The global eCommerce market is estimated to total $6.3 trillion in Q4 of 2023 and reach $8.1 trillion by 2026. This explosive growth demands continuous improvement and development, lest organizations be left behind. The risks of sticking with traditional infrastructure may soon become insurmountable. With 65% of organizations using serverless technology and a further 14% planning to integrate serverless in the next 12-18 months, organizations that do not take a proactive approach to their eCommerce site run the risk of becoming redundant or outdated. Serverless eCommerce is becoming the unavoidable next step for organizations to keep their competitive edge in online retail.

The growth of serverless eCommerce can be attributed to several factors, including operational efficiency and scalability. Organizations find that they can do more with less, reducing overhead while enhancing performance. This isn’t just about cutting costs; it’s about optimizing resources to drive innovation and customer satisfaction. With the serverless computing market expected to reach approximately USD$29 billion by 2028 and eCommerce sales rising 33% year on year since 2021 in the UK alone, serverless and eCommerce is a perfect combination to propel digital success.

Why does serverless eCommerce matter?

Serverless eCommerce is a real game changer for organizations anywhere. Instead of managing servers and infrastructure, organizations can now focus on what really matters: delivering an exceptional user experience which can lead to increased conversation rates of up to 400%

The clear financial aspect of serverless eCommerce cannot be understated, however it is not the only reason organizations are adopting this cutting edge digital advancement, as indisputable benefits come in the form of scalability and adaptability, among countless other areas. Serverless architectures can easily adapt to fluctuations in traffic and demand, making them a flexible solution for all organizations. This flexibility is a key factor in why serverless eCommerce is gaining such impressive traction as it means apps can handle massive traffic spikes, such as during sales or holiday periods, with ease. 

“The risks of sticking with traditional infrastructure may soon become insurmountable”

Serverless eCommerce is increasingly becoming a focal point in the market, not just as a technological upgrade but as a key component in broader digital transformation initiatives. Such initiatives can encompass a wide array of changes, from operational adjustments to new ways of delivering value to customers, all supported by serverless technologies. Serverless eCommerce acts as a catalyst for agility and innovation, meaning organizations adapt to retail market fluctuations more efficiently. This groundbreaking use of serverless computing is not just a technical upgrade for eCommerce; it’s a strategic move that can shape the future of an organization’s online retail operations.

Why organizations should adopt serverless eCommerce

Choosing the right eCommerce architecture is a pivotal decision that impacts multiple facets of an organization. The serverless approach offers a range of unique advantages that significantly impact operational efficiency, customer engagement, and global market reach and countless other areas. A selection of the undeniable standout factors supporting serverless eCommerce include:

Ease of management

Removing the complex task of server management and horizontal scaling, by automatically scaling vertically to meet increased spikes in traffic, eliminates the need for manual intervention and server maintenance. This operational agility frees development teams to focus on strategic initiatives and enables quicker decision-making. The end result is a significant competitive advantage in markets that are increasingly volatile and competitive.

Customer experience

While serverless computing doesn’t directly enhance the customer experience, it does free up development teams to focus on this critical area. By supporting real-time data processing and simplifying integration with analytics tools and CRM systems, serverless architectures allow organizations to allocate more resources to user interface and customer support development. The ultimate benefit is the potential for increased customer loyalty, higher sales, and an increase in customer lifetime value, with improved UI increasing conversion rates by up to 200% and a well constructed UX leading to potential conversion rate increases of up to 400%. 

“Removing the complex task of server management eliminates the need for manual intervention and server maintenance.”

Security

Security is a paramount concern, especially in eCommerce, and serverless platforms excel in this area. Serverless computing minimizes the risk of system failures and is designed to scale during periods of high-traffic. This directly correlates to a reduced risk of costly data breaches and the safeguarding of brand reputation, something that is invaluable in today’s digital age.

