By Blair Lyon, Vice President Cloud Experience, Linode
We are still dealing with the impact of the COVID-19 pandemic. In March 2021, the UK’s Data and Marketing Association published research on how the majority of businesses (70%) are still being negatively affected by the pandemic and its corresponding lockdowns. However, almost two-thirds of companies (63%) also reported that they were seeing some signs of recovery. For many of these businesses, implementing an ecommerce strategy helped them to survive and succeed.
For example, McKinsey found ecommerce market penetration went up from just over 15 per cent of retail activity in 2019 to around 35 per cent in Q1 2020 in the United States. This represents an estimated ten years’ worth of growth in three months by US shoppers. Similarly, the eCommerce market in Germany saw turnover in 2020 rise from 72.6 to 83.3 billion euros, an increase of 14.6 per cent.
This put pressure on many retailers and companies as consumer behaviour shifted. For those with existing ecommerce operations, it meant dealing with the flood of new customers to your sites and looking at how to scale up around infrastructure. For those with small online presences, it meant getting new sites and services up and running fast.
Following on from the crunch of last year, it is now time to look at what comes next. Whether you were running an established ecommerce service or had to get your business ready quickly, by now you should be looking ahead to what will be required in the future. This includes evaluating whether what saw you through the pandemic is still what you need, and where you can improve.
The elephant in the room
For all ecommerce companies, looking ahead means thinking about how to deliver better customer service and experiences. This means comparing your current service capabilities against Amazon. Amazon is held up as the gold standard for ecommerce operations – the company invests millions into understanding customers’ interests and to provide them with real-time personalised recommendations.
In order to compete, you will have to look at how to use services and tools to build those capabilities for your own platform. There are plenty of third-party services that can be used to innovate and close these gaps by building on top of your existing hosting infrastructure. This can help you look at how to innovate around technology by employing services like personalisation and dynamic segmentation of customers. Alongside this, you can consider how to innovate around customer service efforts and creating a sense of community or belonging. In short, this is about working on the elements that are both more interesting and more fun.
Alongside this innovation, it can also be a time to think about where you can make savings. For many ecommerce companies – like retail companies in general – margins are thin, so any cost reductions can have a tremendous impact on the bottom line. A good example here is to look at your cloud service bills and where you can avoid paying out extra for being successful. Many cloud providers charge based on the volume of service that you consume, which can then lead to significant extra spend if you bring in more customers and prospects in a given month. Rather than being penalised for success, getting a flat rate in place for your cloud services helps you budget more effectively over time.
Similarly, cloud services are also becoming more commoditised. Rather than sticking with the largest technology providers, you may be able to reduce your costs for the most common infrastructure building blocks that you might use. While many companies looked to the likes of AWS for their cloud services to start with, sticking with them can be more expensive than other alternative cloud providers for the same services. After the past year, there may be opportunities to reduce your spending through smart migrations or through use of multiple cloud providers, rather than just putting everything with one company.
The move to ecommerce has affected everyone, and this shift will continue in the future. Gartner has predicted that by 2025, 80 per cent of B2B sales interactions between suppliers and buyers will occur in digital channels. To keep your eCommerce operations running well, consider how you can differentiate your customer experience, automate where you can around your operations, and look at ways to keep your cloud costs both predictable and consistent over time.