Are retail CIOs ready for the ecommerce holiday explosion?

With Covid-19 still keeping shoppers out of stores, data-driven technology is going to be more critical than ever this year to make sure customers enjoy a seamless path to purchase. But, are retail IT organizations ready for a stay-at-home holiday season?

holiday ecommerce ts

At leading online jewelry retailer Blue Nile, IT staffers have prepared for months to tackle what experts predict will be a holiday season like no other, in order to make sure their customers enjoy the sparkling shopping experience they expect.

"In the era of Covid-19, we have to handle extra traffic capacity and monitor the performance of all our networks and apps," says Robin Schenck, quality assurance manager at Blue Nile. But, he explains, unique challenges related to the pandemic, such as shipping issues — the company has products from all over the world, including diamond vendors in China — mean there is even more than usual on the team's plate: "It's really about handling any impact to the whole shopping journey, across all the systems and third-party services that make up the entire integrated customer experience," he says.

There is no doubt that holiday ecommerce is exploding: According to eMarketer, ecommerce sales will jump nearly 36% over the last year, as social distancing still keeps skittish holiday shoppers away from brick-and-mortar stores. The question is, are retail IT organizations equipped for what will basically be a stay-at-home season?

"Retail CIOs must be ready for anything and everything," says Jeffrey Neville, retail industry expert at Windstream, which offers managed communications services to businesses across the US. "Consumer behavior and expectations will be dramatically different this year," he says, adding that companies have scenario-planned for a variety of possible situations, including new shutdowns. "Retailers who figured out curbside delivery and had an order management system in place for BOPIS (buy online, pick up in store) and ship from store will be lucky to be able to repeat that process again — some even consider that ability a risk management strategy now."

To meet consumer ecommerce demand, many retailers are providing virtual experiences like never before, according to Michael Witty, director of the retail digital practice at consulting firm ISG. They have improved website interaction with more robust product information and improved social media integration, as well as going beyond static photos: "They are adding augmented reality, virtual reality or 3D experiences where consumers can engage," he says. "In luxury channels, retailers are also offering virtual experiences with personal shoppers."

The good news is, retailers will likely see orders spread out far beyond the week of Black Friday and Cyber Monday. With Amazon Prime Day pushed to the beginning of October, holiday sales were front-loaded, says Neville. "In addition, pricing and promotions are so different right now that I don't think customers are waiting to purchase for that big discount," he says.

Flexibility and agility are key to uncertain season

No matter what bells and whistles retailers offer online, however, experts emphasize that with ecommerce sales poised to reach nearly $200 billion in the US this holiday season, flexible and agile data-driven technology and processes are foundational necessities to navigate this season of uncertainty — everything from personalized marketing and website functionality to supply chain and fulfillment.

One concern is that retailer distribution centers and logistics partners may not have the physical capacity to support this year's ecommerce boom. Recent research from Berkeley Research Group found that this year's holiday spike is likely well beyond the macro-network shipping capacity. As a result, omnichannel flexibility must go beyond the ecommerce site to brick-and-mortar stores, says Ben Schein, current VP of data curiosity at Domo and former senior director of enterprise data, analytics and business intelligence at Target.

Many retailers have transformed into mini-fulfillment centers to support online shopping, he explains: "Gone are the days when the stores were simply focused on managing crowds and stocking the door busters," he says. "They are now shipping orders, getting orders ready for delivery services like InstaCart or Shipt, or preparing orders for pickup in store or drive up." To do this well, he explains, new in-store data is needed to manage conflicting tasks and ensure inventory is going to the right spot.

"One retailer I spoke to recently has turned its stores into customer service centers that support online sales, after its traditional call center was overloaded," he says. "Store associates can answer questions immediately, but they have to make sure their systems and third-party partners can manage the flow of data that makes this work."

Underpinning that flexibility is the shift to the cloud that many retailers have made over the past few years, adds Witty. "They now have the bandwidth to feel confident in that infrastructure – that they have the bandwidth, the capacity to handle increased volumes," he says, adding that retailers don't actually know how big the holiday season will be overall. "Will it be 5% greater or smaller than last year? Then, there are questions about what people will be spending their money on." 

Cloud-based services have also allowed retailers to centralize customer service as ecommerce emerges as the main storefront this holiday season, says Joseph Ansanelli, CEO of Gladly, an omnichannel platform which powers customer service for top retailers including Crate & Barrel, Ulta Beauty and DTC ecommerce brands such as Warby Parker and Allbirds. The company's research found that 79% of consumers say a personalized experience is more important than personalized marketing — and an ecommerce boom means retailers will be competing on the shopping experience.

"Historically, customer service was part of the mindset of a back-office function, but particularly this year, customer service is a relationship problem that directly affects revenue," he says. "Retailers must adjust to these changes from a customer service perspective – adapting to changing methods of communicating, such as millennials who prefer WhatsApp, and deep levels of personalization."

From bread-and-butter IT to post-holiday returns and 2021 plans

There is certainly plenty of bread-and-butter IT work to make sure ecommerce websites stay up and running, in terms of load testing and health checks, says Schenck. In addition, with employees working remotely during Covid-19, it's essential to make sure internal systems are working smoothly.

"Our customer service teams rely on chat and phone functions and will handle extra traffic, and we do get a lot of first-time customers asking questions about jewelry or diamonds," he says. "So we have to be able to support agents working remotely to make sure they can get on VPN and VOiP systems so they can work as easily as they do in the office." 

However, as soon as the holidays are over, retailers will have to think about processing returns. "The volume of returns will be even greater than normal, while customers may not be able to go to the store to return," says Neville. "Customer service agents will have to handle the influx of calls or chat."

After the holidays, as retail IT organizations begin their post-mortems, they will have to work on managing the entire retail ecommerce experience if they want to succeed in 2021.

"There was a real glimmer of hope during the initial shutdowns that retailers would have time to redefine their technology landscape," says Witty. "Ironically, this catastrophic event was about to give them this green field to do what they had wanted to for years." Instead, he says, retail organizations largely retrenched. "In 2021, there is potential for new technology investments that can support a true omnichannel shopping experience."

Pandemic lessons learned to launch 2021 ecommerce success

Experts predict that ecommerce will continue to expand significantly worldwide in 2021, to more than $6.5 trillion in 2023, with no sign of reversing course. Retailers will continue to work to develop a seamless, single view of inventory that supports both ecommerce and in-store fulfillment.

"One retailer I work with just started doing store-pickup and BOPIS this year," says Schein. "It's better late than never, but it shows how complicated it is." After the new year, retailers will have to invest in process improvement and management software tools that use data to facilitate better processes and communication with customers. "Some of it is about actual data restructure efforts, with platforms and tools that take data and integrate it into the operational process in a seamless way," he explains. "It's when data and processes are siloed and you don't make those connections that breakdowns happen."

For Blue Nile's Schenck, retrospectives on the holiday season will surely focus on how shipping challenges affected orders. "I think we'll come back to making sure our shipping network and systems are resilient in 2021 and how we make sure we can handle it if another lockdown affects our industry," he says.

Meanwhile, as Cyber Monday 2020 comes around the corner, it's clear that the stumbles many retailers experienced during the Covid-19 era have provided lessons that will serve them well during this holiday cycle.

"Delivery partners have developed the capacity to fulfill demand, while early-season promotions have spread out demand over a greater period of time," says Witty.  "The key is for retailers to make sure they see what shopping patterns look like now and be agile enough to adjust supply chain models and forecasts quickly to be able to support demand — those who have lagged behind in investing in customer insights will suffer from that perspective."