🧠 Knowledge Series #8: What are Webhooks?

...and how are they different from APIs?

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Hi product people 👋,

You’ve probably heard engineering teams refer to webhooks during a discussion about an upcoming feature. You may also have come across the term if you’ve spent time reading API documentation. Webhooks can be quite a confusing concept to grasp and I remember when I was first introduced to them when I worked in eBay’s shipping team, I found it pretty difficult to distinguish between APIs and webhooks. 

The simplest analogy is to think of webhooks as the waiter who brings you your food directly to your table as soon as it's ready - so that you don’t have to keep checking in with the kitchen every minute to ask when it’s likely to be ready. But if that makes no sense now, hopefully by the end of this it will.

Coming up:

1. ↩ When might webhooks be used?

2. 💳 Examples of webhooks using payments

3. 🧐 Webhooks vs. APIs: what are the differences?

4. 📝 Best practices to consider when using webhooks

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Understanding when webhooks might be used

Before we get into the technical details, let’s explore some scenarios in which webhooks might be used in a product development context:

1. Sending notifications – webhooks can be used to send notifications to users of products when a specific event happens. For example, you might want to send a notification when a package’s delivery status is changed from ‘processing’ to ‘out for delivery’. Webhooks can be used to ‘listen’ for this status change and trigger the correct notification accordingly.

2. Integrations with third party applications – webhooks might power some aspects of an integration with a third party app. A CRM, for example, might use a webhook to update a specific customer’s personal account information.

3. Monitoring and alerts -  monitoring tools can utilize webhooks to send alerts to incident management or communication systems when predefined thresholds are exceeded, ensuring timely responses to issues.

Broadly speaking, webhooks are a simple way for products to receive notifications when certain events happen. So let’s take a look at a real world example in more detail to bring some of the more technical details to life.

Example – using webhooks in a payment context

Webhooks work by allowing products to ‘listen’ to and ‘subscribe’ to specific events. Before we get into the payments example, let’s revisit our restaurant and chef analogy to get to grips with the basic principle of webhooks and why they’re useful.

Eating at a restaurant - without webhooks