Retailer and consumer goods companies today live under constant pressure. Keeping up with the surge in e-commerce and multi-channel shopping, threading the needle of global supply chains,1 reimagining in-store experiences, and managing data volumes and privacy concerns just to name a few. Unfortunately, retailers of all sizes are too often caught flat-footed, and the lasting effects of COVID-19 are only making matters worse. Despite these pressures, global e-commerce sales will exceed $5 trillion in 2022,2 accounting for more than a fifth of retail growth.
To face these adversities head-on and capitalize on the explosion of e-commerce growth, retailers are injecting agility into their business by embracing e-commerce in the cloud. The cloud provides a robust infrastructure to enable seamless unified commerce operations, personalized experiences across channels, and thriving supply chains. To better understand how companies adopt the cloud to drive business transformation, we surveyed 50 global retail and consumer goods companies. The output of this survey is a list of 30 use cases mapped by the business impact, maturity stage, and future cloud investment intensity. These high-impact use cases span areas such as customer profiling, personalization, online returns management, real-time inventory visibility, virtual products, and many others. Furthermore, this study clarifies the business and customer value of e-commerce on the cloud beyond the parameters of speed and scale.
4 critical challenges retailers are facing
Before realizing the benefits of the high-impact use cases, the journey toward e-commerce cloud adoption starts with acknowledging the critical challenge facing retailers today. Our analysis sheds light on the following four challenges:
- Depreciating e-commerce platform performance during peak traffic seasons. Occasions like “Black Friday” and “Singles Day” are the most important retail events for any e-commerce business. Sales skyrocket as pursue attractive deals and seize potential buying opportunities. To prepare for these spikes in consumer demand, retailers traditionally plan early, often locking their digital experiences down by going into code freeze in early fall. Although these occasions will remain significant to retailers’ bottom lines, holiday spending will continue to be more spread out as retailers offer holiday deals as early as October. This matters for retailers because it’s no longer just about managing a spike or two in consumer demand, but rather being able to support sustained spikes over longer periods of time. Some of them planned, others unplanned.
- Data silos across multiple channels curbing customer acquisitions and loyalty. One of the reasons why retailers are offering holiday deals earlier is to minimize the impact of supply chain disruptions. Even though many retailers went in this direction in 2021, this past holiday season was plagued by six billion out-of-stock messages due to supply chain shortages. The drive for customer centricity spans optimizing supply chains to provide convenient at-home deliveries as well as personalized experiences that drive loyalty. This requires enterprises to unlock data in silos to establish a holistic view across their supply chain, while also enabling customers to track their deliveries in real-time.
- Inability to integrate new engagement models for e-commerce. The newfound convenience economy sees many retailers embracing the store-less paradigm by taking their direct-to-consumer (DTC) platforms up a notch. However, the criteria for providing an entertaining shopping experience for customers are noticeably missing. This further drives e-commerce towards social media platforms, giving rise to new business models such as live commerce, social commerce, and gamification. This requires faster integration of such engagement models without compromising on data security, customer privacy, check-out speed, and overall platform performance.
- Lack of new-age technology integration to deploy e-commerce use cases at pace. As retailers continuously experiment with technology to streamline their products and services to cater to their customers’ preferences, one thing becomes clear: the need for technology-enabled capabilities to streamline e-commerce operations so that retailers can deliver new-age experiences. Cloud enables and seamlessly integrates new-age, resource-intensive technologies such as AI, mixed reality (MR), Internet of Things (IoT), metaverse, and blockchain to deploy e-commerce use cases at a pace.
The future of e-commerce is in the cloud
Although each of these challenges creates headwinds for retailers, the juice is worth the squeeze. Retailers can realize the following benefits by burning e-commerce in the cloud:
- On-demand scalability to meet peak traffic and demand.
- 360-degree, real-time data visibility across supply chains, customer engagement touchpoints, and operations.
- Flexibility in customizing digital platforms to deliver unified commerce experiences.
- Secured online transactions and data privacy.
- Faster online searches and personal recommendations.
- Ability to enable new-age engagement models at scale.
More retailers are shifting their e-commerce workloads to the cloud. Currently, more than 60 percent of the total e-commerce workloads function on private and public cloud platforms. By 2023, this number is expected to grow to ~85 percent, with more than half of these workloads being hosted on public cloud platforms.
Retailers are making bets on e-commerce in the cloud to provide the agility required to meet the demanding pressures of today and the uncertainties of tomorrow. Cloud-enabled retailers say bring on the uncertainty. Do you?
Read more about how 50 of the world’s largest retailers are adopting e-commerce in the cloud to drive business innovation through clear, actionable, high-impact use cases in the white paper, “Steering Through E-commerce Disruption with Cloud.”
Follow Microsoft Retail on Twitter and visit our Microsoft Cloud for Retail website to get the latest on how Microsoft and our partners are helping retailers deliver a seamless experience across the entire shopper journey.
1Supply Chain Pain: What’s Causing Backups At America’s Ports, YouTube.
2Global Ecommerce Forecast 2022, Insider Intelligence.
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