Multi-channel Marketing, Cloud and Containers - A Lifeline for Traditional Retailers?

By 
Swen Conrad
Use Case
By 
Swen Conrad
, posted on
, posted 
February 21, 2017

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Many of us feel the same way: We love shopping at places like Nordstrom and appreciate their impeccable collections of stylish fashion. But more and more we are buying anything and everything online, including latest fashion. Yes, we know, we are feeding ever larger companies like Amazon Marketplace, but how can you beat their assortment, convenience and the might they have built? Slice Intelligence looked at 2016 holiday sales and shows Amazon taking a whopping 36.9% share of total sales with Nordstrom taking 2.2%, down from 2.5% last year. And even Walmart lost, closing 2016 holiday sales at 2.7%, down from 3.1% in 2015. - Slice talks about "A new digital divide". 

Online retail holiday sales
A new digital divide - Time to act for traditional retailers

Overcoming the New Digital Divide: A Call to Action for Retailers ... and everybody else!

Countless articles have been written about how retail companies – especially the brick and mortars – now need to deliver “outcomes” and “positive experiences” through “real-time brand engagement” in a “digital economy.” But what does that really mean and how can a retailer with shrinking sales and the generally razor slim retail revenue margins fund and execute a digital transformation? Let's take an imaginary retailer called ShopMore and assume they have done their homework and have a comprehensive retail transformation plan outlined. Many ShopMore leaders are excited, but others point to the risk and problems experienced in past transformations:

  • Projects taking month to get started and several years to implement  
  • High capital expenditures starting with begin of the project, well before any business benefit is reaped
  • A high degree of risk in an ever more turbulent business environment and quickly changing consumer preferences and behaviors

I think most of us will agree that we have experienced each of these concerns in our own past projects before, and often not just once. - But despite these concerns by several ShopMore senior managers, the company decides they have no choice but to kick-off their digital transformation project.

Build-to-Order vs Assemble-to-Order

Based on the business urgency and risk,  ShopMore IT and business leaders agree to challenge the status quo so they can avoid the above pit falls of the traditional "Build-to-Order" IT world. As much as available, off the shelf components will be used in an "Assemble-to-Order" approach for the final ShopMore solution. This will give them the follow advantages:

  • Instantly provision as-a-Service resources without delay and no upfront cost.
  • Scale resources up and down during your project as needed for various development tasks.
  • Consume leading technologies without going through lengthy and expensive. learning curves
  • Seamlessly move from Dev/Test to Production.

ShopMore's Bill of Material

The following three building blocks cover a large portion of the project scope and ShopMore plans to procure them as "assemblies" or in common IT lingo "as-a-Service":

  1. Multi-channel marketing, so all retail channels are always in sync.
  2. Hyper-scale public cloud, for getting the project started immediately, turning CAPEX to OPEX and most importantly provide the elastic IaaS foundation to scale the retail systems up and down with business demand.
  3. A managed service or self-service that makes it easy to consume these pieces as assemblies rather than having to integrate all these capabilities themselves.

ShopMore is also looking at Container technology and cloud orchestration, adding real-time system agility and scalability to ShopMore's big data workloads. - I will write about this in a later blog.

Multi-channel Marketing - A quick Primer

With multi-channel marketing solutions like SAP Hybris you can keep all your distribution channels in sync. While often focused on new media, ideally it links both the online and physical world together. Here are a few examples to explain:

  • You browse on ShopMore's website on your PC but get pulled away. Later you have a look at the ShopMore site on your mobile phone and are excited that your shopping cart from before shows up. You continue shopping and place the order.
  • You found a nice sweater online but would like to try it on before buying. ShopMore's system shows you inventory in store's close by. To avoid any customer satisfaction issues, inventory shown online needs to represent true store inventory. Another requirement for a multi-channel marketing solution.

IT Systems that keep up with Fast Paced Retail Business

Retail businesses have demanding IT system requirements driven by business seasonality,  frequent introduction of new inventory, out of stock situations and most importantly the unpredictability of the online and in-store customer patterns. Imagine Black Friday or Christmas with its flood of online transactions. Having to provision on-premise infrastructure for these peaks would require a significant investment with idling capacity for the majority of the year.Leveraging elastic public cloud for this allows a retailer to always adjust with business patterns. Or imagine the ability to adjust system availability for Black Friday by provisioning a high availability cluster at the push of a button and stopping  such a cluster when online and in-store traffic goes down again and the risk and cost of a system failure is significantly reduced. Public cloud, when used in a cloud native fashion, configured and automated accordingly can deliver all of this at the push of a button. But be warned, Alan R. Earls on TechTarget states, "[Cloud] redundancy, DR set up [is] no piece of cake." 

Working with our Partner Apcera to deliver SAP Hybris on SAP HANA in the Cloud ... and using Containers

Fast Forward ... Ocean9 and our valued partner Apcera, a company focusing on hybrid cloud orchestration and container technology are collaborating to deliver the solution that ShopMore is aiming to implement. It consists of a containerized SAP Hybris application running on top of a containerized SAP HANA database tier. This showcase is based on work with a mutual customer in the retail business enabling multi-channel marketing. The customer goals are:

  • Fast assortment change online, enabled by multiple content releases per day.
  • Public cloud for high performance, elasticity, flexibility and security.

We will be highlighting this showcase at Container World 2017 in Santa Clara this week.

Conclusion

Business and technology is evolving at lightning speed. Some companies are able to take full advantage of it, some others are struggling to keep up.Trying to succeed in such a competitive business environment by using the same IT tools and methods as 5 or 10 years ago may not be the right answer, especially when the leaders like Amazon have reinvented the industry and set standards for online retail and business solutions using big data and being powered by sophisticated public cloud Infrastructure-as-a-Service. Public cloud is becoming more and more powerful by the day. Both Azure and AWS now offer around 100 distinct cloud services to their customers. More are being added frequently. While I covered a lot of ground in this blog, it is only the beginning of many blogs we plan to write on this and similar topics, so stay tuned. With the first iteration, I wanted to alert you to the abilities and opportunities provided by public cloud for challenging workloads and business like retail. And while every business is different in its details, key concepts of seasonality, elasticity, on-demand consumption apply to all business and industries equally.I would love to hear your thoughts. Thanks for leaving your comments below. Please also download our whitepaper that dives deeper into the topic of transforming a retailer to compete in our digital world.

Please let me know your thoughts and comments about this blog below! - Where does your company stand in getting over the "New digital divide"?

Also, please download our easy to read whitepaper outlining the digital transformation journey of a brick and mortar retail company. While the example is retail, the ideas and thoughts in it are applicable to any company,

Download now: WHITEPAPER - Digital Transformation in Retail

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