Cloud becoming a key investment for retailers

Discussion
Apr 28, 2015

A small but notable 20 percent of large scale retailers ($50 million to $250 million) see the cloud as the "most important technology" relative to other recent innovations, according to a new survey from eBay Enterprise.

The survey also found 26 percent of large retailers claiming the technology is critical to their company’s future growth

Overall, the survey, conducted in early March, included more than 1,000 e-commerce and marketing professionals from retailers with revenues of $3 million to $250 million. It was part of eBay’s "2015 Retail Growth Outlook," which examined projected revenue forecasts and critical decisions retailers will make this year to achieve anticipated growth.

The survey found that retailers plan on bringing e-commerce hosting (55 percent), inventory management (46 percent), marketing program management (40 percent) and CRM (40 percent) into cloud environments. Although cloud infrastructure is increasingly top of mind for retailers, top obstacles to adoption include security concerns (26 percent), shared resources (17 percent) and a lack of IT support staff (16 percent).

Cloud services diagram

Source: Amazon Cloud Services

"The distinct advantages of cloud, such as the ability to access unprecedented real-time data and flexibility, puts it on the short list of business transformation enablers for retailers looking to deliver the seamless experiences that today’s consumers expect," said Craig Hayman, president, eBay Enterprise, in a statement.

The cloud’s potential hit the front of business pages last week after Amazon revealed for the first time that it’s Amazon Web Services unit has significantly higher margins than its core retail business.The company’s cloud computing services segment, which had $4.6 billion in revenue in 2014, is on track to reach $6.23 billion in 2015. Wrote Wired, "In the future, Amazon may be a cloud company with a retail site rather than the other way around."

Amazon was also confirmed to have a dominant lead over Microsoft, Google and others.

The New York Times noted that Google’s executive chairman, Eric Schmidt, at an event for cloud software developers last week, compared the cloud’s arrival to the 20-year stretch when Microsoft and Intel dominated computing as well as the web’s arrival that created Google.

"The entire world will be defined by smartphones, Android or Apple, a very fast network, and cloud computing," Mr. Schmidt reportedly said. "The space is very large, very vast, and no one is covering all of it."

Has the cloud become a primary or is it still a secondary investment for retailers? How does the battle between Amazon, Google, Microsoft and others help or hinder greater cloud adoption by retailers?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"The cloud battle is the real issue here. No one wants to be the guy who bets on the wrong horse (think Betamax)."
"It is a big step for most to trust external platforms for housing and executing their data needs. That said, not having a clear view of the ever-changing future landscape is also a source of concern for retailers who may be hesitant to lose some control over the security and safekeeping of their data."

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14 Comments on "Cloud becoming a key investment for retailers"


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Liz Crawford
Guest
7 years 29 days ago

The cloud battle is the real issue here. No one wants to be the guy who bets on the wrong horse (think Betamax). However, as a practical matter, the winner will probably subsume the loser(s), so there won’t be too much lost for the cloud crowd.

It’s interesting to think about which cloud to invest in and the rationale. I personally like Google. Reason: most smartphone owners own Droids and its search and software functionality are set to put it ahead of the others in terms of utility. Microsoft may ultimately have a tussle with IBM for b2b functions.

Ed Dunn
Guest
7 years 29 days ago

No one in the above survey mentioned the use of media cloud services which I believe is more important. Having the ability to host streaming video to demonstrate products and show vendor videos to the consumer is important. In addition, using the cloud for centralized UPC lookup and graphics for the products (think Sysco) to enable m-commerce browsing and shopping.

Cathy Hotka
Guest
7 years 29 days ago

I’m attending a Wharton School of Business conference today, and many of the retailers I’ve talked with here have embraced a cloud strategy. They’re turning away from the minutiae of software maintenance and are relying on outside experts to manage systems for them. The possibilities are endless.

Grace Kim
Guest
Grace Kim
7 years 29 days ago

Digital native companies wholeheartedly have adopted cloud services/strategies as they are cost-efficient (in the form of no software maintenance on the premises or carrying the staff to support it) and deliver more streamlined services that are easy to use and show immediate value. Think Gmail, Box, Dropbox — most startups are on Gmail as their enterprise email service. Retailers have legacy systems that were custom built or have integrations that have been custom built that are harder to move away from. In the long-term, I believe cloud services will be a better choice to remain competitive and viable.

Mark Heckman
Guest
7 years 29 days ago

It is a big step for most to trust external platforms for housing and executing their data needs. That said, not having a clear view of the ever-changing future landscape is also a source of concern for retailers who may be hesitant to lose some control over the security and safekeeping of their data.

