The "headless" trend, exemplified by headless brands. How will "decentralization" transform business and advertising?

The digital world is transitioning into a new era known as "Web3.0," where a trend is emerging to decentralize rights to individuals rather than centrally managing information. The concept of "Headless Brands," born from this context, has recently become a hot topic. Meanwhile, in the e-commerce world, a new approach called "Headless Commerce" has emerged, enabling more flexible, customer-centric shopping experiences. We explore hints for future business strategies from these new movements.

What " Decentralization"Symbolized by Headless BrandsMeans

Traditionally, when companies sold products or services, they would set the brand image, product/service content, and sales strategy, then deliver it to users. In other words, products and services were unilaterally delivered from the company (the head) to the user. Everything shaping the brand, including product design and advertising, was controlled by the company.

Recently, however, a new phenomenon called headless brands has emerged and is rapidly gaining attention. At SXSW 2022, the world's largest creative conference held in March 2022, a session titled "The Rise of Headless Brands" was featured.

Headless brands are brands built on a community-based model, rather than the traditional one-way delivery of products and services from the company to the user. In a headless brand, users are not merely consumers who buy or use products; they are members of the project. They contribute to the project in various ways—planning, development, publicity—and gain benefits in return.

Examples of Headless Brands

The cryptocurrency "Bitcoin" is arguably the quintessential example of a headless brand. While Bitcoin is arguably the most widely recognized cryptocurrency brand, it actually has no central administrator or governing body. Its design and mechanisms were created and developed by an undefined community. A system of mutual user oversight has maintained its core rules.

Another initiative gaining attention as a headless brand is the "WICKED SUNDAY CLUB." This is a brand and community born from a collaboration between NFT artist Twisted Vacancy and IT company MetaFactory. By purchasing a membership pass, members gain access not only to exclusive items like T-shirts and wearables but also to a dedicated chat. There, they can interact with the artist and other members to collaboratively create products inspired by Twisted Vacancy's work.

Background of Headless Brands

The emergence of such headless brands can be seen against the backdrop of recent trends in the digital world. We are currently in a transitional period, moving from the "Web 2.0" era where giant platform operators controlled all data, to what is termed the "Web 3.0" era where users themselves share and manage data. Simultaneously, initiatives like "data democratization" have emerged, making data previously accessible only to specialists available to a broader audience. In essence, a major trend is "decentralization" – moving away from concentrating information and assets in a few places and instead distributing them among many users. Headless brands can also be seen as part of this "decentralization" context.

Decentralization in E-commerce: How Headless Commerce Enhances CX and UX

The trend of "decentralization," exemplified by the aforementioned headless brands, is also emerging in other fields. One such example is "headless commerce" in the e-commerce industry. Headless commerce involves separating the front-end (head) – the customer-facing parts like e-commerce sites and apps – from the back-end systems handling tasks like payment and shipping. This separation enables flexible delivery of customer experiences across various channels.

Traditionally, the front-end—the customer-facing channels like e-commerce sites, apps, and external marketplaces—was integrated with the back-end systems. This integration often made it difficult to flexibly and quickly adapt front-end designs to user preferences or changing circumstances, as changes depended on the back-end system environment.

However, headless commerce separates the front and back ends. This allows for smooth improvement and expansion of the front-end—the customer touchpoints—without being constrained by the back-office environment. It also makes it easier to change the presentation and sales methods per channel or per brand.

As touchpoints with users diversify and become more complex—spanning not just proprietary e-commerce sites but also apps, social media, blogs, external e-commerce marketplaces, physical stores, and events—and as payment and delivery methods proliferate, it becomes crucial to rapidly improve and expand the front end according to the situation. This ensures a more convenient and comfortable shopping experience. In this sense, it represents a shift away from designing around existing systems, aligning with the broader trend of "decentralization."

Furthermore, it may enable interactive presentation methods, such as showing users what they are likely to want at that moment in real time, rather than the uniform approach of simply presenting what the company wants to sell or show. The purchasing experience becomes more personalized and tailored to the user, ultimately leading to increased engagement and customer satisfaction.

Furthermore, a key benefit of headless commerce is the ability to focus more on the approach of "how to make users aware and interested," without worrying about system constraints. While listing on major e-commerce platforms is crucial for expanding sales channels, it's difficult to tailor the presentation based on the user or the product. Therefore, on your own e-commerce site, using headless commerce to ingeniously design the front-end and thoroughly tailor the approach to user needs could become one strategy to survive the intensifying competition in the e-commerce market. It might also contribute to advancing the "decentralization" of the e-commerce market, which has been concentrated on major platforms.

User-First Advertising Strategies Enabled by "Headless"

We've covered "headless brands" and "headless commerce" thus far. Finally, let's explore how the insights emerging from the rise of "headless" can be leveraged in advertising strategy.

As "decentralization" accelerates, the perspective of "empowering users with certain rights and choices, encouraging their active participation" will become increasingly important. However, how advertising itself will "headlessize" remains largely unknown. Precisely because of this uncertainty, we can see room for developing new solutions and services.

For instance, we may see more cases where users voluntarily advertise products or services. The entertainment world already has movements like "support ads." Here, fans of idols, for example, pool funds to purchase advertising space on station or street billboards, large digital screens, and other platforms to display their own ads, aiming to boost their idol's recognition. Such initiatives could spread to other sectors. If the effect of users' voluntary promotion leads many people to purchase that product or service, it could enable price reductions or generate funds for new product development. Designing a system offering significant returns for users should be a major point in "headless" development.

As this trend develops, users themselves may evolve into "marketers" who analyze their target audience, strategize when, where, and what kind of ads will be most effective, and formulate advertising strategies. Indeed, the number of individuals handling everything from content creation to marketing, like YouTubers and bloggers, is growing. With the availability of easy-to-manage ads like social media advertising, even on low budgets, and the widespread use of free access analytics tools, the groundwork is being laid for anyone to become a marketer.

Moving forward, marketing and branding will likely require a perspective focused on how to encourage users' voluntary actions. Rather than companies unilaterally broadcasting brand messages to users, creating systems where user communities support brand management could fundamentally transform advertising strategies.

"Headless brands," born from the decentralization trend in the digital world, and "headless commerce," emerging from the need to flexibly respond to diversifying user preferences and purchasing behaviors. What they share is placing the user at the center. Understanding these trends and designing services and marketing strategies from the user's perspective could be the key to creating new businesses and strategies.