The outbreak of the COVID-19 pandemic was a turning point for businesses across industries. Disrupted supply chains, travel restrictions, a sudden drop in production, and fears of a massive financial fallout forced businesses to find alternative ways to maintain business continuity. In the retail and consumer packaged goods (CPG) sector, however, the struggle was a little different.
The declaration of nationwide quarantine measures saw customers and grocery shoppers turn to the safety of online purchases. With virtually no warning or time to prepare, eCommerce platforms faced sudden, overwhelming traffic. In the first quarter of 2020, Walmart U.S. reported sales growth of 74% with strong results on pickup and delivery services. In an article published by OECD in October 2020, 27 countries in the European Union reported increase in online purchases by 30%. This is despite the fact that overall retail purchases dropped by 17.9%. Such a contrasting pattern was witnessed across the board in various geographies. In China, share of online retail sales was 24.6% of all retail purchases, up from 19.4% during August 2019.
While demand for online platforms was ballooning, catering to this sudden spike was a significant challenge for businesses. The standard capabilities of data centers and monolithic architectures hosted on-premises limited the ability to address the spike in demand for online sales. Further, scaling such a platform rapidly with limited resources, and constrained budgets was a tall order.
As Rahm Emanuel is quoted saying,“… you never want a serious crisis to go waste.” Many clients in retail, CPG sectors have used the past 12 months to accelerate their transformation initiatives and build a strong platform to capitalize future opportunities. At HCL, we have witnessed a strong uptick of retailers (and CPG companies) getting increased consumer adoption of their eCommerce channel leveraging a SaaS-based platform. The decision to change has been fast, with greater percentage of successful (on time/on budget) deployments with high ROI – most of these were unthinkable in a pre-COVID scenario.
The Advantages of SaaS Environment in eCommerce
Simplicity to roll-out: The provider is responsible for end-to-end application with practically no limitation to scale. With a mature marketplace, SaaS presents many options to pick the right eCommerce platform for your business and technology goals.
Scale and agility: Most of the proven SaaS eCommerce platforms are designed to help businesses hit the ground running. Their out-of-the-box features makes them easy to launch. Pre-built customizable designs, user interfaces, and basic functionalities allow businesses to create a suitable online experience and the eCommerce platform in a very short span of time. This not only allows businesses to quickly establish their ecommerce platforms, but also scale easily and rapidly to match sudden surges in demand.
Flexibility: The flexibility of hosted eCommerce platforms means enterprises can eliminate excess compute capacity and wastage without the need to risk downtime in case of surges. SaaS-based ecommerce players can diversify their models to include capabilities like managing buyer channels and improving overall purchasing experiences.
Security: With higher and rapid adoption to online business, the risk of cyber-attacks also increases significantly. While information security, particularly in the realm of cloud is an ever-evolving domain, SaaS environments offer robust security that keep updating, are compliant to the industry-specific standards and address any new threats. It gives ability to proactively learn and deploy active counter measures to ensure high standards of security and compliance of the platform.
Integration: For an eCommerce business to function in a cohesive manner, the eCommerce platform must become a seamless part of the enterprise itself. Operational and business siloes will always inhibit efficiency. Therefore, integrating the eCommerce system with the surrounding applications and capabilities in the enterprise is an imperative for business. SaaS eCommerce platforms can usually be seamlessly integrated with such enterprise ecosystems.
What Lies Ahead
Cloud-hosted eCommerce platforms bring all the advantages of a SaaS environment. As we settle into the new normal, businesses will need to sharpen their vision of how they want to adapt and grow.
The rise of headless eCommerce and microservices are changing the way eCommerce platforms view growth. Cloud data platforms are introducing innovative and flexible operating models into the ecommerce ecosystem, and personalized experience is having an unprecedented impact on customer interactions.
At a time when businesses are faced with a need to jump onto the cloud bandwagon, advocates of cloud-native eCommerce, like HCL, are providing retailers and CPG players with solutions to simplify this transformation journey.