The Next-Generation Commerce Stack

January 28, 2021

A Wave of Digital Transformation

Retail and its supporting technology have undergone a massive transformation over the past 10+ years. While e-commerce has been steadily growing since the dot.com boom in the 90s, the emergence of the digitally native vertical brand (DNVB) pioneered by Andy Dunn’s Bonobos following the 2018 financial crisis set off larger shift in consumer behavior and commerce. The trends pioneered by these DNVBs were further reinforced by the recent pandemic as e-comm first, omni-channel strategies became the clear determinant of success in the next generation of retail.

Digitally native brands and retailers are different from traditional retailers in many ways, and they are constantly reinventing and redefining the future of retail and consumer. However, their biggest differentiator is their foundational dependence on technology and data. Digitally native retailers were born on the internet, so their primary means of communicating and transacting with their customers is through technology, extending from front-end shopping experiences to back-end retail operations. 

DNVBs also have different expectations and needs surrounding technology. Many were founded by finance, tech, and business people who wanted to take a more data-driven, tech-enabled approach to building and maintaining customer relationships. The retail tools and processes that were years behind technology trends just weren't going to cut it. This set off the wave of innovation within the retail tech landscape as software companies developed modern solutions to help these fast-growing, digitally native retailers transform end-to-end retail operations through technology. The software companies that did it best became part of what we call the “next-generation commerce stack,” which is a combination of front and back-end commerce solutions most commonly used by leading retailers.

What Makes a Commerce Solution Next-Generation?

Why is the next generation of retailers gravitating towards a specific set of tools? Here are a few key differentiators between legacy and next-generation commerce solutions.

Cloud-Based, SaaS Multi-Tenant Architecture

Next-generation commerce solutions are always cloud-based, where legacy software solutions built before the wave of cloud innovation needed to be installed onto a desktop. Cloud-based was already important in our increasingly global economy, but this has become critical in our pandemic world as the massive shift to remote workforce increases the need to access data and collaborate effectively while working from anywhere. 

Next-generation solutions are also built on multi-tenant architecture and provided through Software as a Service (SaaS) business models. This means that a single instance of a software application serves multiple customers and lives on a shared database in the cloud. Each customer has the ability to customize some parts of the application, such as the business rules or the look of the user interface, but the base of the application is standard across the customer base. Legacy solutions are single-tenant or hosted-cloud architecture, meaning that previously on-prem software is hosted in the cloud, but each customer has their own independent database and instance of the software. True multi-tenant architecture is important for many reasons including cost savings, ease of maintenance and upgrades, and integrations. You can read more about multi-tenant vs. single tenant solutions here. 

Seamless Integrations

Next-gen commerce solutions support seamless integrations to other technologies within the tech stack. They have pre-built integrations to solutions to other modern solutions like Shopify, NetSuite, Looker, Slack, Asana etc. Next-gen solutions also have flexible APIs or simple CSV import/export capabilities that also make it easy to build custom integrations or get data in and out of the system. Overall, the best solutions are ones that increase visibility across the company and enable employees to streamline workflows across the different systems.

Purpose Built/Out-of-the-Box Functionality

Next-generation solutions come with out-of-the-box functionality, reports, forms and workflows that are based on industry best practices. For example, HubSpot comes out-of-the-box with different sales and marketing reports, and NetSuite has versions of ERP software tailored to industries ranging from apparel to non-profit. Out-of-the-box functionality not only allows companies to start using and getting value out of the solution on day one, it also enables companies to implement processes that are based on best practices of that specific workflow or industry.

Flexibility & No or Low-Code Customizations

While these solutions come pre-built with functionality, they are also flexible and easily customizable. Next-gen solutions are designed so that from the interface, with simple point customizations, users can easily configure and personalize the software to meet their specific needs. Additionally, there is generally a layer of code that sits between the user interface and base code that enables developers to customize the solution even further without impacting the underlying infrastructure. This ensures seamless software updates across the entire customer base while maintaining customizations within individual instances of the software. 

Self-Service Onboarding and Training

Next-generation software companies typically productive their Customer Success offerings and provide self-service implementation, training, and support. They build onboarding workflows into the software, provide recorded training sessions and maintain robust knowledge bases. They ensure seamless communication with their customers through chat bots, email, and phone support.

Time to Value & Cost Effectiveness

Because of all the characteristics mentioned above, next-gen solutions are fast and easy to implement, and more affordable than legacy solutions. Implementation times will vary depending on the complexity of the solution and required customizations, but should generally take days or weeks, rather than months or years. Additionally, because of the self-service configuration and SaaS business model, long-term maintenance of the solution is also easier and more cost-effective.

