E-commerce demand often peaks around Christmas. Its traditions about giving to friends and family offer it the inertia to become perhaps the biggest retail event in the U.K. (and elsewhere). Retailers are constantly looking for new ways to increase their sales, and so it makes commercial sense to jump on Santa’s sleigh at a time when large swaths of consumers are most likely to spend their hard-earned money. They can also take advantage of the increasing trend to buy presents online, giving retailers an opportunity to begin a longer-term customer relationship with their shoppers by using the data they glean from each transaction to offer customers the latest deals on other special occasions.
Sales figures from the Office of National Statistics (ONS) and the Interactive Media in Retail Group (IMG) show that online sales grew significantly ahead of Christmas in October 2016. The ONS reports that online sales grew by 26.5% during that month, and the IMRG-Capgemini eRetail Sales Index increased by 19.9%. The ONS reports that e-commerce sales now equate to £1 billion ($1.2 billion) a week, accounting for 15.2% of all retail spending.
Upmarket fashion brand Ted Baker even reported a 30.3% total in sales growth, ignoring currency fluctuations. Without those fluctuations, the retailer’s growth still stood at a healthy 25.9% and was helped by its international expansion. The company achieved this success in spite of having to cope with some challenging trading conditions, and yet retailers have been able to boost their sales thanks to cooler temperatures in October 2016. These conditions spurred people to buy clothes for the colder winter months, Halloween and the U.S. import of Black Friday.
Consumers are researching products ahead of many of these major retail events, so their online e-commerce activities offer retailers an opportunity to capture consumer data ahead of time to target their marketing campaigns. Yet some industry commentators suggest that retailers are still failing to make the most of the m-commerce (mobile commerce), which is a mistake because an increasing number of consumers are using their smartphones to do their Christmas shopping. Research and digital-analytics company Catchpoint, for example, found that 47% of all respondents of all ages use their smartphones to shop, and 29% of them said they intend to do more online shopping through their mobile devices.
To capture e-commerce and m-commerce customers, Eric Savitz wrote “Why Big Data Is all Retailers Want for Christmas,” published December 12, 2016, in Forbes magazine. Ahead of Black Friday he wrote, “As retailers settle in for…their biggest selling season of the year, the use of big data has become a critical force in growing sales [because] big data is helping retailers to stay in front of a new breed of consumer, the omni-channel consumer, and the avalanche of data they are generating.” So if they were to write to Santa for their own gift, retailers would only want big data for Christmas.
David Trossell, CEO and CTO of data-acceleration company Bridgeworks, explains, “There is the old adage that unless you have it on the shelves you can’t sell it, so the worst fear of any retailer coming up to Christmas is whether he has the right stock and does he have too much or too little stock.” He adds, “As we know with the Internet, brand loyalty is only a click away, so the retail industry has made massive leaps over the past few years on analyzing big data, scraping conversations off social media to understand what is trending and what your opposition is doing.” He believes retailers ignore these tools at their peril.
Yet site outages can occur, and Small Business magazine reports that online fraud was due to grow this Christmas. In his November 2016 article for the publication, “Online fraud attempts expected to rise this Christmas,” Owen Gough wrote, “According to research by global payments company ACI Worldwide, e-commerce retailers in Europe can expect an 11 percent rise in fraudulent activity during the upcoming Christmas shopping season, compared to the same period last year. The predictions are based on an analysis of hundreds of millions of transactions from European online retailers.”
Gough also cites Julia Roberts, payments-risk manager EMEA for ACI Worldwide, who commented, “A well-planned and well-thought-out fraud-management strategy can increase revenue by as much as 20 percent, and we encourage retailers to make adjustments to their online fraud monitoring and prevention strategy in order to provide customers with a seamless shopping experience during this busy season.” Yet having a fraud-management plan isn’t enough, as fraudulent transactions aren’t the only threat retailers will face during the Christmas period.
Spikes in demand can slow websites and cause outages unless the right business-continuity plans are in place to manage the demand increases. Even large e-commerce firms such as Amazon have suffered outages—three times to date. Each outage will undoubtedly lead to lost sales revenue, and Business Matters cited “new research” that said an outage could cost small companies up to £100,000 ($120,000).
These outages can be caused by a number of issues, and slow networks can make e- and m-commerce sites hard to access. This issue will also cause shoppers to drift off to a retailer’s competitors if their shopping experience is crippled by network latency. Network latency is a bit like Santa trying to get down someone’s narrow chimney without having prepared himself by going on a crash diet during the months ahead of Christmas.
Trossell adds, “We all have to live with latency, but we don’t have to let it steal all our performance when transferring data over distances—this is as true for moving data to and from the cloud as it is having the freshest data at our disaster-recovery site.” He then asks, “How much of an effect can this be?” In response to his own questions he says, “Well, if you are using a 1Gb pipe with 30ms of latency, you will be lucky to realize 20% of your possible bandwidth.”
Santa also needs to invest in ways to secure his sack to make sure that each person’s present doesn’t fall out. By securing his sack he can ensure that each child is happy, and his brand will be safe for another year. That present could also be seen as the data created by each retail transaction from a PC, table computer, smart TV, smartwatch or smartphone. So as wise person, Santa should be both securing his data sack and using customer data to gain the opportunity to secure long-term customer relationships and to predict future demand.
Trossell explains why big data is so invaluable and why it must be secured: “All this data is highly valuable, and all the data from last year is just as valuable. It’s also the time when everything is working at its maximum. At such times as these, some of the day-to-day tasks move into the background as everyone tries to update the website, fight fires and so on. It’s exactly this time that disaster recovery and backup are key. If the worst does happen, you need the freshest data available for recovery. Moving this data off site securely and efficiently is paramount.”
He says data acceleration with tools, rather than traditional WAN optimization, can also improve the ability of retailers, or even Santa, to analyze big data in real time. Latency can lead to inaccurate sales forecasts and poor strategic planning. By mitigating it, the data will be fresher and more accurate, enabling retailers to act on trends as they occur.
Top 5 Data-Sack Tips
Trossell therefore offers five tips to secure Santa’s data sack during the festive season: First, help Santa deliver during the Christmas season by investing in solutions that accelerate data while mitigating data and network latency. Second, ensure that your big data and e-commerce sites are backed up at a disaster-recovery site located outside of the same circles of disruption in which other disaster-recovery sites reside.
Third, don’t react, but act by thinking and planning ahead for all kinds of security and risk scenarios—including hacking and fraud prevention to protect your customers and your business. Fourth, remember that upping your bandwidth or deploying traditional WAN-optimization techniques won’t accelerate your big data. The fifth tip concerns searching the market for solutions that will address latency and enable sales growth. After all, Santa wants us all to have a very happy Christmas and he is very keen to ensure that everyone’s Christmas orders arrive safely and on time. It’s in his interest to invest in securing his data sack, and retailers should follow suit.
About the Author
Graham Jarvis is a prolific freelance business and technology journalist. His journalism appears in IT publications such as Banking Technology, Computer Weekly, TU Auto, Cloud Computing World, Cloud Tech, Cloud Pro, CIO, i-CIO, FS-Tech, IT Pro Portal and Cloud Computing Intelligence, and his work has appeared in IT supplements distributed by the Telegraph and the Sunday Telegraph. Graham is also the former editor of the Chartered Institute of Marketing’s Technology Group, The Marketing Leaders, The Where Business and MforMobile. He is the Special Projects Editor of Cloud Computing Intelligence as well.