What is an API and Can It Really Help my Business?

If you are thinking that an API is the less-hoppy cousin of an IPA, let me take a moment to explain what an API is. Application programming interface (API) is a software interface that helps pass data or access capabilities. This makes it easier for developers to create programs and pull together information and capabilities from other sources, instead of having to create everything in house.

Think of it as a data/technology mash-up with your systems (and branding!) using outside experts who have a host of various competencies, such as location verification, payments, inventory, etc.
For technologists, APIs are nothing new. What’s new—and what matters to retailers—is the increasing dependence on this technology and the new opportunities they are creating. Today’s retailers can use APIs to manage their business, reach new clients, cross borders, etc. As retailers want to grow and start reaching new markets, whether domestically or globally, it becomes more complicated to stay up-to-date from a technology and data perspective.

And it does not matter if you have a worldwide brand or a small start-up, the challenges to stay ahead are real. Fortunately, the proliferation of API options is helping smart retailers be more responsive and just savvier.

Retailers of all sizes are using APIs to innovate faster, create custom solutions quickly and better serve their customers. Capabilities, such as sales tax, address verification, mobile applications, all can be made better through the use of APIs. What in the past was either done in-house with costly and long delivery times, or even not at all, can now be delivered through a plethora of API options.
Where to start to consider API technology?  Here are four dimensions of how API technology can serve retailers:

Design: Use APIs to create the user experience that better connects you with your clients. With the right APIs, you can create advanced predictive analytics.  Barbara is shopping your site. With an API you can pull in Barbara’s purchase history and with another API her demographic data to generate a recommendation of products that buyers similar to Barbara have bought.  You could also use an API to retrieve a personalized interactive video experience to help make the recommendations come alive for Barbara on how her purchases – past and future – will work together.

Cloud Enablement: With the move of API technology to the cloud, developers can easily consume partner resources to create new and exciting applications. Consider the application that the team over at NetParcel built for Kickstarter sellers. Through the use of APIs, these developers created a simple tool to fulfill, ship and track Kickstarter rewards to overseas backers. The solution is tailored to helping Kickstarter sellers ship internationally.  It is like crowd-sourcing your problem solving. With specialized capabilities available in the marketplace in the form of APIs, retailers can get problems solved for them by a much broader set of innovative developers.

Data: Data-enabled commerce delivers greater marketing relevance and revenue opportunity for retailers. APIs can then harness the data so that you can be more efficient and smarter. The volume of data available is staggering but it does not help you if you are not using it to your advantage.  The example with our shopper, Barbara, is an example of using data to improve her experience. If you are in the US and Barbara is in Canada, there is another set of data that you need. You will need the trade classification data for goods to make it easier to ship cross the border. Accessing and managing the data for your shopper and for your back-office systems is easier through APIs.

Business Systems: Scale when your business is ready.  APIs can help manage costs, add capacity and features as you scale up to ensure efficient revenue growth. This is the area that can make a huge impact on your consumer relationships but something that they never see. With multiple channels and marketplaces that a retailer can be managing, you need to get your inventory right. If our shopper Barbara fell in love with that teal sweater, then you want to send her that teal sweater and not a note saying that the sweater is sold-out.

In a borderless world, the lines between physical and digital commerce are becoming increasingly blurred.  The more I speak with retailers about the problems that they want to solve one thing is clear –the problems may vary, but what’s the same is the speed to outcome– they need it now. APIs can help retailers connect to their customers seamlessly and completely, as well as better manage their businesses.

James Fairweather is Ph.D, Senior Vice-President Technology and Ecommerce for Pitney Bowes

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