Why Today’s Retailers Can’t Afford Not to Migrate to the Cloud

As a retailer, you don’t need to read the daily headlines about the state of retail to be very aware that innovating and streamlining your operations is becoming increasingly essential to staying competitive and growing your business.

I have these conversations with numerous retailers on a regular basis.

Many are faced with increasing management costs and burdens of legacy, on-premise POS and retail management systems, which stand in complete contrast of retail innovation. They’re not able to truly operate in real-time and take advantage of modernized functionality and emerging features like automation being offered in a cloud-based retail management system.

Taking your migration plans from legacy, on-premise POS to the cloud is an endeavor. No argument there. But let me share with you why now, more than ever, is the time to set your plans in place. The good news is that the process is much less expensive than you may think and will begin to pay for itself quickly.

The Lack of Innovation Adoption is a Retail Dilemma

The PA Consulting Group works with worldwide organizations to advise them on how to best meet business goals, and in their words, their firms have “proved time and again that innovation —pragmatically applied—can be a powerful force for competitive advantage and growth.” In their recent study, they “were frustrated to see organizations forgoing opportunities in future competitiveness, productivity and financial gain.”

Surveying 821 senior executives across the globe about innovation, PA’s findings showed that 66 percent of those executives believed their companies will not survive without innovation and adopting new technologies. In contrast, 37 percent stated they’d made little to no moves towards making the innovative changes needed to survive.

My point is: you’re not alone.

Legacy back office systems can impair the ability to operate a retail brand where all channels work seamlessly with each other in an omnichannel model. Where a retailer can deliver goods and services wherever and whenever consumers are browsing and shopping, while providing the level of service shopper’s demand.

Being able to support omnichannel goes beyond bandwagons and buzzwords. It’s about exceeding customer expectations, so the only thoughts on a shopper’s mind is how much they love the new spring line from their favorite store, and not whether that store has their size in the color they want, be it online, in-store, or on mobile.

A researcher for Software Advice, a Gartner Company, has some advice about the benefits of cloud-based retail management versus legacy POS, “With tons of products spread throughout multiple locations, getting a firm handle on company-wide stock levels can be a huge challenge. But it’s efficiency that multi-store merchants need to achieve in order to streamline inventory management.”

Taking Stock of Your Legacy Retail Operation

The first step is getting a reality check of your retail business. In order to innovate and move forward, you first need to take a look at some ugly truths.

Reviewing abandon shopping cart rates is a common practice for ecommerce organizations. Many retailers have ways to woo the customer back into completing the purchase. Just as important is the story behind why the purchase wasn’t completed. Was your shipping charge too high? Product not competitively priced? Check out process too cumbersome and lengthy?

If you take a step back, how much business is being lost on a daily, monthly, and on an annual basis? How are you managing your margins, and is this costing you sales or weakening your business position?

Legacy systems have their limitations and aren’t always able to update inventory in real-time, or change prices across the board in an quick and easy fashion. Flash sales have proven to be of benefit to retailers with the right approach and system in place, but can backfire on retailers with an outdated retail management platform that can’t handle the overload on their servers or on their shipping and customer service staff. Angry customers then take to Twitter or Facebook, and we’ve all seen how that goes for brands.

If your checkout process requires a number of hoops to jump through because of how it was configured years ago, how much would that cost you to streamline and update the process, and is it worth it?

What about security? How well is your legacy system sending software updates to address the latest security requirements?

On-premise environments typically require retailers to employ a full-time administrator. When it comes to support, these platforms are not always retail centric, making technical issues more difficult and time-consuming to resolve. Depending on the vendor, many may require you to choose your ecommerce vendor from their proprietary marketplace versus enabling you to choose from other solutions like Shopify, BigCommerce, or Magento that will better suit your needs and budget.

Taking the time to do a thorough audit of all the ways your unique retail business needs to improve each operational area -- order processing, pick and pack, shipping, supply chain management, inventory management, invoicing, and customer service -- will enable you to assess whether your on-premise POS system can meet these requirements.

Plus, if you’re spending all your time, resources, and big chunk of your operational budget just keeping up with the back office operation, that means you're most likely neglecting your front office. Balancing the two is an essential component to running a competitive, growing business.

Another study by Gartner Research from March of 2017 focused on taking a new industry view for retail and consumer goods, stating that the transformation many retailers are currently experiencing requires a systemic approach, “Firms must redesign the front of the house while also improving the backend infrastructure necessary to power this kind of agile commerce ecosystem.”

How Cloud-Based Retailers Deliver a ‘Customer First’ Experience

Now that we’ve looked at the weaknesses of a legacy POS and on-premise retail management system, let’s see how each of those pain points are addressed after you’ve migrated to a cloud-based platform.

First, you’ll have a single view of your customers, of your inventory in all of your warehouses, your sales, pending orders, returns, and a number of other data points. And it’s all real-time data.

True support for omnichannel, with inventory updated across each channel immediately upon a sale or a return of an item to inventory: in-store(s), online, mobile, eBay, or Amazon. A customer buys a product online but wants to return it to the store in exchange for a different size or color. No problem.

Online check out systems have been improved significantly for both desktop and mobile to deliver an easy way for the customer to complete their purchase, eliminating those hoops.

Automation is now your friend. You can set up rules that could assign orders coming in from a specific regional area to a specific warehouse and assign to a specific shipper by weight or region. When the order ships, the customer automatically receives a notification by email or text with the tracking information, whichever they prefer.

These are just a few simple examples, but the beauty is that you’ll be able to customize your operation easily to fit your unique retail company without requiring the cost of outside IT services or additional internal resources.

Another key competitive and cost benefit is the ability to grow your business without the need to add more back office staff. Automated design significantly reduces the need for manual processing. You can handle the holiday rush and determine ahead of time whether certain discounts benefit your business, or if strategic flash sales can increase your customer reach while preserving margins and profitability.

Forrester Consulting and Accenture Interactive partnered on a study, and their number one finding of the 396 decision makers they surveyed center around delivering a premium consumer experience, “With customers in the driver’s seat of their interactions with brands, businesses must create positive and relevant customer experiences across channels and touchpoints. As a result, digital development and customer experience improvement are two key priorities for businesses.”

The Move to Migration

Legacy on-premise POS and retail management systems have too many weak points to truly support omnichannel, which has increasingly become the operation model today’s retailers need to compete and meet customer demands. The cost to maintain and update these systems is not going down anytime soon. The additional costs to your business by sticking with the status quo is most likely even higher.

The time is now for migrating to a cloud-based retail management platform. There’s no doubt that your competition has already made the move or is in the process. While there is a definite investment required up front, it’s a lot less than you may expect. In the short and long term, the move will enable growth and profitability, will save your company money in a myriad of ways, and overall, will save your company.

This article first appeared on ITProPortal.

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About the Author

Derek is CEO of Brightpearl, responsible for the overall company strategy. Co-author of the Omnichannel Survival Guide, Derek is recognized as a leading retail expert, and his mantra is to deliver on Brightpearl’s mission to automate the back office for today’s merchants. During the 1990’s Derek founded two IT companies, including Ireland’s first online advertising agency building database driven websites and offering SEO services. Most recently, he served as Senior Vice President of field sales and marketing for Norton, responsible for $1.7bn of revenue globally. Since Derek became CEO of Brightpearl in spring 2016, the company has seen significant growth in its core customer base, cementing its position as an invaluable asset for mid-sized merchants seeking a competitive edge.