In the run-up to Christmas, major retailers have announced their sales figures for a seasonal peak sales period covering both Black Friday and Cyber Monday. Looking at these figures, one thing becomes abundantly clear: online retail is growing at an exponential rate.
Verdict Retail recently revealed a forecasted 44.9 per cent growth in online retail spending over the next five yearsi. By 2020, Verdict Retail predicts that 17.1 per cent of total retail sales will be online, up from the current rate of 13.8 per cent.
These figures demonstrate that e-commerce is no longer an optional additional sales channel, but has become a necessary one for retailers to remain competitive. According to an IMRG report from February 2015, shopping on smartphone and tablet devices accounts for 45 per cent of all ecommerce traffic in the UK, highlighting that retailers cannot focus solely on developing browser based platforms. However, in spite of this growing trend, many retailers’ online platforms are not adequately prepared to accommodate for such an increase in online demand.
During this year’s Black Friday sales, many major online retailers struggled to cope with the flood of online users looking for deals, including Zara, Schuh, John Lewis and Argos. This led to customers having to queue to shop on the Argos website and completely unable to access the John Lewis website at some points in the afternoon. Overall, figures by traffic-defender.co.uk suggested that outages and other website problems led to an estimated £4.33m loss across the UK.
Verdict Retail also revealed that UK online spending is expected to hit £62.7 billion by 2020, businesses need to proactively prepare for the challenges that this trend creates, enabling them to seize the opportunities it also brings. As in-house infrastructures are proving unable to keep pace with this growing online demand, more retailers need to look to cloud service providers to offer a more flexible, easily scalable and robust solution to develop and test their online platforms.
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. This is also the case when hosting high-traffic websites. Cloud-based solutions can greatly reduce the time and resources spent building retailers’ online platforms.
ASOS, one of the largest online retailers in the world, uses the flexibility of cloud-based solutions to scale with and support its approximately 20 per cent year-on-year growth. Due to the ease of setting up new development environments within its cloud-based solutions, ASOS is now able to activate a test environment within a day, a task that could have taken it two weeks with the in-house infrastructure. The time taken from testing to production also reduced from 16 weeks to 2 days.
When brick-and-mortar retailers expect a long term increase in customers, they must plan to have enough stores open, that each is large enough to accommodate for its expected footfall, and that there is inventory to accommodate for the increase in sales.
Similarly, online retail platforms must be developed and tested to ensure that it is able to scale and support increases in traffic and sales – both through peak sales periods and for projected long-term growth. In order to remain competitive online, online retailers will need to be able to respond to such needs quickly and cost effectively. A cloud-based infrastructure can meet this need.
Vivek Vahie, Senior Director of Service Delivery at NaviSite
Image Credit: Shutterstock/Petr Kopka