Retailers have a reputation of not putting all of their eggs in one basket and, accordingly, may be hesitant to put all of their data in one cloud until the future landscape of cloud computing becomes more clear.

Lee Kent
Guest
7 years 29 days ago

If the cloud is not yet a primary, it will be getting there fast. Moving to the cloud will give retailers the flexibility they so desperately need. Then whatever the next new thing is, they will be poised and ready.

The fact that there is a battle says that retail has options and options don’t hinder, IMHO. Each offers different strokes for different folks at this point so let’s see how it plays out.

And that’s my 2 cents.

Tom Redd
Guest
7 years 29 days ago

The cloud has become a critical path for many retailers, from mid-size to very large. Cloud environments support faster innovation and this is a must for the constantly changing space of retail. We see hoards of cloud activity around the globe. We are a group dedicated to a broad mix of cloud strategies. We have deployed many, many retail solutions out in a wild mix of private cloud/mixed and foundation platforms or environments.

No matter the direction of the noise, the key is to serve the retailers on the platform that they choose.

Google, Amazon and MS can fight it out. We already have our centers in place around the globe to serve the retailers vs fighting. We also work with any other cloud environments—If Amazon makes a Prime Cloud with free shipping, I’ll take that!

Laura Davis-Taylor
Guest
Laura Davis-Taylor
7 years 29 days ago

All points above are valid, but one not yet discussed are those of security concerns. I have a dear friend very, very high up in a cloud security company and it’s a valid consideration. Until the clouds are bulletproof, it’s not likely that the world’s largest retailers are going to jump in.

Gajendra Ratnavel
Guest
7 years 29 days ago

Has it become so? Not too sure, but it definitely should be primary. Going cloud not only improves efficiency, scalability and cuts cost, it will also enable new innovations to take place. It will allow for much easier exchange of data. This is certainly something that retailers should embrace.

The elephant in this room is security. There have been too many embarrassing incidents that consumers may react in a negative way. Time will solve some of these issues as people get comfortable with the cloud and understand the risks vs reward.

Martin Mehalchin
Guest
Martin Mehalchin
7 years 29 days ago

Eric Schmidt’s comment nails it. It’s not the cloud itself but the scenarios that are enabled by ubiquitous mobile devices and network access running on a cloud backend. The vendor battle will drive faster innovation and lower costs so it’s good for enterprise customers. For retailers, Google and Microsoft have fewer conflicts of interest and pay better attention to vertical solutions than AWS.

Vahe Katros
Guest
Vahe Katros
7 years 29 days ago

Seems like there are three types of clouds:

  • The cloud to host your custom app’s hosted on horizontal platforms.
  • Entire Enterprise systems/Verticalized app’s in the cloud – like Netsuite.
  • And turn-key retail clouds that are like malls that already have their own tools and audience—like say, eBay.

You don’t need a weather man to know which way the wind is blowing in this survey.

Shep Hyken
Guest
7 years 29 days ago

The cloud is where it all is! It allows for a third party (typically) to keep our information and manage virtually every function we used to do on individual computers. It’s easier than ever to manage inventory in multiple locations, track sales, spot trends, etc. Everything can become cloud based and accessible from any machine, anywhere in the world. So, why would this be considered a secondary investment?

As for the battle between Amazon, Google, etc., I am not sure there is a battle—or a major advantage of one over another. There are features that can be chosen based on personal preferences. It is just a matter of choosing where you want to do business. It could be a smart move to backup on a different company’s cloud.

Gordon Arnold
Guest
7 years 29 days ago

The future of successful retail is in e-commerce regardless of how retailers choose to engage the tools available. Whether IT is used to sell, purchase or support consumers the failure to engage technology will properly will cause any-and all to lose income. That said the first and foremost consideration must bean IT infrastructure built to expand with compatible software and solid security. At the present the cloud is far from secure and few IT manager are aware of the security issues and/or the disaster recovery issues that exist for the participants to deal with.

I am comfortable with the need retail has for cloud computing. I am not so sure that cloud computing is, as it stands, is the right choice for those with suspect or limited IT capabilities.

Kai Clarke
Guest
7 years 26 days ago

Yes, the cloud is, and will continue to be a primary investment for smart retailers. The market leaders like Amazon have proven this, and will continue to do so as the opportunities it provides increase their bottom line….

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Braintrust
"The cloud battle is the real issue here. No one wants to be the guy who bets on the wrong horse (think Betamax)."
"It is a big step for most to trust external platforms for housing and executing their data needs. That said, not having a clear view of the ever-changing future landscape is also a source of concern for retailers who may be hesitant to lose some control over the security and safekeeping of their data."

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