Online shopping is nothing new in the retail industry but, as increasing numbers of people gain more ways to shop on the web, e-commerce has become a major growth area for retail brands of all sizes.
UK retailers such as John Lewis have adapted well to the opportunities presented by internet-powered shopping, and reported positive results over the Christmas period.
Yet not every retailer has enjoyed year-on-year growth in online sales. M&S reported a drop in online sales of nearly six percent at a time when wider industry figures continue to tout e-commerce as the future of retail.
M&S had a new website that was able to cope with the increased web traffic expected over the Christmas period, including the Black Friday and Cyber Monday sales now adopted by the UK.
Yet the large number of sales that needed to be fulfilled from a successful Black Friday overwhelmed M&S's national distribution centre in Castle Donington, Leicester.
This led to increased delivery times and prompted the firm to curtail any further product discounts which had an adverse effect on online and in-store sales.
M&S's third-quarter results indicated that it had been brought low by a flaw in its physical supply chain, despite pursuing an e-commerce strategy backed up by investment in technology.
M&S will ensure that these problems do not arise next Christmas, but it's an example of how the benefits of e-commerce can be scuppered by real-world shortcomings.
Clive Longbottom, founder of analyst house Quocirca, told V3 that retail companies looking to run effective e-commerce arms need to consider how they fit into the operations of the overall business.
Retailers embracing e-commerce must ensure that inventory operations are robust enough to cope with the rush of orders online shopping can deliver.
"If your inventory consists of hundreds of thousands of different items, you're really going to struggle when you have a massive peak of online activity, because it's a case of: have we got enough things in physical inventory to fulfil these orders?" he said.
"If it's not fully tied together all the way down the supply chain, you end up selling more than you've actually got in inventory."
Longbottom also explained that big retailers need to focus e-commerce activity on specific markets, as trying to be 'all things to all people' creates a confusing proposition for customers.
He went on to cite a flip side of this situation where retailers, such as Tesco, have found that a healthy online Black Friday and Cyber Monday had an adverse effect on business as a whole, owing to discounting some products below cost price and damaging bottom-line profits.
Miya Knights, senior research analyst at IDC, echoed some of Longbottom's views, adding that retailers will struggle with the integration of IT systems with retail operations in an attempt to build multiple ways to target customers.
"There are still going to be challenges around integrating assets, processes, supply chain merchandising and other areas," she said.
Integrating supply chains with online retailing leads to a high-tech challenge that retailers will need to address if they are to run a successful e-commerce operation.
Retailers can face a 100 to 1,000 percent increase in web traffic to online stores during peak sales periods, and need to have suitable back-office IT infrastructure to cope with these peaks.
Longbottom explained that retailers need to forecast the level of traffic they expect to receive and ensure they have the appropriate infrastructure in place.
On-premise systems may work for retailers expecting double the increase in traffic during busy times, but Longbottom warned that larger companies need to adopt cloud-based systems to scale infrastructure demand up or down as required.
Using private infrastructure is not a cost-effective approach for large e-commence operations to scale up capacity to cope with huge peaks in web traffic. "It only makes economic sense to do that through the cloud," said Longbottom.
Despite these two challenges, TLT's Retail Growth Strategies Report 2015 noted that 69 percent of surveyed retailers are investing in websites and mobile sites, indicating a dedication to exploiting the benefits e-commerce can deliver.
One key aspect of this investment is that e-commerce allows retailers to expand internationally without the need for a physical presence in other nations. The report found 72 percent of retailers are using or will use their online presence as the main way of international expansion.
There is no doubt that e-commerce will continue to grow in 2015 given the results it can yield for retailers.
However, those that fail to find models that effectively translate their physical brand into the virtual world may end up rapidly falling behind their more adaptable competitors.
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