Developers’ new opportunity: Retailers’ open APIs

Retailers have long relied on a wide range of individuals to get customers into their stores and products off their shelves, from salespeople and floor managers to display designers and market analysts. But increasingly retailers are providing opportunities for a very different kind of worker: software developers.

Twenty years ago, brick-and-mortar retailers were only just discovering the Web as a vehicle to reach customers. Websites were seen mainly as extensions of ad campaigns in other media: They spoke and customers listened. But today’s “clicks and mortar” businesses view the Web as much more of a two-way affair, and their technical savvy is growing. In addition to such Web 2.0 features as blogs, RSS feeds, and customer forums, retailers are opening up their systems to outside developers like never before, by offering public APIs that provide real-time access to business data.

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Naturally the largest retailers are leading the way, particularly those that already have a strong Web presence. Amazon.com, the biggest online-only retailer, provides more than access to its retail systems. It also spun out a version of its massive IT infrastructure to offer storage, application hosting, and other services.

But smaller businesses — and ones less grounded in the Web — are getting in on the act as well. Zappos, a fast-growing online retailer of clothing and shoes, launched an API pilot program in April. And in February, Sears, which published its first retail catalog in 1888, announced a developer program of its own with two APIs. If this trend toward data transparency continues, which seems likely, it presents an emerging opportunity for software developers in the retail sector.

New solutions for a new retail market The changing nature of the retail business is, at least in part, driving these companies to invest in software infrastructure. For a small retailer with a single store presence, nearly every transaction is handled on a person-to-person basis, whether it be marketing, sales, or order fulfillment. As businesses grow, however, automation becomes increasingly necessary. For a modern “big box” retailer with a nationwide presence, it is essential.

Consider Amazon.com, which operates no retail stores. Lacking any in-person interaction with customers, it must rely on ever more creative means of engaging them over the Web. Public APIs are one way to encourage outside parties to develop those methods, in much the same way that open source can breathe fresh air into an in-house development project.

Much like Amazon.com, British retailer Tesco, the world’s largest after Wal-Mart and France’s Carrefour, offers a bewildering array of products. And like Amazon.com, it has been developing APIs for several years, in hopes that independent developers will find new ways of presenting those products to customers.

Just who are these retailers hoping will use these APIs, and for what? According to Sears, apps for mobile devices are a particular interest. As smartphones become more ingrained into daily life, Sears wants to be on the forefront of location-based shopping and other emerging technologies — whatever form they might eventually take.

The elephant in the room is that all of this activity will only escalate the struggle between large, nationwide retailers and the ailing small businesses they’ve begun to replace. Just as it is inconceivable that any new business would succeed without some form of Web presence today, it is possible that API-based access to business data may become de rigueur tomorrow, even for small retailers.

Can small retailers adapt? The problem, of course, is that few small or midsized retailers have enough in-house software development expertise to carry off such a project. Integrating a company’s IT system is often difficult enough without opening access to outside parties, particularly when a company has grown organically from humble origins.

The challenges of developing a successful retail API are numerous. Security is a paramount concern. An API that is vulnerable to attack could allow criminals to play havoc with both the retailer’s systems and those of its customers and partners.

Equally important are the robustness, accuracy, and reliability of the API. It must not return erroneous results for inventory queries, for example, or display inaccurate prices. Data corruption issues can quickly become business issues when dealing with mission-critical data.

Before embarking on an API project, companies must also ask themselves whether the data they plan to expose might actually undermine their competitive advantage. Make too much data available, updated too often, and you risk giving your competitors a microscopic view of the inner workings of your business. Careful planning is essential.

Naturally, all of these concerns translate into development costs, and there’s a definite “Field of Dreams” quality to any such undertaking. Ask any company that hosts an open source software project how many outsiders actually commit code changes on a regular basis and you’re likely to hear a discouraging figure. Similarly, just because a retailer builds an API doesn’t mean anyone will actually use it. Given the uncertain prospects of return, it can be difficult to justify such an investment.

An emerging role for developers It seems likely that intermediaries will step in to help small businesses overcome these hurdles. Service providers already assist small retailers with functions such as transaction management and credit card processing. It’s only natural that these or similar companies extend their services to include inventory management, potentially with API-based access.

Because every business is different, however, it’s equally likely that back-end APIs for retailers will remain largely bespoke affairs. That means demand for developers who understand the requirements and challenges of such projects will continue to grow. And because of the intricate relationships between retailers, their business partners, and customers, designing such APIs may be a process that’s difficult to outsource.

For small and midsize businesses that hope to compete with today’s giant retailers, Web-based APIs present an opportunity to open new markets in unprecedented ways. For many, however, this novel way of looking at the retail business means entering an unfamiliar world, which opens up fresh opportunities for software developers, as well.

This article, “Developers’ new opportunity: Retailers’ open APIs,” originally appeared at InfoWorld.com. Read more of Neil McAllister’s Fatal Exception blog and follow the latest news in software development at InfoWorld.com.