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Dynamic, flexible IT architecture is essential for online retail

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AJ Hartenberg 1
AJ Hartenberg, Portfolio Manager: Data Centre Services at T-Systems in South Africa.

In the retail market, competitiveness has always revolved around differentiation, be this of product, price or service. However, as the world has become more digital and traditional retailers have joined the online retail market in the ecommerce space, differentiation has become increasingly difficult.

Consumers can now obtain any product from any number of retailers, and differentiating on price would simply lead to an unsustainable price war between retailers. Competitiveness now centres on delivering the best experience for customers. This in turn requires the support of a dynamic, flexible IT architecture that delivers the scalability and agility required to respond quickly to changing customer demand.

The ecommerce space is full of online retailers with no ‘bricks and mortar’ presence that take advantage of reduced overheads and operational costs to remain competitive. In order to keep up with an increasingly connected world, many of the traditional retailers including supermarkets and department stores have also developed online shopping services. The challenge for these retailers is to get the right mix of products to the right customers – since they have physical stores, customers will expect a consistent brand experience.

Online customers are typically happy to share certain information about their preferences, likes, dislikes and more, which is a significant opportunity. Online retailers need to be able to gather this information and then utilise it effectively to address customer needs. In addition to information volunteered by customers’, the very medium of online shopping can provide a wealth of insight, from what customers purchase at what time of the month or year, to where those goods are being delivered to. This can enable online retailers to market their products more effectively for increased turnover.

Customers all have a core set of products that they will buy frequently, as well as ‘nice to have’ items that they will purchase if they have the means, and luxury items that are often only purchased on special occasions. Armed with this information, retailers can effectively market special offers on nice to have or luxury items when customers purchase core good. This can increase retailer turnover by incentivising customers to buy their more luxurious items more often. Loyalty cards can also be linked to derive more insight and deliver more targeted offers. Furthermore, analysis of consumer buying patterns can help retailers to more effectively gear up for seasonal demand, by providing insight into sales volumes and types of products purchased.

Gathering, analysing, drawing insight from and utilising buying patterns is a powerful tool for all online retailers. This is applicable to all markets, including food, clothing and home ware. However, in order to achieve this, retailers need effective supporting IT infrastructure and architecture. Analysing big data is only part of the story. Retailers also need to be able to respond to events. Dynamic infrastructure not only provides the necessary power to analyse data and derive insight, it also offers the scalability required to become increasingly agile. This enables retailers to react to events or proactively scale capacity based on forecasts and predictions throughout the year.

Competitiveness in the online retail market is all about ensuring the customer enjoys their shopping experience. With so much freedom of choice, a bad experience will simply lead the consumer to shop elsewhere in future. Improving the customer experience requires data and analytics, which in turn requires flexible, dynamic IT infrastructure. Armed with customer insight, retailers can improve marketing campaigns and brand awareness, effectively cross sell and upsell, and transition this insight on buying patterns into their physical stores as well. Ultimately, retail success is about making things easy for customers, and analytics is a core tool to achieving this goal.

By AJ Hartenberg, Portfolio Manager: Data Centre Services at T-Systems in South Africa

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