E-Commerce In The Cloud: It’s Time To Make The Move
RSR’s recent benchmark on the state of cloud computing in Retail identified E-Commerce as the top candidate for deployment to the Cloud. At this point, it would be a surprise to me that any forward leaning retailers would think differently; after all, the consumer is in the Cloud 24X7, and if retailers want to meet consumers where they are, shouldn’t they be there too? I know the arguments; loss of control, concerns over data security and privacy, etc. But the potential benefits are far greater – and they all have to do with three things: dynamic scaling to meet demand, and better agility at adding new features/functions as consumers demand them, and the ability to modernize the legacy operational portfolio without a complete lift & replace.
Let’s get the issue of dynamic scaling out of the way first. Only 26% of the retailers we queried indicated that “<the> need <for> an elastic computing environment that can adjust to seasonal swings in business volume” is a top-three reason to move to the Cloud. But retailers’ top opportunity to be addressed by a move to the Cloud is to create “the ability for the business to adapt to market changes more quickly”, and I would argue that that includes the ability to adjust to sudden spikes in volume that are driven by promotional activity. Retailers also express a desire to create “the ability to quickly add new features on top of our legacy business applications”, which we concluded is a bow to practicality – retailers will be living in a hybrid computing environment for a long time, if for no other reason than that there’s only so many things they can address at one time.
But why E-Commerce first? Surely, the E-Comm platform is one of the more recent applications that retailers have deployed! That was the subject of a recent webinar that I participated in with Google. Here’s how I explained the issue:
Today, the “front door” to retailers’ shopping experience is in the digital domain. In fact, consumers often don’t “go” to a physical store to start their shopping journeys; today, they carry “the store” around with them in their purses and pockets. The essence of the retail industry’s “New Normal” is that shopping is a 24X7 activity, and consumers want focused and relevant information and offers about products and services, even when they intend to complete their shopping journey in a store.
“Retail Winners” (over-performers) are even more bullish on the future influence of digital side of the selling environment on total sales; with 42% of those retailers indicating that 50% or more of their sales will be influenced by customer-facing digital channels by 2021, according to one recent RSR benchmark study.
With each day that passes, the importance of the eCommerce platform as the front door to retailers’ selling environments only increases. And the importance of performance is highlighted under demanding conditions (for example, on Cyber Monday, Boxing Day, or Singles Day).
And here’s another challenge: according to RSR’s research, over 40% of retailers admit that their “existing technology infrastructure is preventing us from moving forward”, the implication being that the on-premise solution portfolio cannot easily address new functional or performance requirements. As more and more of consumers’ shopping journeys begin in the digital domain, this becomes a bigger and bigger inhibitor to success.
What Consumers Say About eCommerce Performance
If you’re not inclined to believe the research, believe the consumer! To get shoppers’ perspective, RSR conducted a private poll of approximately 800 consumers in June 2019 to test their sensitivity to poor performance or unavailability of retailers’ eCommerce sites. Their answer to the most basic question, “Have you ever left a website because it’s too slow?” revealed that 91% have, indeed. And what’s so interesting about that is that it didn’t matter what age the consumer is – the answer was still “yes”.
To the question, “What did you do next?”, consumers indicated an all-too-easy willingness to abandon the retailer, at least temporarily … with 45% of customers indicating the desire to Google for similar products immediately. Next, when we asked consumers, “How does poor website performance affect your opinion of a retailer's brand?”, 35% told us that they take a very dim view of retailers who waste their time with poor performance – 30% indicated that they’d think twice before visiting the retailer’s site again, and 5% called the experience “intolerable” and promised to never again visit the site.
Retailers have to ask themselves, are they willing to risk alienating 35% of their eCommerce customers? Ignoring the issue creates a potential exposure for retailers. And the problem is real; of the nearly 800 consumers RSR queried, a stunning 85% indicated that they have experienced slow or unavailable eCommerce sites up to 5 times in the last six months. To get a sense of how much money could be at risk; the largest group of consumers (42%) indicated that they spend between $51-100 each time they purchase something on the eCommerce site.
Some industry studies have shown that every second of web latency can result in a 7% loss in conversion. But in another recent study, RSR found that time-to-complete load times for 80 retailers systemically underperformed customer expectations, averaging 9.5 seconds on mobile and 16.6 seconds on desktop.
Do the math! The message is unambiguous: meeting consumer expectations for a fast and flawless eCommerce experience 24x7 should always be top-of-mind. Anything less is flirting with disaster, because the number of customers that are using the E-Commerce “front door” is growing – fast.
The True Value Of The Cloud
Cloud is fundamentally a real-time and data-oriented approach. It is driven by the availability of real-time and accurate information that can, in turn, be used to personalize the experience at scale. As a platform, Cloud also offers dynamic scalability and resilience that businesses would have a difficult time achieving on their own. Additionally, technologies are available today that facilitate the real-time integration of customer, employee, and partner facing capabilities with legacy on-premise business applications. Finally, cloud-native solutions open up possibilities for faster development and deployment of new features and functions, in keeping with consumer adoption of technology in their lives.
For those retailers who want to move forward with cloud initiatives in the most successful way possible, RSR offers the following stepwise suggestions (excerpted from our recent report on the state of the Cloud in Retail):
Design The Consumer Experience
In each of the steps in a consumer's path to purchase, the consumer is leaving digital footprints that leave new clues about the needs they are investigating. Determine those places where you can effectively personalize the content and presentation to encourage the consumer to take the next step.
Expect To Operate In Dual Mode For Years
The eCommerce presentation is the front door to the retail experience. With that in mind, eCommerce has to be integrated to the legacy (store) environment.
Develop A Roadmap
It should go without saying: “Rome wasn’t built in a day”. Each retailer must prioritize its business functions and decide for itself what the most important candidates for modernization are.
Get Guidance From Those That Have a Vested Interest In Your Continued Success
As it happens with any new breakthrough technology, the world is suddenly awash with cloud computing experts. Retailers should seek help from technology partners that have the most invested in their continued success. Those partners that are the most willing to bring new ideas to the table, to co-innovate, and to help the retailer gain a competitive edge. One of the industry’s oldest truisms applies to technology providers too: it’s easier to keep a good customer than to find a new one.