How eCommerce has adapted to the pandemic [Q&A]
One of the side effects of the COVID-19 pandemic has been a boost to online shopping. This has increased pressure on companies offering eCommerce to adapt quickly to the new business model.
But how well have businesses -- particularly smaller ones -- coped with this and what should they be focusing on as we move forward?
To find out we spoke to Blair Lyon, vice president cloud experience at cloud computing specialist Linode and Lukas Hertig, SVP business development and strategic alliances at server management company Plesk.
BN: How has eCommerce changed over the past year, and how did customers switch over to online shopping?
LH: We've seen a lot of change and a lot of growth in the eCommerce space. I was thinking, everybody already has an online shop, but the reality is far from that. I had so many people coming to me personally, saying I have this small retail shop, can you help me quickly build an online store? The reality is that trying to do this quickly doesn't really work because you should have a long term perspective.
In terms of what we are seeing as a company, we have seen a tremendous growth of WooCommerce. WooCommerce is part of WordPress, and it's the largest self-hosted, self-managed online shop solution. Working with partners like Linode, We have seen a tremendous increase in the number of activations using Plesk, especially in the first few months during the first lockdown last year. We believe that this is not going to stop.
BL: Over the last year, we've seen this incredible leap forward for a lot of our customers around their digital transformation projects. They have probably jumped forward maybe three to five years due to the pandemic and the need to really scale their eCommerce stores and initiatives. McKinsey found eCommerce went from just over 15 percent of retail activity in 2019 to around 35 percent in Q1 2020. That's around ten years' worth of growth in three months. In Germany, the eCommerce market saw turnover in 2020 rise by 14.6 percent.
When this pandemic hit, and when they got this rush of customers, a lot of companies weren't quite ready for it. One of the things that they had issues with was even finding capacity and being able to grow, let's say, their on-prem storefronts. A lot of them turned to the cloud in order to scale up, as they had to go where the capacity was, to providers like Linode.
There was also a behavioral shift for customers in terms of looking for alternatives that are going to satisfy their needs, whether it was online grocery shopping or being able to get the other kinds of products that they needed. Being able to invest in infrastructure, to invest in scale, to invest in performance and be able to reach these new markets, is one of the things that has really changed over the last year.
BN: How have smaller companies managed this move?
LH: There is a trend in the market around who builds these websites and online stores, the people I call web professionals. This is everything from professional agencies to smaller consultants or hobbyists, but they all get involved in these projects. Previously, they would go to a more traditional hosting provider to get a shared hosting environment.
But as those organizations' digital transformation needs grow, those web professionals would rather go to a provider like Linode with Plesk on top of it, because it's so easy today to actually manage your whole server. That approach provides you all the control and also scalability that you actually need for your digital transformation needs. So having your own virtual private server and Plesk automates so many layers in the implementation, and it is the way to go for these customers so they can have a more scalable online shopping site and help in their digital transformation environment.
BL: One thing we've seen is a focus on simplicity and predictability. Companies are turning to managed service providers and systems integrators and other kinds of dev shops building and managing storefronts on behalf of their customers. They're looking for ways to cost-optimize wherever possible, they're looking for ways to cut complexity, to be more agile in what they do. They want to make those costs more predictable too, so they don’t get spikes in bills when they have a good month of trading.
Making this simple helps them focus on more strategic areas, like what they want to provide for their customers, whether it's differentiated experiences, additional innovative services and features, other kinds of services that they can have to be more competitive, things like that. So any time you can reduce complexity, reduce cost and make it more predictable, is going to be a win-win for everybody.
BN: Now these companies are online, what should their number one priority be? Is it security?
LH: Running your online store and transforming your business in the digital world is not a quick goal. You have to take a really long term view. For instance, you need to do the same as you would do with your physical retail store -- sometimes you need to get new offerings in, sometimes you need to run promotions or spruce up your store. Ultimately, you need to talk to your customers and you need to find out about their needs. This is a key foundation to start understanding how this works.
When we talk from a technical perspective, I think companies should look at how they use open source. For example, you can use the combination of Linode and Plesk alongside WordPress or WooCommerce. But you can replace any of those components with another and you are not locked in as you would be with some other Software as a Service products.
I think security has to be considered, and you should look at how your updates can be automated. For online stores with thousands of products, or tens of thousands of products, you will need a very different consideration in terms of caching and other issues on the performance side of things compared to those that cover smaller volumes of products. I think security and performance are definitely key items to learn and to understand because every second it takes longer to load your site, you lose a certain amount of customers. So I think these two things are really very important. and yes, ease of use is important too.
BL: Having built-in security like DDoS protection or cloud firewalls will allow you to make sure that you have the uptime and the necessary performance to be competitive in this marketplace.
I think one of the most important areas is how to make things simpler and easier to maintain, while delivering that high performance and the security that you need. This then frees you up to do those other things that I think a lot of eCommerce providers or customers need to create a differentiated customer experience. That could be looking at other kinds of capabilities around personalization and where you really need to compete on the actual customer experience. Making the infrastructure side and the technical side easier allows you to spend more of your limited time and resources on delivering that differentiated customer experience, which will help you become more successful.
BN: What other issues should people be thinking about? Management, performance, development or other areas?
BL: I think you do have to go in with a plan on what you want to achieve in the future. You should try to remain flexible and try to find the right technologies that fit for you. Whoever you work with from a partner perspective should have the support structure and be able to service your needs, especially if you're a small to medium sized business.
Our whole mission is to make cloud computing more simple, affordable and accessible to everybody, not just those that have large bank accounts and budgets. We are happy to have you as a customer as cloud is all we do - we aren’t in retail, our business isn’t supported by advertising data, and to the best of my knowledge we don’t have plans to build rocket ships. We want to be able to provide good accessible simple cloud computing services, and allow the customer to have a choice in the provider they work with. And in this market, that's really a powerful statement.
LH: The future of eCommerce is not just selling online, just like it is not about running a physical store alone any more. The future is about more companies working across multiple channels in a consistent way, rather than just the very biggest retail brands. That means looking at your architecture and IT systems as a whole.
Does your current implementation support your needs for an omni-channel experience? That includes, for example, that I can sell online and I can pick it up in the store, or I can buy online then bring it back in the store, or that when I'm coming into the store, I'm actually getting recognized as a high priority customer and I should get an additional discount based on my previous online ordering.
What a lot of people don't realize is that running proper eCommerce is actually much more complex than they think. it comes back to having a proper strategy that can grow and evolve over time, rather than trying to do everything at the same time. If you have a proper web professional partner that not only builds and maintains your IT assets for you, but maybe even helps marketing your products for you, you should be in good hands.