For SMBs, Build vs. Buy Microservices Debate Warrants a Look at the Tech Stack

The tech stack — that conglomeration of tech, codes, software and services that build websites or apps — can be a strategic advantage, not a cost center.

Brandon Gell, CEO and co-founder of Clyde, said for smaller firms, in the inexorable bid to move online, after all, speed is of the essence.

Small and medium-sized businesses (SMBs), resource-constrained as they already are, simply cannot afford a rip-and-replace strategy as they upgrade their operations to deal with the rising tide of eCommerce. A rip-and-replace strategy is not necessary, he said, given the rise of microservices and proliferation of third-party vendors — and platforms that enable them to broaden their offerings.

Clyde, for example, empowers businesses — from startups to enterprises — to offer extended warranties, which in turn increases average order values and revenues. It is now becoming standard to offer a warranty, he said and offering one can be a competitive tool that lets the smaller retailer compete with Amazon.

See also: Merchants Can Mitigate Supply Chain Woes With Extended Warranties? Clyde CEO Says Yes

The larger the brand or the larger the original equipment manufacturer (OEM), he said, the more likely they are to build a custom platform. Retailer marketplaces are very likely to build their stacks. For the smaller to mid-market companies, there’s a tradeoff between building internally and speed to market against competitors regardless of the vertical. For those companies that are hesitant to embrace new business models, he said, they need to reexamine their “if it ain’t broke, don’t fix it” mindset regarding websites and their end customers’ journeys.

Examining the Stack

As Gell said, “How well is it working? How many other things is it blocking?” are the key questions to ask. Companies should mull whether they can test their offerings to see if they can boost sales conversions.

He pointed to Stripe as an example, where small SMB startups congregate to build their platforms in turn.

In choosing platforms with which to partner, said Gell, smaller firms tend to look at how the platform makes money — i.e., whether the platform will charge per-transaction fees or for software as a service subscription, to name but two examples. Then there’s the consideration of how the SMB can leverage the platform to scale their own business and transaction volumes and perhaps reach new markets internationally. It’s critical for enterprises to evaluate and launch the microservices on offer and whether they can use them with ease.

The overarching theme is that tapping into platforms and working with third-party providers can take some of the burden off the enterprise, competing as it does with Amazon (which Gell said is pretty much the only eCommerce player that does, well, everything in-house).

As he told Webster, there’s no financial benefit, realistically, that smaller firms get from building this on their own, “unless you’re at a crazy scale. And you’re really just optimizing for margin rather than for growth.”

The partnership model may take root even for larger enterprises and OEMs, he said. However, the natural evolution will be that SMBs and mid-market companies will adopt that strategy first, which will, in turn, spur the larger firms to do the same.

Platforms should be customizable, he said, and in the case of Clyde, he noted that firms launching their warranty programs could — with the aid of account managers on the platform and a variety of features — boost the “buy” rate of those warranties from 4% to 18%.

Looking ahead, he said, OEMs, brands, marketplaces and retailers will reprioritize some of the things they may be thinking about and improve their tech stack so that they maximize their chances to grow. The holidays — with the pressures on supply chains and the prospect of late deliveries and empty shelves — may narrow the focus on tech stacks.

Mused Gell: “Every brand can use existing partnerships and technologies to strive for a ‘better than Amazon’ experience.”

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