News

Data Management and Black Friday e-commerce sales surge

Nov 29th, 2019

By Chris de Bruyn, Operations Director at Gabsten Technologies

The general holiday season is around the corner, a time when customers flock to retail outlets and clock up a lot of sales. Such large crowds are good news for retailers, but they also create downsides and overcrowding of stores often dissuades other shoppers from going out at all.

To fix this, retailers are relying on e-commerce as another channel for shoppers to reach them. A PwC survey indicates that consumers are planning to spend big this Black Friday and Cyber Monday, expecting consumers to spend 36% more in 2019 than in 2018.

Although, spending will increase during Black Friday, buying goods online is also growing in South Africa at an estimated 15% annually, and the retail sector has been investing in its e-commerce capabilities.

Features such as same-day delivery and pick-up boxes are expanding to meet demand. Even retailers that don’t have online retail presences use pop-up e-commerce stores to create those experiences during sales events. But when the day comes, the site crashes.

e-Commerce is highly user experience-driven, so crashes or slowdowns are detrimental. They damage sales as well as brands and consumer sentiment. Angry, unsatisfied shoppers are the last thing a retailer needs in this crucial period. Yet these kinds of performance blackouts are not unusual – there were several stories during the Rugby World Cup of streaming services failing to meet demand.

Why e-commerce fails

You’d think this is one area where they’d know how to get it right. Today’s systems are supposed to be good at scaling and accessing large volumes of bandwidth at low costs. Yet many go in with the best intentions, but still get caught off guard.

So why do e-commerce sites and streaming services keep being overwhelmed, even when there was an anticipation of large user numbers? How can a retailer ensure their shop will stay online during the holiday rush?

The first step is to realise the fundamental difference between dedicated e-commerce/streaming businesses and other retailers. Their core business values naturally focus on being experience-driven and always available, so there is no downtime. Consequently, their systems and strategies are designed to meet those core values.

Retailers with physical sales outlets don’t have the same priorities. So when they attempt to insert an e-commerce element to their operations, it isn’t suited for high-demand periods. There is also a considerable reluctance to invest adequately, even though the service provider isn’t sucking estimates out of their thumb.

These are created by applying algorithms and case studies to the requirements. Dedicated e-commerce companies know not to low-ball these calculations. Others have to learn the hard way, such as when their site goes down during Black Friday.

Another mistake many retailers make is to rely too much on their internal IT systems. But building the necessary resilience doesn’t have to be very complicated or expensive. It’s a much better approach to use hosted infrastructure, especially for temporary periods such as the holidays.

These give access to the technologies and skills that focus on scaling performance during surges. Many companies think they save money by using in-house systems, but it’s rarely the case when traffic grows dramatically. You should go to somebody who is an expert in the field to get the best results.

Get ready for the holidays

The ideal is to integrate internal systems with an external partner that can add capacity to manage shopping or streaming surges. Data management partners are particularly well-suited for this. They handle data-related services on the client-side, liaise with infrastructure hosts and coordinate activities to deliver on the anticipated scale.

When big one-day events or holiday periods happen, they can bring in hosting to assist and switch on the extra capacity. Whether you want a hybrid solution between your systems and the host, or a service that is completely managed and hosted by third parties, data management provides the skills and experience to bring it all together.

Digital sales still only represent 1% of South Africa’s retail market. It’s a segment that will keep growing. The smart retailers have responded – they have built online stores, pick-up points and continue to improve their e-commerce capabilities. But that’s not enough to manage surges caused by events and holidays.

Don’t get caught off guard. You have to be willing to invest in making sure that the service offering is the best. And once you get to that level, the profits will follow the technology.