Retail’s Head is Finally in the Cloud

Thousands of businesses have closed their doors since the spring as buying and consumption habits abruptly shift to majority online. A welcome lifeline, cloud computing solutions have helped businesses large to small adapt to new shopping demands and a crowded online marketplace.

By Poornima Apte, Contributor

Mom-and-pop retailers like One Girl Cookies in New York City took a beating during the COVID-19-induced lockdown. More than 70,000 U.S. small businesses have closed since March according to a Yelp economic impact report, but a Brooklyn-based initiative is providing a welcome lifeline: CinchMarket.

Cinch corrals retailers like One Girl Cookies into one united online marketplace. Customers can shop for products from more than 30 participating stores, and Cinch then fulfills the order. The collaborative will deliver the order—if the shopper lives in Brooklyn—or ship it if the customer lives outside the city.

Neil Saunders, managing director of GlobalData‘s retail division, finds such an adaptation to the COVID-19 pandemic especially impressive. “For some of these retailers it might have been difficult to [execute a response alone], but clubbing together creates advantages of scale and a strong online presence,” Saunders says.

Saunders believes the pandemic is accelerating such digital solutions to retail. Whether they’re ideas like Cinch or simply the movement of smaller brick-and-mortar retailers online, more small shops are embracing ecommerce and, by extension, the cloud.

Cloudy With a Chance of Cha-Ching

Cloud computing is the use of computing power on-demand without the need for direct maintenance. Cloud computing customers can simply rent resources from vendors instead of owning them.

Any kind of ecommerce needs computing capacity. Traditionally retailers would buy and attend to servers at a data center they owned. On-prem (i.e. on-premise) servers offer plenty of advantages, including tighter control over resources. But they also require in-house expertise. Cloud computing, on the other hand, liberates the retailer from the hassle of maintenance and upkeep of computing resources.

Such an approach is especially appealing to smaller retailers that lack the in-house expertise for heavy-duty IT calisthenics, have a short timeline, or are setting up an online channel because they realize that they can’t stay strictly brick-and-mortar if they are to survive. Shopify, a company that helps small retailers set up online storefronts hosts its solutions on the cloud. In just over a month, between March 13 to April 24, new stores grew on the platform by 62 percent more stores.

“Ecommerce has become a much more important tool for retailers to use during the pandemic to try and keep business going. So those who were kind of on the edge, they have suddenly been pushed over and the decision was made for them,” Saunders says of the pandemic-driven retail shift to online commerce and cloud computing.

The global market for retail cloud computing was on a growth track even before the pandemic, expected to reach $28.53 billion by 2021, with a compound annual growth rate of 20.9 percent.

Advantages of the cloud

Cloud computing has many advantages for all retailers, including small and mid-sized across many industries. For one thing, solutions are easily scalable.

Picture small retailers preparing for holiday ecommerce shopping. They would have to first forecast traffic based on past analytics and expected behavior, which will likely be especially complicated during COVID-19 times. Retailers then invest in extra IT capacity if needed, to accommodate that shopping traffic. During the rest of the year, these servers run the risk of lying idle. If retailers use the cloud, they can scale IT capacity up or down depending on the traffic their ecommerce sites encounter. They pay for what they need. The retailer Etsy, for example, saw a spike in consumers looking for cloth masks during the pandemic. In its second quarter, the online crafters’ marketplace sold 29 million masks. The company credits the cloud for its ability to handle, and benefit from, the surge in traffic.

An additional advantage of the cloud: disaster preparedness. The most glowing promise of online shopping—24/7 availability—is all for nothing if your website is down. When managing cloud on-prem, retailers are at the mercy of rolling blackouts, hurricanes, or other disasters. Cloud computing, meanwhile, saves backups at multiple redundant locations, so even if one data center might be affected, business is not interrupted. The cloud makes disaster recovery easier for smaller retailers as they can lean on IT experts who understand backup services.

Cloud computing is also made for how business is conducted today. Given that we never know when the next black swan event such as a pandemic will hit, retailers need flexible digital solutions. Cloud computing is made to take on as much or as little of retailers’ digital needs as they choose. Merchants can do the bare minimum or use the cloud’s endless computing resources to increase the scope of their ambitions.

The Bells and Whistles

The big players in retail have already been realizing their ambitions, such as high-octane data analytics, for a while now. No longer constrained by the limits of computing abilities, mega online retailers pick up the digital breadcrumbs that customers leave behind and slice and dice that data to deliver personalized recommendations and drive sales even more.

Even during the pandemic, the cloud has helped large retailers buoy their online presence. Saunders points out that Best Buy quickly added curbside pickup services and online appointment consultations to their roster of services. Williams Sonoma also offered design consultations online and ways for clients to evaluate design plans virtually. Such services helped these retailers shift quickly to a new sales approach. The digital resources these retailers leaned on? Cloud computing.

Such digital Jiu-Jitsu need not be the purview of big-box heavyweights alone. Smaller retailers can also use AI-driven algorithms to personalize customer offers and potentially increase revenue especially if they’re part of larger marketplaces such as those offered by Amazon or Walmart, Saunders says.

Above all, moving into ecommerce powered by the cloud has democratized retail, Saunders says. “What we’re seeing now is a leveling of the playing field. Because online gives everyone an opportunity to promote themselves.” He dismisses the idea of brick-and-mortar, mom-and-pop stores fading away entirely in the move to digital. “Ecommerce isn’t a replacement for a physical store. It’s additive,” Saunders says. “Customers shop both channels seamlessly. That’s a really important lesson coming out of this pandemic.” And the cloud helps retailers keep track of it all.

The pivot to ecommerce and the cloud is here to stay, believes Saunders, and it’s allowing more fish to swim in the lucrative ecommerce waters. “The pandemic has made retail more competitive—sure—but it is also making it a lot more democratic.”