The cloud is out there.
Your customers are on it. Your competition is on it. If you’re not on it – or at least moving toward it – then you run the risk of becoming obsolete.
Recently, we shared the Top 12 Reasons to Use Cloud-based Inventory Management. Those reasons represented advantages your business could gain by using the cloud.
Today, we’re going to look at the flip side of the coin: what will happen to your retail business if you don’t adopt cloud technologies?
Lack of On-Demand Inventory
One thing legacy systems are not designed for is real-time updates. Even with frequent batch updates during operating hours (if you can manage it), your inventory databases will always be two steps behind. That means you need to build in protective measures to avoid overselling, especially when you’re trying to source from multiple locations.
With cloud-based inventory systems, your competitors will be able to sell through their stocks and hit their reorder points quicker… while you’re still waiting for that overnight batch to see where you stand.
And when your location is out of stock of an item, what do you do? Call another store and ask them to find and hold a product for your customer? How long does that take (assuming the other store answers the phone)? Your cloud-enabled competition doesn’t have that problem. With real-time inventory updates, they can tell if the other store has the item in stock. They’ll just place the order or hold right there on the spot.
Which experience would you prefer as a customer?
Lack of Omnichannel Distribution
Cloud-based inventory systems have allowed retailers to evolve into omnichannel distribution models. According to TechTarget, “omnichannel provides the customer with a seamless shopping experience whether the customer is shopping online from a desktop or mobile device, by telephone or in a bricks and mortar store.”
What this means is that customers will find the products they want on your competitor’s cloud-based system far more easily than they will on your legacy system. And while many retailers have created new proprietary systems on top of their legacy systems merely to simulate omnichannel distribution, these are nowhere near as efficient as the real thing. Ultimately, they add another layer of cost into your distribution network that your competition doesn’t have.
Higher Inventory Storage Costs
Another advantage of omnichannel distribution is that it treats every store as a warehouse and fulfillment center. Because each store is able to ship products directly to customers, there is less need to maintain large fulfillment centers. Plus, individual stores don’t need to carry as much inventory, since intracompany transfers are much more streamlined. What you end up with is less space and cost consumed by the storage of inventory.
At least, that’s what your competitor can achieve with its cloud-based inventory system. Without it, you’re still stuck with each store needing to carry higher inventory levels, with even more inventory staged at fulfillment and distribution centers.
Huge Infrastructure and Implementation Costs
When you think about it, your cloud-based competitors have it easy.
They don’t have to build, support, or maintain their own technical architecture (at least for those systems). The cloud platforms do all that for them. All they have to do is maintain their own data and any customized software. How much money do you think that saves them? According to IDG’s Enterprise Cloud Computing Study, half of the companies transitioning to the cloud said they’d reduced their IT costs by 25% or more.
It gets better, too. When new software is implemented, they don’t have to go from location to location, computer to computer. All they have to do is install it once and train the employees how to use it.
You, on the other hand, don’t have it quite so easy. You need to support and maintain all of your own technical architecture. You need to update it – both hardware and software – in what amounts to an endless cycle. You need to backup and secure your data. You need to keep up with security patches and revisions not only for your operating platforms, but for each individual piece of software.
Moving to the cloud lifts a huge burden of costs from your IT department’s budget. But if you’re still shouldering those costs, at some point you’re going to find it hard to compete.
Scaling Your Business
What happens when your business outgrows your current technology infrastructure? You need to build a whole new infrastructure, that’s what. Which means new hardware, new software, new facilities… as well as new installation and implementation costs.
Quite honestly, the complexity and expense of replacing a systems architecture is one big reason why many retail companies fail in their attempts to “scale up.”
With cloud-based systems, scaling up is literally as easy as selecting a new radio button and clicking “SUBMIT.” The main cloud providers – AWS, Google and Microsoft Azure – provide platforms where even the largest of corporations are dwarfed by the overall throughput. This easy scaling is a huge advantage for retailers on the cloud as they look to expand and grow.
If you’re not on the cloud, however, you might want to start budgeting for that next infrastructure update now – the cost is going to be huge.
Obviously, you don’t want your retail business to become obsolete. And you might even recall facing a similar decision not that long ago – about getting your first ecommerce website up. Some retailers embraced it wholeheartedly, while others published information-only sites. Who benefitted the most during that transition? Who missed out on the explosion of online shopping?
With the cloud, the differences between the haves and have nots will be even more pronounced than they were during the advent of ecommerce. Not only will cloud systems make the customer experience easier, but they also have the potential to dramatically improve your efficiencies, reduce your costs, and revolutionize the way you do business.
For more information on how your organization could take advantage of the cloud, contact DecisionPoint today. We specialize in building the modern retail solutions you need – including everything from warehouse management systems to customer-facing mobile sales.