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The future of ecommerce: platforms and people

Innovation Leadership Summit

Who would be the boss of a retailer? Not me that’s for sure. It must be exhausting. As you get your head around one consumer trend the next one sneaks up and smacks you round the back of the head. Show rooming, pop ups, experiential consumer hubs, next day delivery, same day delivery, next five bloody minutes delivery… it is just impossible to keep up with changing consumer habits and ways to consume. Today’s transformative technology is tomorrow’s pointless investment – another in the long list of things you regret spending money on.

And consumers are an increasingly demanding bunch. They want everything faster, cheaper and more personalised. You can’t just deliver a product you have to ‘add value’ and create an ‘interactive and emotionally engaging experience’. Consumers use multiple channels often at the same time and make no allowances for slippages between them.

Added to this is the increasing seasonality of shopping habits. Peaks in demand caused by events such as Black Friday, pre- and post- Christmas sales, mid-season sales and one off price-drop events mean that ecommerce platforms need to be able to withstand huge surges in traffic. A crash during one of these events could mean both lost revenue and a loss of reputation, and the associated reduction in repeat custom that goes with it. It is also increasingly difficult to predict where the peaks will lie. Is Black Friday in or out? Does Cyber Monday actually exist anymore?

Monolithic systems are no longer fit for purpose

In this maelstrom of change one thing is clear – the traditional platforms that were built for ecommerce are no longer fit for purpose.

The older ‘monolithic’ systems, which incorporate every aspect from initial browsing to payment and delivery are clunky and inflexible; their ability to develop and adapt to shoppers’ needs can be likened to the Titanic approaching the iceberg. Increases in scale require the purchase and connection of myriad new servers, a fault in one part can take out the whole, and innovation outside of the pre-existing structures can be more laborious than the gain in revenue merits. None of these factors would make it easy to steer the retail vessel away from the impending reduction in profit and into clear waters.

Using a single system to house an entire platform has three main issues. The first is that the servers need to be able to withstand the huge peaks in demand, whilst laying dormant for much of the year. This alone is neither efficient nor cost effective. The second is that with the global expansion of many retail firms, a platform sitting on servers housed in one country won’t necessarily be able to provide the speed and reliability demanded by online consumers in another country. And the third issue is that by housing all the servers you need in one place, they become susceptible to any number of issues with no back up; if the servers crash, there’s no easy response. This can lead to a huge potential loss of income and reputation.

Add to this the consumer’s growing desire to be treated as a unique entity, with their preferences, needs and shopping habits taken into account. Retailers need to be able to mine data (within the EU’s General Data Protection Regulations) to incorporate in to their ecommerce offering,

So it’s clear that the one-size-fits-all approach of the old ecommerce platforms is outdated, but to build a bespoke platform from scratch is also a huge undertaking. To do this would take an army of skilled developers who are committed to developing and redeveloping the platform to stay ahead of the game. Again, a retailer would need to look at whether this is cost effective to implement. I’m guessing the answer is generally not…

SainsburysClicknCollectA cloud-based micro-services approach

The solution to this problem is hyperscale ecommerce using cloud-based services, not just for data storage, but for hosting different aspects of the ecommerce platform in smaller, more manageable sections. By separately managing the various functions, it allows them to be developed, maintained, expanded, and replaced without affecting the other parts. This in turn makes the whole system more robust, more scalable, and more adaptable to the specific needs of the retailer and its customers.

Consultancies such as Amido (partners of this titles Innovation Leadership Summit) have been working with some of the most innovative ecommerce firms, including online fashion retailer ASOS, helping them create a unique consumer experience that can be scaled up, and built with flexibility for future expansion. ASOS moved to a cloud-based micro-service approach, hosted on Microsoft’s Azure platform, when their existing platform started to get in the way of their growth and innovation. By separating each of their functions they are able to innovate and grow, exploring emerging services such as augmented reality and conversational commerce, without negatively impacting their core business.

Cloud-based hyperscale ecommerce also allows the retailer to shop around for the best solution for each service; deciding whether buying, renting or building that section would be the most cost effective. In this way, each retailer can focus on their unique selling points – concentrating on developing those aspects that will make them stand out in an increasingly saturated market.

Offering a personalised experience

In this market it is the unique, the reliable and the innovative that will prosper; but it is also the retailers who offer a personalised experience who will attract and maintain a loyal customer-base. Using artificial intelligence to mine the wealth of information on how shoppers browse, respond to marketing, use social media, fill their baskets and complete their transactions allows retailers to create individual shopper profiles. This customer insight can then be used to target shoppers in a personalised way – ultimately leading to an increase in profit.

Department store Fortnum and Mason’s award-winning cloud-based ecommerce platform was built with the customer at the heart of it’s redesign. The store is famous for its exceptional in-store customer experience, and this needed to be mirrored in its online presence – including the handling of complex orders with delivery to over 100 countries. The implementation of this new site saw a huge increase in sales year on year.

Of course, the shopping experience is different in every country – things such as taxes, payment and delivery options, and local customs vary hugely. So as retailers use their online presence to expand into new territories, the ability to offer a more localised service becomes more important. Similarly the need to be able to host this reliably and consistently must be a factor – cloud-based ecommerce platforms again proving their worth.

Looking ahead to the future

Keeping up with customers’ needs and shopping habits is fundamental for continuing profitability Already, new products on the market are again changing the way people shop. Devices such as Amazon Echo and Google Home are taking their places in people’s homes and allowing them to create shopping lists and order products without even needing to open a browser or app.

The emergence of social media channels such as Instagram and Snapchat being used in retail is also having an effect. People are able to link directly to an ecommerce platform from social media. Soon they’ll be able to order a product they see simply by touching the image of it.

Consumer needs will always dictate the nature of ecommerce, but the solution isn’t simply to go bigger. By breaking down the Titanic-sized ecommerce platforms in to smaller, more manageable chunks, and by mining the wealth of consumer data available to develop deeper insights into customer behaviours, retailers can steer clear of the metaphorical icebergs and make their way towards the new commercial opportunities opening up to them on an almost daily basis.

Widgets Magazine
About Mike Altendorf 8 Articles
Mike was the founder of Conchango, one of the UK’s most successful digital consultancies and systems integrators. Mike has many years of experience in consulting services and technology, founding Conchango in 1991 and building it into a £45m+ revenue business before it’s sale in April 2008.
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