Ian Massingham, UK Tech Evangelist, Amazon Web Services, talks us through how cloud is king for retail during the festive period
The golden quarter of October to December can be a make or break period for business. Eating out, eating in, drinking, shopping, and taxis home when you’re loaded down with purchases or too much ‘seasonal cheer’ mean this period accounts for the majority of sales for a vast range of businesses. The quarter also sees a huge spike in online traffic as more shoppers turn to their screens to finalise their Christmas purchases. Retailers must be prepared to take advantage of this spike in demand or risk losing customers to the competition.
Black Friday and Cyber Monday this year were a case in point with more shoppers choosing to go online to make their purchases versus heading for the high street. For Amazon, Black Friday was the company’s busiest day ever, with more than 7.4 million items ordered, equating to around 86 items per second.
But it’s not just retailers that are benefiting from this surge in business, businesses in many different industries have launched new services and products to try to capture a share of the Christmas market. Take taxi firms such as Hailo who run campaigns based on seasonality encouraging customers to jump into one of their cars to avoid the cold, or restaurants with a plethora of Christmas specials for lunch and dinner on the menu. For the media companies Christmas is just as important, as the likes of Netflix prepare for a surge in online traffic on Christmas day, when everyone gathers around the TV for a classic Christmas movie.
All these different types of business have one thing in common. At no other time of year do they experience the surge in demand for their products and services, both in store and online, than over the festive season. At no other time do they have to manage the complexity and demand for their services and at no other time of year are they under more scrutiny. With more shoppers making their purchasing decisions online than ever before, this year has seen all sorts of businesses turning to the cloud to be able to take advantage of this seasonal phenomenon.
Don’t be the one to spoil Christmas
From an operations perspective the festive season, and particularly Black Friday, is a unique phenomenon. It is a ‘break the internet’ moment for many businesses as they encourage huge numbers of shoppers to visit them online. It is the one time of year when businesses, no matter the vertical or sector, need to be able to scale up and down instantly in line with customer demand.
For example on Black Friday, businesses need to make sure they have the computing power, to respond to deliver the same customer experience they expect if they were shopping on that site on any other day, the same goes for Cyber Monday and Boxing Day, while on December 25th, its likely to be quieter, so retailers need to be able to scale down.
Shop Direct, the retail group behind Littlewoods and Very.co.uk, uses the cloud to deal with these seasonal peaks and to maintain the online experience its customers are accustomed to, which resulted in a 14% sales increase over the last Christmas period.
The flexible, scalable nature of cloud means that for a peak period of hours or days, retailers can rapidly scale up their infrastructure to meet demand and then scale it back again just as quickly. This means they aren’t spending large amounts of money on IT infrastructure they only need for one day of the year, but at the same time are not sacrificing customer experience for the sake of reduced IT costs. Having the technology in place to scale is just one element of making sure you are prepared for the holiday season, knowing what your customers want and how to deliver it is the other.
Understanding your customer
Customer experience is more than being able to handle online visits and enquiries. It’s about being able to show that you truly understand the customer through analysing behaviour and being able to manage and predict demand and provide a tailored interaction by suggesting items based on previous spending habits and choices. The ability to do this has up until now been reserved for those with big budgets and vast resources to invest in the required infrastructure, but with the cloud, pay as you use, analytics services, have helped to reduce the costs, and allow for easier management of the data.
Take Euclid, a fast-growing technology start-up as an example. Euclid helps brick-and-mortar retailers optimise marketing, merchandising, and operations performance by analysing customer movement data to correlate traffic with marketing campaigns and to help retailers optimise hours for peak traffic. With a network of traffic counting sensors in nearly 400 shopping centres, malls, and street locations around the US, Euclid is able to provide aggregated, anonymous data that measures more than 21 million shopping sessions a month in specialty retail, department stores, shopping malls, and big-box retail.
Making the most of the information at your fingertips
There is a lot of information that goes into making Christmas a success. Historic data about customers, data from manufacturers and suppliers, delivery data, customer wish lists, social media sentiment, mobile data and now increasingly data from a growing number of connected sensors.
All this information is priceless for retailers and businesses looking to take advantage of this seasonal shopping period. But with so much information available how can retailers manage the sheer volume of data in this short shopping period to deliver a personalised experience for customers. This is where new technologies, such as machine learning, come into play.
Machine Learning allows computers to look for patterns in data. It is what powers the online recommendation engines that for example, suggest books, music or films you might enjoy. Amazon has a long legacy in machine learning and has been using it since its early days, when it needed a way to help its editors make recommendations from the millions of books in its library. Today Amazon uses machine learning in almost all areas of the business. It is what makes Amazon Echo able to respond to voice commands instantly, and it is what allows Amazon to unload an entire truck full of products and make them available for purchase in as little as 30 minutes.
Today even cab companies are using machine learning to make predictions. MyTaxi in Germany, for example, are able to learn the propensity for a customer to take a ride by analysing both the interactions the customer might have with them in combination with contextual data such as the time of day the booking was made or whether it was raining or not.
Using machine learning online, retailers can use it to make useful recommendations in store. Retailers can also automate their warehouses using smart machines, enabling the items to be dispatched based on incoming orders, with no human intervention. This frees up people to focus on bringing new services to market for customers and the development of new applications. This level of automation could be spread across the entire supply chain from manufacture to delivery, providing a 360 degree view of both customers and operations and when combined with feedback from customers and analysis of social media, could dictate future product development.
UK businesses are no longer confined by borders. British brands, such as designer shoe retailer Kurt Geiger, which originated in the UK, have a growing global appeal. The internet has underpinned their global popularity, but to compete effectively without damaging their reputation for quality, they need to deliver the same experience internationally as customers in the UK have become accustomed to.
Brands today have a matter of seconds to grab consumer attention before they move on to a competitor, an extra three seconds at the checkout could mean a lost sale. With the Christmas period, the pressure is on, but with cloud, businesses can afford to scale to accommodate these international customers and ensure the same experience. What’s more is that they can get the infrastructure to do this in minutes not hours and months. Kurt Geiger used Amazon Web Services to enable it to handle up to 400 percent more customers than it had been able to do previously.
The secret to success
What is most important for any business to remember when they are preparing their customer strategy throughout the golden quarter is that cloud is integral to providing the customer centric, fast and flexible services that consumers want.
Done right, this Christmas peak period can make and not break a retailer.