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The Intersection of Retail, Customer Experience & Cloud in 2023

By Ori Weizman, Technology Solutions Lead at Silk

It's no longer acceptable for eCommerce websites to simply be available as modern user expectations for responsiveness have evolved significantly in recent years across industries. The retail sector has seen enormous advancements in this time, shifting everything from technology, consumer habits, and expectations, and how retail leaders approach strategic planning. Success is dependent on working with and embracing these shifts. All the while supporting unpredictable demand, delivering great customer experience and gaining insights from customer data. Each of these areas becomes critical in showcasing a brand's value to its customer base. And customer loyalty translates directly to revenue.

Meeting unpredictable demand

Retailers won't win the customer experience battle by having a highly performant eCommerce website, but if they don't have one, they will lose. About half of all consumers expect a web page to load in two seconds or less and 40% will abandon the site entirely if it takes longer than three. On the flip side, retailers that can't contract the performance infrastructure of their digital footprints during low-demand periods are throwing money directly in the trash. Retail businesses that understand this have or are in the process of moving their mission-critical workloads to the cloud to gain elasticity. People often forget elasticity implies expansion AND contraction.  

Apart from elasticity, public cloud providers offer cutting-edge technologies and game-changing architecture solutions. Moving away from the traditional "three-tiered" architectures consisting of web, application, and data layers and incorporating serverless, event-driven, and microservices-based architectures can eliminate performance bottlenecks while reigning in costs and reducing operational overhead. Case in point: lower market demand should result in lower operating costs; if you don't need the performance, don't pay for it. However, this is literally impossible when dealing with the upfront capital expenditures of maintaining on-premises hardware.

To be fair, the cloud isn't perfect. Runaway cloud costs can be an issue. The difference is that in the cloud you can achieve the performance you need while also achieving cost efficiency during both high and low-demand periods. For example, we know that the highest eCommerce conversion rates occur when page load times are between 0-2 seconds. However, the cost to achieve this page load rate with a user concurrency rate of 1,000 is vastly lower than it is for 10,000 or 100,000 users. If you're always paying to support 100,000 concurrent users even when you have just 10,000 or 1,000, you are doing yourself a disservice.

Customer experience rules all

With the dark clouds of recession forming, some business leaders are allowing fear to drive their strategic planning for 2023, jeopardizing customer experience investments. Promoting this course of action is a mistake. Global eCommerce is projected to reach $7T by 2025 with 86% of buyers willing to pay more for a great customer experience and 65% of customers finding a positive customer experience is more influential on purchasing decisions than advertising.

Despite the economic situation, there is a huge opportunity to increase market share and grow revenue for retail outfits in 2023 and beyond. The cost efficiency and elastic performance of operating in public cloud environments should be the first focus. And while technologies of the future such as AR and the metaverse have yet to go mainstream, there is little chance of taking advantage of emerging markets when stuck in the past, managing your own hardware. Controlling costs is essential, but where to prevent them is just as important. Invest in customer experience and control infrastructure and operational costs.

One emerging trend is Phygital retail which combines elements of physical and digital retail to construct a better customer experience. Creating this type of customer experience will require ongoing investment in a retailer's online marketplace and has begun to frame the ongoing fight for retail dominance.

Futureproof your business with data

The only way to meet retail customer needs is to generate accurate insights from your consumer data. The best place to do that is to run eCommerce websites on public cloud infrastructure. It's easy to understand why taking advantage of insight-generating technologies like AI, machine learning, and deep learning can significantly impact retail businesses. What's not as apparent is how leveraging on-demand cloud services for testing can save time and effort.

Consider a new machine learning algorithm that promises to be a game changer. In the cloud, development teams can immediately start playing with, testing, and researching the service with minimal cost. If that service shows promise, it's easy to expand these informal tests into a larger effort and proof of concept. If not, the team can walk away without wasting significant effort or cost. This is simply not possible when you're operating your own datacenter. The cost and effort required to simply get the software (and potentially specialized hardware) installed is herculean in comparison and comes with sunk costs which may be significant. What's worse is walking away becomes more difficult and the likelihood of teams wanting to "hold on to their baby" so to speak, increases.

The moral of this story is that the retail landscape is constantly and rapidly changing and ultimately, the experience provided to customers will determine success or failure. The way to meet and exceed the demands of those consumers is with agility and foresight which the cloud offers for those that can execute.

ABOUT THE AUTHOR

Ori is a Solutions Architect at Silk and a highly technical delivery manager with over 15 years of professional consulting and presales experience. Ori is a proven leader, driving the delivery of complex multi-year programs with teams of over 100 globally distributed resources. He has excellent communication and presentation skills and extensive experience interfacing with C-level officers. Ori is well-versed in the sales cycle including partner and customer relationship management and is a hard-working, passionate technology evangelist who loves to play with bits and bytes.