sensitive customer data and payment information. Ensuring data security and compliance with relevant regulations, such as GDPR or PCI DSS, can be challenging and requires rigorous security measures.
Maintenance and support
Managing multiple integrations requires ongoing maintenance, bug fixes, and support. This can be resource-intensive and may demand dedicated teams or personnel to ensure seamless operation across all integrated platforms.
If you’re reading this and you have a Shopify integration only, that’s what your team has to look forward to. While Shopify is great, their feature set is drastically different from the rest of the platforms your target merchants use.
That’s why we’re here…
Violet exists to help channels unlock the potential of Integrated Native Checkout without having to tackle the work of endless ecommerce platform integrations. Violet offers a single, headless API to provide all of the functionality required for Integrated Native checkout across any platform. That means that a channel can sell products from, and write perfectly accurate orders back to any merchant on any platform.
We’ve done the hard work so you don’t have to.