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Australian online operations suddenly became profitable

Australian retail achieved somewhat of a milestone during the recent annual results season: widespread profitability from online operations.

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It didn’t go unnoticed by market analysts. But retailers have been playing in the online space in Australia for a long time. What’s behind the turnaround in fortunes?

One factor likely to be at play is the renewed focus that many large brands have put into online.

Consumer experience (CX) and digital experience (DX) have become key goals for many organisations, not just those in the retail sector. These goals recognise the value in putting the customer at the centre of any product, service or experience they are expected to buy. Businesses that champion the customer are most likely to succeed.

CX/DX leaders have gone about this in many ways. In some cases – including in retail – entire digital arms have been created. Woolworths has WooliesX, Coles has LAB288, and so on. They are examining every step of the customer journey, and when they find problems or points of friction, they are getting in and doing something about it.

The idea is to fix, amend or remove anything encountered in the journey that might get in the way of a purchase being made.

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To understand the customer, one must understand everything they do when interacting through a particular channel, such as an app or website.

Importantly, once you know what your customer does and understand the end-to-end experience, you can model or translate it into code to make problems or breakages easier to spot, before they begin to negatively impact customers.

More companies are monitoring how users interact with their websites and are baselining critical workflows through synthetic transaction monitoring.

Using synthetic monitoring, a company can script known ways that users interact with their site or app, and then run those scripts at regular intervals to try to proactively detect issues before a real customer is impacted by them.

The principles of synthetic monitoring have undergone nearly zero change over the past decade.

What has changed is the environment that synthetic monitoring is being applied into.

Retailers (and other organisations) have gone or continue to undergo massive digital transformations. Apps and websites have become more distributed, interacting with multiple third-party services through APIs or are otherwise composed of multiple microservices split across multiple cloud environments.

In this context, traditional synthetic monitoring, with its lack of knowledge of underlying dependencies and their influence on application or site performance, is no longer good enough.

Newer suites like ThousandEyes Synthetics are emerging to bridge the gap in monitoring end-to-end application or website performance and business transactions with a tight correlation to cloud infrastructure and internet behaviour. Synthetic transactions emulate and monitor a customer user experience by scripting workflows  that navigate a URL, take specific actions and make sure specific elements are present. In other words, these transactions replicate exactly what an end-user might do so organisations can detect and resolve issues before it starts affecting the user experience.

Retailers – and other organisations – that aren’t able to accurately map and monitor their customer journeys face a range of potential impacts.

Australian retailers have not been immune from the effects of ROPO – research online, purchase offline. SAP research shows “more than a quarter of Australian shoppers abandon their carts at least half the time.”

Synthetic monitoring will allow you to narrow down on why a user is abandoning a cart – for instance, it could be anything ranging from slow page load times or a failure to complete a particular transaction like adding to a cart that can quickly frustrate users in today’s highly volatile customer loyalty market.

Quoting a Harvard Business Review article, ThousandEyes’ Digital Experience Performance Benchmark report for 2019 notes that “a study found that a ten-second wait for a page to load can make 50 percent of consumers give up and leave. Researchers at Microsoft even found that a website begins losing traffic to competitors when it takes 250 milliseconds longer to load.”

Then there are the general pressures of the highly-competitive retail space. Online is clearly a profitable channel to be in. Those with substandard online experiences will now find it increasingly difficult. There exists a genuine urgency to act in ways that improve consumer confidence in online operations, given that leaders in the space are now seeing growth.

Organisations that rely on digital operations for revenue and brand awareness are striving to build a strong foundation of infrastructure and network performance on which to create rich and responsive experiences.

Customers are setting a high – and rising – bar for what constitutes a good or competitive user experience. It is up to retailers and other customer-facing organisations to meet or exceed it.

Archana Kesavan, Director of Product Marketing at ThousandEyes