We recently hosted a webinar where we spoke with two experts about the ways retail companies can utilize cloud technology to stay competitive in 2021 and beyond.
As Senior VP at Emarsys, Alex Timlin is an Entrepreneurial Executive specialising in Go-To-Market, Product Marketing and Product Leadership with 15+ years’ experience building and managing high performing teams in multiple geographies and across multiple industries for fast-growing SaaS businesses.
As Zalando’s Director of Engineering, Jan Hegewald is responsible for the strategy, product management, and the engineering of Zalando’s central product platform that processes up to 50,000 offer updates per second. He tripled the throughput of the product platform and built a new department, Category Experience, from scratch, and also introduced flexible team structures.
During the webinar, we covered the following:
- The biggest challenges retailers are facing right now
- Technology trends that are here to stay
- How cloud and open-source technologies can support retailers and eCommerce companies
- How companies running on traditional platforms can get started on their path toward digital transformation, and the most important things to watch out for
Watch the webinar – or read the summary below.
Technology and retail trends that are here to stay
Jan and Alex both mentioned a few prevalent trends that retailers will want to take note of:
1. Increased reliance on mobile devices
It’s no secret that there’s a new way customers engage with brands: mobile apps.
Alex stated that a whopping, “62% of travel in the US started and ended with a mobile app. Because of the pandemic, people relied on mobile more for access to stores and commerce. That won’t go away.”
People use apps to do just about everything these days from connecting with their BFF’s on Instagram to purchasing a new pair of shoes at Zalando.
2. Video interactions with brands
Aside from mobile app usage reaching an all-time high, people now use Zoom and other video tools to interact with brands digitally. This trend will continue to rise as we adjust to a more hybrid work setup. We can no longer see retail and eCommerce separately. It just won’t work. We must see things more holistically, and find ways to leverage our data to seek new business opportunities.
3. More demand for sustainable products
Today’s consumers are highly invested in researching the materials used or the water consumption necessary to create a product. Jan mentioned how at Zalando, “you can buy and sell used items that you’ve been inspired by or that you’ve bought that are still in good condition, but you don’t use anymore”. This practice of buying and re-selling has satisfied the sustainability demands of their customers.
4. Personalized shopping experiences to leverage data
Another trend in the retail space is a need for personalized online experiences. In Zalando’s case, customers want curated items. This means not only buying one outfit, but instead getting suggestions for a complete outfit.
Even though this process is personalized, it’s largely driven by AI. In this way, the customer has a seamless and unique experience, while a company like Zalando also makes their customer data work for them.
Traditional retailers can learn from companies like Zalando: With the switch to eCommerce comes an opportunity to understand and leverage data to scale and discover new opportunities for growth.
Biggest challenges retailers are going through at the moment
Jan and Alex suggested that the challenges of the retail industry can be put into two categories:
1. Hesitations surrounding the implementation of AI technology
Customer expectations are on the rise and they expect to receive items faster. Take Amazon Prime’s same-day delivery as a “prime” example. eCommerce companies can also use technology to execute this in a sustainable way, but there is some hesitation about its impact on the customer experience.
Alex brought up that AI is a bit of a buzzword that often gets a bad rap. He goes on to explain, “The adoption of AI and using it to enhance that personalized experience and doing the hard work for the customer, that’s the trend that’s going to continue.”
He says, the questions retailers need to ask should be, “How do you provide less friction during the customer experience and greater efficiency as a business? That’s where data comes in and how you put your data to work... not just about how we store data, but how we leverage it?”
2. Demand unpredictability & the roadblocks to scalability
Another prevalent challenge is how unpredictable demand is these days - both online and offline. Businesses that make the majority of their revenue in store are having to play catch up right now, which means they need quicker access to a flexible tech stack and the personnel skills to work remotely.
When looking at scaling and the need to turn around business models to embrace an eCommerce approach, choosing the right technology and learning how to implement it requires immense effort. But it is hugely worthwhile, because better access to information gives retailers the ability to make agile decisions.
Jan recommends taking an incremental approach: “If you want to make a move from on-premise to fully on-cloud, I think that’s a big initiative. But nothing stops you from starting and experimenting. Start small and then extend that by removing legacy on-premise components step by step. I would recommend starting to build this knowledge rather than waiting for a big bang migration.”
