Cloud computing is powering innovation in the retail industry at an increasingly accelerated pace, from the big players at the top right down to small local independents.
Investment in the cloud by the retail and consumer goods sector was $11.6bn in 2018, predicted to rise to $48.47bn by 2025. [Source: Adroit Market Research].
In this blog post, we look at how some of the big players are using technology to revolutionise the retail industry and how cloud computing supports and enables them to do so.
How can the cloud enable retail innovation?
The on-demand distribution and global access to applications, databases, intelligence and storage that cloud computing offers means that retail companies can have complete visibility across their supply chain – and all the insights that go along with that. This “big data” means retailers can provide a highly personalised offer to customers, and – as we’ll explore here – use past sales and other data, plus AI modelling, to predict the future.
Retailers can effectively own all the supply chain systems to optimise efficiency and capture data at every stage, as well as provide real-time status updates.
The big players in cloud computing
First, let’s look at the background and infrastructure of the cloud computing industry. Amazon Web Services is by far the largest cloud computing platform in the world. Netflix (which consumes 15% of global internet bandwidth) is fully hosted by AWS. LinkedIn, Facebook and the BBC are also customers. It’s the “big fish” in retail (more about the AWS business model here).
So it was somewhat of a coup for competitor Microsoft (which had low exposure to the retail market) when Walmart announced their partnership last year, with plans to leverage Microsoft Azure as a critical part of its strategy to “further accelerate Walmart’s digital transformation in retail.”
The Motley Fool reported that the partnership would involve Walmart expanding its use of Microsoft cloud services, to include using machine learning, artificial intelligence, and business analytics for both external and internal purposes. The partnership makes more sense in the context of both companies’ desire to compete with Amazon in the retail marketplace.
Walmart no stranger to tech innovation
Walmart has been at the forefront of using technology-driven solutions for years. Who can forget the Walmart “hurricane Poptarts” story? Famously, the US retailer began to stock its stores with beer and Poptarts before a hurricane. Common sense might suggest that bottled water would be a better use of shelf space. But when Walmart started using predictive technology back in 2004, data mining from previous hurricanes revealed that it was actually Poptarts and beer that customers were stockpiling before hurricanes hit. Who knew that these were the “hurricane essentials” of choice!
Amazon – the retail industry disruptor
Back in 2013, Amazon registered a patent for “anticipatory shopping” technology. Now up and running, the “optimised Prime” service Prime Now brings together AI and anticipation to predict what customers will buy, and deliver it to a location as close as possible to the customer, so that when that customer clicks ‘Buy Now’, their product can be delivered to them in as little as two hours.
In another example, the flagship Amazon Go store replaced cashiers with a smartphone app and hundreds of small cameras. When a customer removes an item from the shelf, Amazon puts the item in your online shopping basket.
When you walk out of the store with that item, Amazon charges your account for it. No queuing up to pay.
While there are obvious ethical questions that arise from the use of some of these technologies, as well as logistical challenges, the possibilities it offers are endless.
Cloud-enabling: the bigger picture
None of these innovations would have been possible were it not for the deep integrations that cloud computing brings. The cloud brings everything together in a virtual space that enables us to effectively “play around” with the possibilities of new technologies, like AI, without huge costly hardware investments. It streamlines and performs efficient modelling to deliver accurate predictions in an instant that would have taken years of manual calculations to work out. It takes a sledgehammer to R&D investment costs, and it enables collaboration on a global scale.
While it is clear that companies like Walmart and Amazon have always been digital retail disruptors, competition for market share within the retail industry is likely to fuel further innovation in the capacity and breadth of cloud computing solutions on offer too. And not just among the global giants.
The cloud can bring efficiencies and opportunities to retailers of all sizes, for example through improved customer communications, cheaper product development and distribution tracking.
Plenty of people are now developing applications in cloud platforms like Azure. But equally, there are lots of organisations that need a hybrid environment with an Azure distribution at the front end to give them a global presence.
virtualDCS has been working with a large retailer that has £2bn turnover and over 500 stores. To enable the back end of such a large operation and see £2bn of transactions going through our infrastructure is a huge reward for us! We are also very proud to be working with many customers in the retail and distribution space.
Talk to us
We love finding innovative solutions to hybrid challenges too. Our team dedicates time to finding out what the gaps are and exploring what Amazon and Azure can’t do – and finding a way to bridge that gap and deliver a bespoke cloud computing solution.
Look out for our next blog post, in which we’ll be exploring What Amazon and Azure CAN’T do! (And how we can help.)
Have a problem that you think we could fix? Looking at moving some or all of your operations to the cloud? Interested in growing your retail business and using the cloud to minimise costs?
Call us today on 0345 3888 327, drop us an email to enquiries@virtualDCS.co.uk or fill in our online contact form for a callback.