By Richard Davies, CEO of ElasticHosts.
On Black Friday this year Britons spent a whopping £1.1bn online, but many retail websites, such as John Lewis', couldn't keep up with increased traffic despite increasing server capacity by a third from the year before. For online retailers to generate as big a profit as possible over the upcoming Christmas period, they need to maximise revenue and minimise overheads.
If retailers embrace technologies that ensure website reliability, protect the customer experience and reduce spend on IT, they'll stand a much better chance of not only surviving periods of high demand, such as Black Friday - but of thriving. But how should they go about doing this? Here's our three step guide to sales season success:
1. Keep costs down
Many online retailers turned to cloud computing to reduce spend on IT infrastructure, as it eliminates the need to run and maintain expensive on-premise servers. Unfortunately, research has shown that companies are only using around 51 per cent of their cloud server capacity, which means that most retailers are paying for infrastructure they don't need. This unnecessary expenditure eats into earnings generated during periods of high demand, such as on Black Friday.
Retailers, both big and small, should asses emerging cloud technologies that dynamically scale alongside usage, so that they are never over or under provisioned. Containers, the next generation of cloud server, accommodate for peaks and troughs in demand fluidly. They scale up for instances of high demand and automatically scale back when demand falls. This is especially beneficial for those retailers that have substantially more web traffic during the day than at night - when most shoppers are asleep.
As containerised server usage is monitored, it can also enable usage-based billing – so retailers only ever pay for what actually use, in a the same way they do for electricity or gas. This reduces online retailers' overheads and increases their profitability as a result.
2. Keep websites and shoppers happy
Spikes in activity, such as those experienced on Black Friday, can overload servers and cause websites to run at a slow pace, or even crash. This can result in a loss of revenue and reputation. Shoppers will become quickly frustrated with a slow website and abandon shopping carts, or worse still default to a competitor. This year household names including Schuh and Zara struggled with website availability after increased web traffic overloaded their servers and Argos, Tesco, John Lewis and Boots all experienced problems.
Traditionally, retailers would prepare for surges in web traffic by investing in additional servers to accommodate demand. This additional capacity is often loaded in blocks of capacity, as they are charged at a capacity rate. This is expensive, and is often beyond the financial restraints of smaller retailers, as traffic spikes are fleeting so it doesn't make financial sense in the long term. However, it can be equally costly for retailers to have a website that fails when faced with heavy traffic. Amazon reportedly lost $66,240 (£43,559) every minute the website was down during a 2013 outage.
Instead of working with the typical 4GB servers, which need to be provisioned and managed, containers can allow retailers to scale from 1GB to 16GB at the blink of an eye. By having capacity on demand when needed, retailers can guarantee a much smoother customer experience.
3. Keep it focused on the job in hand
The cloud allows businesses to cut back on their infrastructure and IT management costs as retailers can essentially outsource this function to a third party. However, while they may not have to look after servers or manage a datacentre, using VM servers is not as hands off as it can seem. In fact, a recent survey showed that 81% of retailers felt they had to sacrifice service and support when moving to cloud, and a further 85% felt cloud providers could do more to meet user expectations regarding reducing the support and maintenance burden on our in-house IT staff.
Part of the reason retailers are feeling unsupported by cloud providers is that despite the fact they are running virtual servers, they are still having to manage capacity levels. This is particularly true at a time of high demand when IT teams are often fire-fighting other problems. However, using containers, infrastructure becomes invisible. IT teams can set them up and let them run without having to manually interfere, leaving them free to concentrate on other areas.
To maximise revenues throughout the holiday season, online retailers need to ensure website reliability; protect the customer experience and minimise overheads. Retailers that switch to containers, not only stand themselves in good stead for Christmas, but also for other periods of high demand – such as the Boxing Day and New Year sales.