Retail Digital Transformation in 2023: Loud and in the Cloud
The cloud, combined with digital technologies, has reinvented how retailers connect with and serve their customers. Once the domain of megastores and e-commerce platforms with the budget and resources to support on-premises infrastructure, today the cloud is unlocking digital customer experiences for retailers of all shapes and sizes.
And merchants are loving it, able to create personalized and curated experiences across multiple channels while driving up conversion rates and average order value (AOV). But it wasn’t always like this.
History of eCommerce
The advent of e-commerce dates back to the 1960s, when IBM launched its online transaction processing (OLTP) system to process financial transactions in real time.
The technology was used in the development of a computerized ticket reservation system for American Airlines called Semi-Automatic Business Research Environment (SABRE).
The system connected computers in different agencies to a large IBM mainframe computer for simultaneous transaction processing, with all agents accessing the same information at the same time.*Photo credit: IBM Icons of Progress
The infrastructure cost $40M to develop and install, the equivalent of over $402 million in 2022.
The online shopping that we know today didn’t emerge until the internet arrived, with the first secure retail transaction over the web occurring in 1994. Amazon jumped on board the very next year, launching its online shopping site (Earth’s Biggest Bookstore), and the world never looked back.
Today, successful retailers leverage the cloud to support a range of digital business models, including online, in-store, and hybrid.
But while online shopping has become table stakes for most retailers (just about everyone has a website), optimizing efficiencies and profitability in the cloud depends wholly on the technology that stands behind it.
Agility & Resilience
With success closely tied to the ever-shifting (and fickle) habits of consumers, it’s imperative that cloud technology in retail supports rapid change. This was never more evident than during the pandemic, where US consumers jumped online in droves, adding $218.53 billion to projected US e-commerce sales in a single year (2020-2021).
Retailers that already had their cloud technology in order were able to pivot quickly and share in the rewards. Others were not as fortunate, including Neiman Marcus Group, JCPenney, J. Crew, and other leading brands that filed for Chapter 11 bankruptcy protection during the pandemic.
Retail in Real Time (and at the Speed of Light)
Speed is essential to agility and one of the most critical aspects of retail IT solutions in the cloud. Without it even the flashiest ecommerce site will fail:Speed is important on the backend as well. For example, at the start of their cloud journey, many retailers selected monolithic architecture for their ecommerce site, the practice of designing and developing a complete application in a single unit (frontend, API, services, load balancer, database, etc.).
This model made sense, since it delivered all of the ecommerce functionality retailers needed in one unit or product. Unfortunately, monolithic applications are not very agile. Instead, they’re tightly coupled, which means if something goes wrong with a particular function, the entire application could crash, incurring expensive downtime. Plus, new features are time-consuming and cumbersome to add, impacting scalability.
As a result, many retailers are shifting to microservice architecture, a collection of separate executable files that may be independently maintained and replaced without redeploying the entire application.
For example, an ecommerce app will have functionalities such as product listings, adding products to carts, checking out an order, and payment. With microservices, each of these functions are developed and deployed independently and integrated via an API gateway for a fully modular and composable technology stack.
Retailers can modify pricing, products, and workflows in the moment without disrupting the business. When (not if) the market changes, the retailer can adjust their infrastructure in real-time to ensure they stay in lockstep with consumer behavior.
A microservices architecture relies on system and data integration to connect all the moving pieces.
Enterprise integration platform-as-a-service (eiPaaS) technology in particular supports the flexibility of a composable technology stack, where legacy applications are replaced and/or connected with cloud-based applications.
With streamlined dataflows from retail information systems, the company benefits from accurate analytics, critical in retail forecasting to predict inventory and demand. These agile connections enable the business to easily adjust its infrastructure to leverage new innovations without incurring downtime to perform the work.
Digibee has partnered with many successful retailers to implement system and data integration. A good example is Payless, an international, self-serve footwear retail chain. By implementing Digibee’s eiPaaS, the company was able to integrate a secure ecommerce platform across more than 200 stores in 15 countries, in less than 30 days—with zero downtime.
With Digibee, Payless has optimized its agility, maintaining business as usual even during surges in sales around high-volume events such as Black Friday.
Retail in 2023 & Beyond
A healthy future depends upon the retailer’s ability to deliver amazing digital customer experiences. To achieve these results, the business must rapidly adopt new innovations as they emerge, or else risk falling behind.
A microservices or composable architecture plays a critical role in these outcomes, enabling the organization to easily replace any component with something better. Supported with eiPaaS technology, retailers are able to rapidly evolve their business.
While this capability was critical through the pandemic, it also safeguards the business from disruptions in the future, allowing retailers to accommodate whatever lies ahead. And there is plenty to accommodate. While some trends are already underway, others are just around the corner:
- Omnichannel (and optimized) customer experiences including digital, in-store, hybrid, and curbside with face-to-face, computer, and mobile interactions
- Cashierless checkout
- Virtual fitting rooms
- Live streaming
- Integrated loyalty programs (protect against customer churn)
- Links to external marketplaces (extend customer reach)
- New technologies (NFT, the metaverse, AmazonGo Stores, etc.)
Today, online shopping is a critical capability for any retailer, with success depending upon the agility and resilience of the business in the face of change. Those retailers able to keep up and even predict what’s next will be the frontrunners, securing and increasing their fair share of the market.
Let Digibee Enable Your Retail Digital Transformation
Digibee’s eiPaaS technology enables a cloud-based, composable infrastructure, leveling the playing field so retailers of all sizes can deliver a modern shopping experience while amplifying their voice and brand in the cloud. Contact us to learn more or schedule a demo.
- A one-second delay in page load time = a 7% reduction in conversions
- 53% of mobile users will abandon a site that takes more than three seconds to load
- A slow website negatively affects the decision to buy for almost 70% of customers