By Russell Poole, managing director of Equinix UK
Christmas shopping has changed significantly in the last few years. Consumers are now choosing to avoid the biting cold and high street crowds, and instead take the bulk of their festive shopping online. Traditional visits to see the Christmas lights, shopping amongst festive decorations surrounded by brass quintets playing carols is no longer enough to lure consumers away from the efficiency, convenience and comfort of buying gifts online.
In 2017, UK shoppers bought almost a quarter (24.1%) of non-food shopping online in the run up to Christmas, a figure that increased from 23% in 2016, according to the British Retail Consortium (BRC). This period followed the richest period in the history of UK e-commerce, with consumers spending around £8 billion in the four-day period between Black Friday and Cyber Monday. A recent survey by PwC estimated that online was overtaking in-store shopping on Black Friday in every age group. Even 60 per cent of over-65s planned on chasing bargains online instead of in-store, with the under-25s doing just 25 per cent in store.
Online shopping is growing exponentially. The proliferation of digital devices and services in the age of the Internet of Things continues to gather momentum at a truly remarkable pace. The retail industry, like many others, is facing seismic changes. The holiday shopping season has gone from being a headache for high-street shop employees, to an increased priority for e-commerce companies. IP traffic and the volume of data processed reaches unprecedented highs thanks to these new consumer shopping habits. Information security and latency are some of the several items that must be considered to keep up with consumer demand during the festive season.
This past holiday season, Equinix had a few tricks up its sleeve to ensure its customers stayed ahead of the game.
Data spikes – turning challenges into opportunities
The increased website traffic over a festive, or sales period, if managed correctly can lead to huge injections of cash for a company. This is something Alibaba can attest to after taking an astounding $14.3 billion in one day last year during China’s ‘Single’s Day’ on 11th November. However, this increased demand is causing major difficulties for companies with legacy IT systems struggling to cope with the data congestion on the public internet, resulting in sluggish load times for adverts and webpages. This isn’t something that online retail outlets can afford.
Keep the customer experience positive
Research has shown that 40 per cent of consumers will not wait more than three seconds for a page to load before leaving a website, and this expectation is only going to increase in the digital era. Retailers will struggle to engage customers if their online shopping journeys are hindered by slow loading websites that serve them with irrelevant ads. Heavy data traffic affects the time in which analytics tools can process consumer requests, meaning that companies may be missing out on placing relevant ads and capturing new audiences.
But all is not lost. There are steps that e-commerce companies can take to deliver the best possible online shopping experience.
Co-locate your data centers
Companies can significantly improve the customer experience by ensuring that their data centres are in close proximity to their customers. For most e-commerce companies this means they must have co-location data centres near to major population hubs. These centres will help businesses to better engage with customers in real-time, by leveraging social, mobile, analytics and cloud technologies. This will lead to a reduction in latency and ensure customers can browse and shop online without delays. Essentially, the lower the website latency, the happier your customers will be.
Create new ecosystems
Another way for companies to achieve this is by hosting their data centers in the same facility as their partners and suppliers, to create an ecosystem of interconnected players where than connect directly with each other. This creates cost savings and increased speeds of data transfer as businesses avoid the public internet. This model also allows companies to easily and quickly scale-up to handle the significant surge in traffic that occurs during peak shopping periods such as Black Friday, Cyber Monday and Christmas, and ensures a positive customer shopping experience that will translate to a boost in sales.
According to our recent Global Interconnection Index, which tracks the total capacity required to privately and directly exchange data traffic (Interconnection Bandwidth), this will be the way forward for retail companies who are expected to grow their use of interconnection by more than 66% by 2020 in order to meet consumer demand and therefore remain competitive.
Even dedicated online retailers are facing challenges as the previously separate domains of electronic payments, mobile networks and the cloud are converging. This is where hybrid models come in to play. Having a choice of network and cloud service providers not only allows companies to optimise their infrastructure for the best performance and redundancy, but also gives them pricing power.
At Equinix we sit at the intersection of where networks, clouds and enterprises meet, affording us a unique perspective of the developing trends and resulting infrastructure changes across multiple industries, including retail. A company’s ability to transform into a digital business really has become a matter of survival. It is time for retail businesses to review their IT infrastructure and ensure they have what it takes to compete, and survive, in 2018 and beyond.
Here are my tips for companies to embrace the new era of integrated commerce:
- Ensure top speed, performance and security by reviewing IT infrastructures and implementing an interconnected model that supports digital engagement, seamlessly joining people, locations, clouds and data. At Equinix, we call this an Interconnection-oriented Architecture (IOA).
- Leverage the dense ecosystem around cloud and mobile, and connect to them as if they were part of your own infrastructure.
- Move to the middle of a digital payment ecosystem with your partners and customers. This will enable you to lower costs, latency, time-to-market and downtime while increasing security over the public Internet.