Scale

Lastly, next-generation solutions are built help high-growth scale. Due to the multi-tenant architecture and SaaS based business model of cloud-based technology, these solutions are designed to support companies from pre-revenue to $500M+. Because they are easy, cost-effective, and quick to implement and flexible enough to adapt to an evolving business, next-gen solutions enable you to focus on growing your business rather than managing your technology. 

The Next-Generation Commerce Stack

Based on the characteristics of next-generation software and the adoption of these solutions within the industry and our customer base, below is our take on the best-in-class software solutions that make up the “next-generation commerce stack.”

Ecommerce & POS

Shopify & Shopify Plus
Shopify is the leading ecommerce platform provider, enabling over 1 million businesses to sell online every day. Of our customers and 350+ companies that we’ve spoken with, more than 80% run their business on Shopify’s e-commerce platform. 

Shopify allows anyone to set up an online store and sell their products. Merchants can also sell their products in person with Shopify POS. Shopify allows you to quickly and easily sell and get paid for product or service transactions. Shopify comes out of the box with over 70 store themes, and enables you to easily customize your store-front with simple drag-and-drop functionality. The platform provides out-of-the-box tools and insights to help you market and manage your business. Lastly, it has an app marketplace that provides seamless integrations to over 4,000 other solutions to help you extend the functionality of the Shopify platform and better market, manage, and track your business. 

NewStore
NewStore is an omnichannel store solution for enterprise retailers. The company a platform that combines mobile POS, an omnichannel order broker, and inventory management. Store operations, from endless aisle to mobile checkout to fulfillment, are executed on intuitive iPhone apps, creating a joyful shopping experience for the consumer and associate alike. NewStore customers include companies like ANINE BING, Burton Snowboards, Decathlon, GANNI, Outdoor Voices, and UNTUCKit. 

ERP (Enterprise Resource Planning)

NetSuite
NetSuite provides a suite of cloud-based Enterprise Resource Planning (ERP) tools that run the business of more than 24,000 customers. Of our customers and the 350+ companies we have spoken to, more than 50% of those that are over $5M in revenue run their business on NetSuite.

Unlike many other established ERP providers, NetSuite is built leveraging 100% cloud- based, multi-tenant architecture technology. NetSuite’s ERP combines accounting & financials, inventory and order management, supply chain and customer relationship management all on a single unified platform. NetSuite has different versions of the software for different business types that come pre-built with functionality based on leading practice. They also have solutions for every stage of a business whether you are pre-revenue or $500M+. 

Inventory Management

Dear Inventory
DEAR Inventory is an inventory management application designed to help small to medium businesses become more efficient at the day-to-day operations. DEAR provides a platform to simplify the management of inventory, quotes, purchase and sales orders. 

Cin7
Cin7 is an automated inventory management platform for brands growing their revenue over $1 million. Cin7 synchronizes stock with sales and orders across every physical and online sales channel and automates order processes for greater efficiency. Brands that sell or distribute products use Cin7 to keep costs down, margins and cash flow high, and stock at the right level. 

PLM (Product Lifecycle Management) 

Backbone
Backbone is an all-in-one solution that helps consumer goods companies get their products to market with greater efficiency and velocity. The Backbone platform allows you to manage your product line, create tech packs, and iterate designs. Backbone fully encompasses the product development process, empowering your entire team to collaborate seamlessly.

WFX
WFX provides customizable cloud based software solutions, which completely and efficiently manage the product life cycles of the Apparel & Home Furnishings Trade. WFX products include PLM, PDM, SCM & Financials solutions for the fashion industries worldwide. 

BI (Business Intelligence) & Data Analytics

Looker
Looker is a business intelligence software and big data analytics platform that helps you explore, analyze, and share real-time business analytics easily.

Toolio and the Next-Generation Commerce Stack

While digital transformation has been widely adopted across commerce and fulfillment operations, merchandising is a crucial retail discipline that is stuck in the past. At Toolio, we’re on a mission to change this by providing the first, modern merchandising and planning platform designed for the next-generation of retail. Toolio seamlessly integrates to your tech stack so you have access to real-time data needed to create and maintain plans. Toolio is 100% cloud- based and comes pre-built with metrics, views, and workflows that are foundational to every retailer. Toolio is also extremely flexible and customizable, enabling you to configure the platform to meet your needs today and over time as your business evolves. Lastly, Toolio was designed to be cost-effective and quick to implement -- you can start planning on the Toolio platform in as little as 8 weeks.

If you’d like to learn more about Toolio and how it fits into the next-generation commerce stack, schedule a demo with our team today! 

Summer Stewart
Head of Growth