Home: June - July 2006 Lead Story › HOST WITH THE MOST



31/07/2006 | Channel: E-Business / IT


Organisations cannot afford to ignore the impact online shopping is having within the retail market. The latest figures from IMRG/Capgemini reveal that online shopping continues to grow compared with high street sales, reaching £4.5 billion in May, a rise of 1.6 per cent over April and equivalent to £73 per person. Alongside these statistics, many online retailers have unveiled impressive figures for their yearend results. Underlying profits at ASOS have leapt by 176 per cent to £8.25 million for the year-end to 31st March.Meanwhile sales for the 13-week period to 27th June 2008 were up 95 per cent. The company also reported 3.4 million unique visitors in May a 60 per cent increase year-on-year.

Likewise, online retailers such as Play.com reported sales growth of 29 per cent over Christmas 2007 and at the company's peak trading time on 3rd December, its site processed 700 orders per minute, up from 422 at the same stage in 2006.

These statistics are exciting at a time when the high street is stuttering, but as the online shopping explosion shows little sign of slowing entrepreneurial online start up
companies face the barrier of cost. This may prevent them entering what is fast becoming an increasingly competitive market place.

Counting the cost
Bricks and mortar retailers pay close attention to their staffing levels to make sure customers receive the optimal service in-store and, in turn, manage their costs smarter. Twenty-four hour stores do not operate at the same staffing levels at two in the morning on a Wednesday as they do on a Saturday afternoon - so why should online stores be any different?

Retailers could benefit from exploring the opportunities that a 'pay as you host' service would present. Adopting a managed hosting service designed specifically for retailers could provide a flexible and affordable hosting opportunity for retail websites.

Such an offering would take the hassle of running their server infrastructure away
from the retailer, while coping automatically with peaks in their business without paying for server resources and bandwidth that remain idle for large parts of the year.

All retailers experience significant peaks and troughs in their business. However, one of their key challenges is providing sufficient server capacity and bandwidth to deal with the peaks without incurring unnecessary cost when business is slower.

Retail hosting, from Maginus, offers a solution in the form of a flexible and affordable hosting service. Companies can configure a hosting service for a typical workload - this could be an average number of e-commerce transactions through their website. However, should business suddenly increase the service will adjust automatically to cope. Therefore, retail hosting clients only pay for the resources they actually use.

Don’t lose customers

Retailers are under increasing pressure to provide a fast and reliable service to their customers. Slow server response or downtime on an e-commerce website may result in a lost sale, or even worse, a poor customer experience may mean a customer never visit your site again. Equally, failure in a back office system that's being used to fulfil a customer order can result in a dispatch delay, a cancelled transaction and a customer being lost for good. The concept of retail hosting can also be adapted to meet the individual needs of a retailer. These range from the hosting of corporate websites and low volume ecommerce sites, to online stores that process high transaction volumes.


Custom hosting packages can be tailored to the specific needs of the retailer. These can include ERP, email and office applications. Alternatively a customer may want to consider a fully managed service, which will let retailers focus on generating and keeping customers happy instead of running and maintaining their server infrastructure.

Brand awareness
Along with hosting opportunities many companies are now looking at how the multibranding of goods could equally assist businesses in their growth plans. For example, a company could produce high-end PC products - these goods could be expensive and designed for a particular demographic. However, the same company may want to introduce a different range of goods but will not want to price it so they damage the value around their high-end brand and effect sales or their pricing strategy.

So companies are beginning to look at different branding for products aimed at a different type of market. This will help them increase a wider offering of goods available to a wider audience.

The benefits of this are not just about having more customers across a wider demographic, but it also presents the opportunity of spreading the cost of your infrastructure. This means you can have the same distribution centre for all your goods.You can also have the same call centre for customer queries and staff will know how to answer the phone from their caller display.All these add up to increasing your opportunities as a business.

Toy story
One such example of a customer maximising its branding is Tobar which is a
multi-channel business, selling inexpensive novelty presents in both B2B and B2C environments. Tobar trades via mail order, wholesale, over the web and through a number of expanding retail shops. The retail shops and B2C catalogue and website trade under the name of Hawkin's Bazaar.

By combining the management of its B2B and B2C relationships and all channels on one system, the company is offering slick customer service and whichever channel a customer uses there is access to relevant information such as stock availability, order status details and returns and the efficiency within the call centre has increased significantly.

The company also increased efficiency in the warehouse and this has meant that the company can handle more orders with increased accuracy and reduced despatch
time without having significantly increased staff numbers in the warehouse. As a result of increased picking accuracy, the percentage of returns has fallen significantly.When products are returned they can be processed much quicker and the goods either returned to stock or to the supplier and the customers credited. This is just one example of a company taking a multi-brand approach, but it is likely to become increasingly popular going forward.

As consumer demands continue to increase retailers need to make sure that they are catering for their every need. Consumers have so much choice available to them that retailers can ill-afford to make any errors. A website crash will mean that a customer is not likely to return for repeat purchases. Alongside this consumers expect more
choice than ever and retailers need to make sure they cater for a cross-section of society. By adopting a flexible approach and making the most of their technology, retailers - from small to large - could flourish and grow their businesses.