Global expansion

For organizations eyeing international markets, serverless eCommerce is a boon. Simplifying the complexities associated with global expansion through the integration of multiple payment gateways and automatic adjustments to fit with different tax and currency regulations massively accelerates the time-to-market in new regions and is crucial for capturing a global audience. As 57% of online customers frequently shop internationally, this is an opportunity that cannot be overlooked.

Operational efficiency

Working with a pay-as-you-go model massively improves resource allocation and eliminates waste by increasing operational efficiency. The added benefit is that these pay-as-you-go models free up resources for other strategic investments and align well with sustainability goals, making it a smart choice for organizations looking to optimize their operations.

Driving innovation

Serverless architecture is a catalyst for innovation. The modular and event-driven nature of serverless eCommerce facilitates rapid feature development and efficient testing cycles. This agility helps organizations adapt quickly to market trends and technological advancements, resulting in a platform that is able to stay ahead of competitors and is therefore better positioned to capitalize on emerging opportunities.

Serverless eCommerce vs traditional eCommerce

Traditional eCommerce platforms often come with a complex architecture that requires significant investment in hardware, workforce, and ongoing maintenance. This not only complicates operations but also has significant financial implications. In contrast, serverless architecture operates on a pay-as-you-go model, offering cost savings over time. The data supports this shift: a recent study shows that implementing serverless technologies can reduce operational costs by up to 90%. Beyond the financial aspect, scalability and flexibility are crucial differentiators. While traditional systems may require manual adjustments to handle increased traffic, serverless systems automatically adapt to changes in demand.

Another key distinction is the speed of deployment and updates. Traditional systems often involve longer development cycles, making it challenging to quickly roll out new features or updates. Serverless architecture allows for quicker iterations, helping organizations to be more agile and responsive to market changes through better resource management and the time savings from outsourcing server management. Serverless eCommerce offers a blend of cost efficiency, scalability, and agility that are just not available through traditional eCommerce sites, making it a compelling option for organizations improving their online retail strategies.

Tackling the challenges in serverless eCommerce

While the benefits of serverless eCommerce are compelling, organizations must acknowledge the challenges that come with transitioning to this architecture. Initial costs can be a hurdle, especially when it comes to migrating existing systems and data. Organizations may need to invest in new digital tools or services, which can add to the upfront expenses.

Migration itself presents its own set of challenges. The process can be complex, requiring careful planning and potentially causing disruptions in service. Organizations need to weigh these considerations carefully when making the switch.

There are also technical limitations to consider. Cold starts can lead to latency issues, and reliance on third-party services can introduce new dependencies and potential points of failure.

While the road to serverless eCommerce may have its bumps, the strategic advantages far outweigh the challenges, making a compelling argument for organizations looking to expand and innovate in the competitive landscape of online retail.

Key takeaways

The shift towards serverless eCommerce is more than a mere technological trend; it’s a strategic imperative that’s reshaping online retail. The architecture offers unparalleled advantages in operational efficiency, customer engagement, and global reach, setting the stage for a new era in eCommerce. Some of the most pivotal things to consider when looking at adopting serverless eCommerce are:

  • Operational agility: Automatic scaling and pay-as-you-go models optimize resource allocation, freeing development teams to focus on strategic initiatives.
  • Enhanced customer engagement: Real-time data processing and CRM integration lead to a more personalized user experience, driving customer loyalty and increasing conversion rates.
  • Security measures: Built-in, up-to-date security protocols offer comprehensive protection against system failures and data breaches, a non-negotiable in today’s digital age.
  • Global market penetration: The ease of integrating multiple payment gateways and adapting to local tax regulations accelerates time-to-market, an invaluable asset for capturing a global audience.
  • Scalability and flexibility: The ability to automatically adapt to traffic fluctuations offers a level of agility traditional systems can’t match, making it a compelling option for organizations improving their online retail strategies.

The adoption of serverless eCommerce can fundamentally influence an organization’s growth trajectory and market positioning. With the serverless computing market expected to reach approximately USD 29 billion by 2028, this is a trend that organizations can’t afford to ignore.

Thomas Charneau

December 13, 2023

7 Min read