The holiday season has just passed and for many it was taken up by stress, holiday traffic, and a never-ending list of work, social, and family events. For retailers this was the biggest time of the year, with hordes descending upon storefronts to find last minute presents or the forgotten family ham.
The overworked retail worker was a familiar sight for many, but few got a glimpse behind the scenes into the hive of logistics, transport, and communications which drove the whole choreographed event. For e-commerce, most people only ever interact with the pop-up chat bubble.
Technology is a major force for getting gifts under trees, and the constant disruptions over the past few years have necessitated more advanced practices.
The 2019-20 bushfire period had a huge impact on key domestic trade, and the lives and livelihoods for millions. Online shopping became more difficult in some areas, but also more important where physical shopfronts have been destroyed.
Before businesses had a chance to recover, the world went into lock-down. It was no longer just domestic supply chains, the entire international trade system was forced to a halt. In the second quarter of 2020, global trade in goods fell by 12.2 per cent.
However, things have been looking up, and for many Australians it was finally a ‘normal’ holiday period. But some of the trends and habits adopted from the past two years are here to stay, with the Australian Retailers Association (ARA) estimating 58 per cent of festive season, shoppers will buy online. Online retailers saw this holiday period serve as the ultimate stress test for how effectively they have turned temporary measures into permanent strategies.
This means e-commerce must not only maintain the systems which were rapidly adopted to cope with fluctuating demand, but also continue to improve their service delivery based on new consumer expectations.
Adapted services lead to logistics challenges
The convenience of online shopping has changed how people shop. Consumers want goods quickly, with free shipping and free returns. However, retailers have been slow to catch up to these increased logistical demands, with trucks often shipping out half empty. This is a massive lost revenue opportunity but filling a truck to go in the right direction, at the right time, requires good, comprehensive data analysis.
Technology is also a driving force for maintaining habits and increasing spend. According to the ARA, one in 10 Australian’s plan to use buy now pay-later (BNPL) for their big purchases. And larger retailers like Coles and Woolworths are automating more of the stores processes to speed up online deliveries.
Although these services mean bigger shopping carts, for merchants it also means more systems to maintain and keep secure, and more chances to miss out on the online shopping spend.
These technology services are infinitely more complex than managing bricks and mortar store fronts, because the roles required to maintain BNPL, or automation features are highly technical. Physical stores can scale staff up and down during the Christmas period, but it is difficult to hire casual, specialist IT staff to meet seasonal demand. With the ongoing IT skills shortage, hiring specialists for just the holiday season is not feasible.
Expertise outside the four walls of retail
Outsourcing has been a fundamental tenet for many retailers. Many outsource transportation of goods through couriers or Australia Post, contract external marketing and advertising personnel, or use third-party applications to streamline payment and logistics platforms. But as these threads spread out, retailers are still in need of a central point of management to keep emissions and costs down. If it’s too costly to do in-house, it might be time to look further afield.
Australians were predicted to spend $63.9 billion dollars in the lead up to Christmas
. Even as cost-of-living increases, Australians want something to celebrate. But even a small, unexpected fault can destroy holiday revenue for online retailers. If your website is down for a few hours consumers will go elsewhere. These issues can be fixed quickly, but only if you have full visibility over your IT systems – something which is not as easy as it sounds.
It’s not just lost profit from online failures. Customers trust online retailers with their private data, shopping preferences, searches, and cookies. With more online shopping, retailers must be honouring this trust with more comprehensive security measures. Although much of the secure payment mechanism is managed by third parties, the onus is still on retailers to ensure these systems are effective – the risk is a loss of profit or reputational damage.
As the dust settles on a volatile market period, and consumers start to pull down their holiday lights, retailers have an opportunity to recalibrate the technologies adopted when times were more unpredictable. Technology built to improve customer and business experience does not need to be mutually exclusive.
The end of year boom is fantastic for the economy, but retailers should be wary of growing too fast without the right expertise and systems in place. After all, we all want our white wine in the sun next Christmas too.
Daniel Benad is group vice president and regional general manager for ANZ and Oceania at Rimini Street.