How cloud and open-source technologies help retailers and eCommerce scale into the future
Let’s talk a bit more about the benefits of scaling your eCommerce business with open-source cloud technology:
- Scalable data centers: Helps you avoid problems like lagging power supply, lack of space, and ventilation for hardware when businesses attempt to build and maintain their own data centers.
- Flexible operation costs: Instead of having fixed costs, cloud technologies like Aiven offer variable costs so that you only pay for what you use.
- Safe test environments: Cloud technology services allow you to test large load environments similar to your production environment, so that you can work out any potential issues before going live.
- Expand your services: Cloud technology companies offer value-added services like managed data storage. These allow you to implement more use cases within your own company and have the bandwidth to be more creative.
- Better productivity: Open source enhances productivity. Instead of starting from scratch, you’ll have battle-tested technologies that make it easier to adapt. This lowers the technology barriers to entering new markets and extending functionality.
- More innovation: Take advantage of new infrastructure and innovations throuigh crowd-sourcing and turn what works for others into something that works for you.
Alex mentioned one specific example of innovation: Charlotte Tilbury completely closed their physical stores and began to offer virtual beauty consulting and virtual styling sessions. If they had been using their previous technology stack, this would have been impossible. The true power of cloud technology is the incredible level of flexibility and adaptability it gives retail businesses.
How to prepare your business for digital transformation through cloud and open-source technologies
For traditional retailers, the big question now is: how can I transition 95% of my business from offline to online? Despite the desire to make it happen, digital transformation doesn’t happen overnight.
Here’s how you can take an incremental approach:
- Step 1: Mindset/philosophy/culture shift - Ask yourself: What can I do on-cloud to improve my business? What opportunities will become available to me when I migrate from on-premise to on-cloud? Why does this matter?
- Step 2: Align business goals with open-source and cloud tech functionalities - Ask yourself: What do I need from cloud services? How does this affect my decision making and goal-setting?
- Step 3: Prepare your architecture - ideally, shift to a microservice-based one and start looking into event-driven architectural patterns
- Step 4: Prepare your team - find or hire an internal team with the right cloud development and operations knowledge, experience, and skill set.
- Step 5: Develop a clear migration strategy - Ask yourself: Which of my business processes need to be in the cloud? What are our goals and milestones for migrating from on-premise to on-cloud?
- Step 6: Align with all stakeholders - Finance, development, and engineering teams must all be on the same page in regard to cloud utilization - what do we need from cloud tech providers?
- Step 7: Use the data to efficiently improve products, customer experience, business processes, and your brand.
- Step 8: Consider managed services vs DIY. In this new technological environment, keeping data management and the related costs under control and up to date is a challenge. To add to that, there is the pressure to reduce overhead costs and do more with less. This is why more and more retailers and e-commerce companies opt for managed services: to speed up time to market, and ensure that their engineering teams focus on what really adds value to their business.
Migration vs digital transformation
One important thing to note with the above process is that there's a big difference between migration and digital transformation:
- Migration: moving your processes from on-premise to on-cloud.
- Digital transformation: full understanding of your business goals and the opportunities of open-source and cloud technologies.
Why does this difference matter? It’s about experiencing not just short-term, but also long-term benefits.
Alex adds: “Rather than focusing on shifting your core operations into the cloud, look at how cloud technologies make sense for your business. If you’re going to work the same way on-cloud as on-site, that’s a migration, not a transformation. To get the most out of it, a change in mindset, philosophy, and DevOps needs to happen with any technology purchase.”
Ready to bring your retail business to the future?
As a leader of a retail business today, it’s critical to have agile decision-making skills and the right data to support your business decisions. Combined with increasing demands from customers for convenience, personalization, and flexibility, adaptation is needed to distribute your workforce and have the right technology to power your business remotely.
Open-source and cloud technologies boost your retail business by helping you scale flexibly and make efficient and timely business decisions. As a result, you can take advantage of new infrastructure and innovations that give your business a competitive edge.
We’ll leave you with this insight from Alex: “The digital world is changing more quickly than any one software provider can forecast. We’re constantly building and releasing new technologies with our open-source and cloud partners to make sure that we’re not just scaling up and offering more capacity, but innovating and offering new opportunities to make sure we’re keeping up with the changes in the market and consumer behavior.”
If you’re interested in hearing more, check out the full webinar.
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