Impact of Cloud on Retail Industry

Shantam Goel
Nov 4 · 5 min read

The scope, scale, and complexity of the retail sector have undergone big changes over the past two decades. According to Statista, global retail sales will amount to an estimated $26.29 trillion in 2019.

Modern consumers expect a seamless 24x7 shopping experience across every channel, from the desktop site or mobile application to right before their order reaches the doorstep. So, it’s not surprising that retailers are constantly pressurized to conform to evolving demands, constantly innovating through new technologies and features.

In this scenario, the cloud provides retailers with digital capabilities that are necessary to survive in the market.

Why Cloud Matters

Cloud computing supports innovation in the retail space at a rapid pace, from small-scale local stores to the major players at the top of the chain. No wonder the retail and consumer goods sector invested $11.6 billion in cloud computing in 2018, which will increase to $48.47 billion by 2025.

Global access to databases, storage, and applications, along with on-demand distribution, indicates how cloud computing offers complete visibility and insights to retailers across the whole supply chain.

Because cloud-powered apps can draw insights out of big data, retailers are now in a position to provide highly personalized offers to customers.[1] By integrating data from all supply chains, retailers can optimize process efficiency and pave the way towards building a lean yet massive business. [2]

How Key Retail Players Set the Trend

Looking at the infrastructure and background of the cloud computing industry, it is abundantly clear that Amazon Web Services dominates the market. With a market value of $32 billion, Amazon owns almost half of the public cloud infrastructure.

Microsoft attempted to steal some of the thunder by partnering with Walmart in 2018 and leveraging Azure as part of its strategy to rapidly increase Walmart’s digital retail transformation.

According to The Motley Fool, the partnership [3] would see Walmart increasing its use of Microsoft cloud services, such as business analytics, AI, and ML, for both internal and external purposes. This partnership was a direct call-to-arms against Amazon’s domination over the retail marketplace.

What’s interesting is that Walmart is no stranger to tech innovations, having used predictive technology way back in 2004 for stocking items like beer and Pop-Tarts.

Positive Effects of Cloud Adoption

Through analytics, retailers big and small, harness valuable insights from data, reacting to changing demands accordingly. Analytics helps retailers position themselves for the customer- and technology-driven changes in the fast-paced retail market.

Most of this analysis occurs because of efficient data management in the cloud. It has a significant impact on customer experience at any online superstore, fashion boutique, or electronics store.

Understanding What Works

Cloud analysis is nothing new. But the unavailability of data resulted in managers going by their gut instincts on which products to approve and reject. But advanced data crunching can now spot trends quickly and make retailers more responsive.

For example, Belkin, the phone accessory company, used data analyzed by AWS to fine-tune its Wemo line of products and prioritize them on the manufacturing line. AWS also came in handy for managing the company’s Linksys home routers. Thus, cloud insights helped reduce the time it took to market most of the company’s bestselling products.

Targeted Ads

Retailers understand what customers want by analyzing their long-term buying patterns. Targeted marketing benefits them greatly in this respect. Retailers combine data generated from online and brick-and-mortar sites to form a clearer picture.

The data is stored in the cloud and helps retailers uncover the best way to sell products with the help of hosted applications like QuickBooks Point-of-Sale software. That’s how retailers send out mailers, ads, and emails showing actual items that customers clicked on or searched for.

Inventory Management

Retailers can easily manage the number of products on store shelves if they know what products to stock up in the first place. This process becomes simpler and more efficient with the cloud. The cloud basically assists with supply and demand.

For example, snow shovels sell fast during winters while the demand is less in summer. Stores such as Lowes and Home Depot use inventory tracking to make sure a sufficient number of shovels are available in stores. Inventory system triggers automatically place more orders when stocks dip below a preset threshold.

Easy Payment

The next time you pay for your vanilla latte via the Starbucks app, thank the cloud for powering that transaction. Mobile payment services nowadays are all powered online by different vendors.

No matter what mode of payment you use — your phone’s integrated payment system or the retailer’s branded app — the cloud connects all touchpoints between the retail store’s virtual cash drawer and your money.

The cloud also works for cashier-less payment technologies like Amazon Go. Thanks to cameras combined with deep learning algorithms and computer vision, Amazon Go identifies when and what products are picked up by consumers along with the pricing.

That product is then added to a virtual shopping basket and charged to the customer’s Amazon account once they exit the store.

Role of The Cloud

The innovations mentioned above would never have been possible without the deep integrations of cloud computing. The cloud gathers everything in one place within the virtual space, supporting the possibilities of AI and other new technologies in retail without expensive hardware investments.

The cloud streamlines and performs efficient modeling to provide instant, accurate predictions that would have manually taken years. This decreases R&D investment costs considerably and allows for worldwide collaboration.

While corporations like Amazon and Walmart are the leading digital retail disruptors, the market share race within the retail sector will fuel more innovation in the breadth and capacity of cloud computing solutions.

For smaller businesses, the cloud holds the promise of better customer communications, distribution tracking, and low-cost product development.

Concluding Remarks

More retailers have started realizing the significance of migrating to the cloud to survive in an industry dominated by online shoppers. While moving entire operations to the cloud is no small feat, retailers should address the challenges associated with storage costs, security, and technology adoption to keep pace with the competition.

Use tools for easy migration, a simplified interface, and storage efficiencies to handle complex multi-cloud storage infrastructures.

Shantam Goel

Written by

I am a Digital Marketer and Content writer at Ace Cloud Hosting https://www.acecloudhosting.com/. I like to read & write about Retail industry and technologies.

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