For some people, the holiday season is the most wonderful time of the year — but for retailers, it’s the busiest. Hordes of eager gift buyers crowd stores and websites throughout the months of November and December, which can account for up to 30 percent of a company’s annual sales. On peak shopping days like Black Friday, online merchants see upwards of three times more traffic than usual.
To take advantage of this flurry of activity, retailers must quickly expand their infrastructure and operations to meet surges in demand. This is no easy task: In 2016, scalability problems on critical days likely cost businesses billions of dollars. Several major retail sites experienced lengthy outages due to high traffic volume, while others loaded so slowly that shoppers moved on to competitors. Both in stores and online, high out-of-stock rates on Black Friday and Cyber Monday led to millions of dollars in lost sales.
What’s the solution? Forward-thinking retailers are using cloud technology to handle the holiday rush in 2017 and beyond. And it’s not just other retailers that can benefit from this type of planning — it’s any business that may experience sudden and extreme surges in activity, such as financial institutions, media companies, and manufacturers. Here are some of their strategies.
Plan for elasticity to keep sites up and running during spikes
The challenge: For the first time in U.S. history, consumers plan to spend more of their holiday budget online than in stores in 2017, according to Deloitte. That means retailers should expect even more web traffic than during a typical holiday season, especially on key shopping days like Black Friday and Cyber Monday.
The solution: To avoid losing customers and damaging their brands as a result of unplanned downtime, savvy technology leaders are stress-testing their infrastructure well in advance and using machine learning to forecast demand. Many will rely on cloud solutions to dynamically add more compute and storage resources as site traffic climbs, then scale down automatically when demand wanes. UK retailer Lush, for example, migrated its entire ecommerce platform to Google Cloud after Boxing Day traffic crashed their website for two years running; in addition to preventing outages, the move reduced their infrastructure hosting costs by 40 percent.
The takeaway: Any business can leverage cloud resources to prepare for sudden bursts of activity, whether they’re a likely scenario or a distant possibility. For example, insurance companies can use cloud solutions to increase their processing capacity when unexpected events such as natural disasters trigger a spike in claims.
Speeding up transactions to maximize revenue
The challenge: Fifty-nine percent of consumers plan to make holiday purchases using their phones in 2017. These on-the-go shoppers have a need for speed: More than 50 percent of visits are abandoned if a mobile site takes more than three seconds to load. Even in store locations, shoppers frequently jump ship when it takes a long time to make a purchase.
The solution: To reduce latency on their mobile sites and apps during holiday traffic surges, astute retailers will use cloud solutions that deliver content across globally distributed points of presence. Cloud technology can also help shorten wait times — and long lines — for busy shoppers who purchase gifts in person. Many retailers have adopted cloud-based mobile point-of-sale solutions that enable sales associates to take credit card payments anywhere in the store. Since information is stored in the cloud rather than on premises, these systems have the added advantage of eliminating server maintenance and integrating seamlessly with other data sources, such as loyalty program records and recommendation engines.
The takeaway: Other industries can also seek out opportunities to ramp up revenue by speeding up customer experiences on mobile sites and apps, at physical branches, and during phone interactions. For example, media companies can use cloud-based content delivery networks to reduce page load times, making it possible to show more ad impressions.
Aligning inventory more closely with demand
The challenge: In 2016, 77 percent of holiday shoppers abandoned retailers when they couldn’t find what they were looking for, and they did so an average of four times over the season, the National Retail Federation reports. That’s a lot of missed opportunities to sell someone a trendy toy, giftable gadget, or other sought-after item.
The solution: Leading-edge retailers will avoid this fate by deploying a real-time inventory system in the cloud, making it easier to track demand and keep stores and warehouses fully stocked on peak holiday shopping days. Real-time inventory capabilities also help retailers facilitate omnichannel purchases, which have become more common over the last few years: Fifty-seven percent of North American shoppers who participated in a recent survey said they’ve bought online and picked up in a store.
The takeaway: In fields like manufacturing and consumer packaged goods, closely matching supply to demand can help manage costs, both during busy periods and throughout the year. Cloud solutions allow businesses to quickly and accurately react to demand fluctuations by capturing, combining, and analyzing data from many sources, as well as seamlessly sharing it across the entire organization.
Leveraging omnichannel services to manage returns
The challenge: Nearly two-thirds of holiday shoppers made at least one return in 2016, according to the National Retail Federation. This onslaught of inbound merchandise has grown even more complicated in today’s omnichannel world, where many customers choose to return gifts purchased online in stores.
The solution: Leveraging cloud services to gain a single view of orders across channels can help retailers simplify the returns process for both customers and employees, making for a less frenzied new year. Forward-thinking retailers will also rely on another cloud-powered technology to handle holiday returns more intelligently in 2017: better data analytics. First, predictive analytics can help businesses fight holiday return fraud, which cost retailers an estimated $2.2 billion in 2015. Second, data analytics — on its own or combined with machine learning — enables retailers to understand why returns happen and learn to make better product recommendations in the first place.
The takeaway: In today’s omnichannel world, a business’s ability to create a cohesive physical and digital experience could mean the difference between gaining a loyal customer and losing a dissatisfied one. Cloud solutions empower businesses to design digital services that fully integrate with one another, without making a large upfront investment in their infrastructure. For instance, banks can leverage the cloud to meet customers’ expectations for fast, seamless access to their accounts from any location or device, even during moments of peak demand.
Using artificial intelligence to meet increased customer support demands
The challenge: Customers need more help than ever during the holiday season — whether they’re shoppers looking for the perfect present or gift recipients trying to understand how their new gadget works. To provide all this support, businesses have traditionally turned to seasonal employees. U.S. retailers will hire between 500,000 and 550,000 temporary workers during the 2017 holiday season, the National Retail Federation predicts.
The solution: In addition to bringing on holiday help, some retailers are turning to AI-powered chatbots to make product recommendations on social messaging platforms, assist with in-store shopping, give updates on shipping and returns, and more. This enables businesses to tackle common problems at scale while freeing up employees to focus on interactions that require a more personalized touch. The most effective bots use natural language processing and machine learning to add value and create meaningful engagements, experts say. Retailers that successfully leveraged this technology last holiday season included Nordstrom, which launched a chatbot on Facebook Messenger and Kik to help shoppers select gifts.
The takeaway: Chatbots can enable businesses in every industry to expand their customer support capabilities as demand increases. A tax preparation company, for instance, might deploy this technology whenever key deadlines approach, using it to answer common questions and route customers needing further assistance to the right support personnel.
The holiday season means that retailers have a unique need for strategies like these, but every business should anticipate spikes in site visits, foot traffic, sales, and support requests. Cloud-based solutions — either alone or as a complement to on-premises resources— grant companies the elasticity and scalability they may one day require, as well as the ability to scale back down to avoid wasted spend. And that’s enough to make every IT leader a little more jolly, around the holidays and throughout the year.
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