Sean McAvan, MD of managed service provider NaviSite Europe, says retailers aren't fully prepared for online growth.
Online retail is growing at an exponential rate. According to IMRG and Capgemini, e-retail now accounts for nearly 24 per cent of the total retail market.
Fuelled in part by online shopping ‘events’ like Black Friday and Cyber Monday, the UK’s online retail market grew by 14 per cent in 2014, exceeding the £100 billion mark for the first time.
By the end of 2015, the online retail market is expected to grow a further 12 per cent. The growth figures are evidence of the evolution of consumer habits; many now prefer to research and purchase products from the comfort of their own home.
It’s therefore clear that e-commerce is no longer an optional, extra sales channel, but a necessary one to remain competitive. In spite of this growing trend, many retailers’ online platforms are not adequately prepared to accommodate for this rise in online demand.
During the last Christmas period, nearly one-in-three UK shoppers experienced problems with their online order. IT glitches resulted in cancellations of deliveries from some of the UK’s largest grocery retailers.
On Black Friday, major retailers struggled to handle the increased traffic to their online platforms, leaving customers waiting over an hour in the queuing systems or entirely unable to access the retailers’ websites.
For online success, a retailer’s e-commerce platform is critical. Even short outages can significantly impact profits; if the platform is down customers will simply go elsewhere. Therefore, uptime, stability and keeping system performance levels stable throughout peak periods is imperative.
In order to take advantage of the online opportunity, retailers need to not only have an online presence, but make sure that it delivers a reliable and dependable shopping experience for their customers. In-house infrastructures are proving unable to keep pace with this growing online demand.
More retailers, both online-first and traditional brick-and-mortars, are therefore looking to cloud service providers to offer a flexible, scalable and robust solution to build their online platforms.
Building your shop in the Cloud
Commissioning the IT infrastructure necessary to host and support online platforms can require a lot of time and capital investments when done in-house. This cost in time and resources is further exasperated by the development and testing period necessary for the implementation. Infrastructure-as-a-Service (IaaS) solutions are significantly reducing the time and resources spent building online platforms.
Leveraging IaaS solutions means retailers are able to better build and grow their online platforms. By reducing the time needed to test, produce and roll-out new environments, retailers can quickly respond to growing and changing customer needs.
Even exclusively online retailers are finding themselves better equipped to scale up and accommodate for online growth with cloud based solutions; for example, e-tailer ASOS was able to reduce the time to move from testing to production from 16 weeks to two days. This reduction allows businesses to quickly roll-out new and innovative products and customer-facing applications.
The beneficial scalability and flexibility of cloud-based infrastructures is also relevant to physical expansion, enabling retailers to open new stores and centres quickly, and without installing hardware that can be costly and time consuming to manage.
When brick-and-mortar retailers expect an increase in customers, they prepare by building more stores, expanding staff and opening hours, increasing inventory, etc.
Similarly, online retail platforms must be developed and tested to ensure that they are able to scale and support increases in traffic and sales – both through peak sales periods and for projected long-term growth.
At lowered costs and in less time than in-house infrastructures, cloud computing is enabling retailers to respond to these needs and remain competitive.
About the author
Sean McAvan is MD of managed service provider NaviSite Europe.