E-commerce profitability is tied closely to technology—and with good reason. Each of the examples discussed thus far within the supply chain and product catalogue rely on technology, in one form or another, to identify the opportunity and activate the solution.
Perhaps the most obvious example of the power of technology can be found in data analysis and, by extension, artificial intelligence (AI) and machine learning (ML). With enough high-quality data, retailers can identify trends that can help anticipate buying patterns, optimize inventory levels, right-size the workforce, and set prices and promotions that maximize revenue. These technologies draw on a vast array of data sources including past transactions, behavioral data, social media activity and geographical location, to create algorithms and models that give the organization both a more complete customer profile and greater awareness of the business. AI can also be used to power solutions – from 24/7 customer service chatbots to customized product recommendations – thus helping retailers increase the profitability in the burgeoning digital world.
An equally powerful opportunity lies in robotic processing automation (RPA). Many warehouses are woefully out of date, relying on humans to move throughout both the store floor and the backroom to collect items for digital orders. Through the use of scanners, conveyer belts, robots, automated forklifts, exoskeletons and drones, the time spent at every stage of the fulfillment process can be significantly reduced. Further, not having a centralized and automated shipping facility makes it nearly impossible for retailers to achieve the efficiency of Amazon or other modern e-tailers, all of which are leveraging the latest in robotics and automation technology to increase efficiency.
However, the deployment of data-enabled tools and robotics requires a level of speed and flexibility far beyond what is supported by many retailers’ current IT operations. While organizations appear eager to adopt advanced technologies such as AI and ML, their ability to effectively do so—and harness the applications’ full benefits—may necessitate infrastructure upgrades. The cloud holds particular promise as migrating key business services to a cloud-based system enables near real-time performance monitoring and inventory awareness. These insights can unlock new levels of efficiency across the value chain—from inventory optimization to product recommendations to customer service. Cloud-based technology also provides the speed and flexibility needed to scale, which is a crucial point as retailers attempt to expand successful pilot programs or test applications throughout the organization.
While virtually all organizations recognize the value of technology, many stop short of implementation, largely due to cost concerns. However, technology infrastructure investments are just that—an investment. Increasingly, these capabilities are not just an enabler of growth, but the key to viability. Fail to keep pace with digital applications, and the entire business will suffer.
There is ample evidence that cost-conscious retailers are being pennywise and pound foolish when it comes to IT modernization. Recent research from Publicis Sapient revealed that IT infrastructure investments can pay back in 2-3 years while continuing to create long term value7 through increased conversion, affinity and loyalty. Further, our research estimates an annual cost savings of 17.5 percent, as delivered through reduced operating costs, increased productivity and quality.8