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The Impact of Cloud Computing in Rapid Transformation of Retail Business

Executive Summary

With the rapid transformation of the technology, retail businesses have also started to infuse digital techniques in operations. In this scenario cloud computing provides the opportunity to produce a unified networking system involving all the organisational departments. Here a literature review has been conducted to check the effectiveness of cloud computing in rapid transformation of retail industry. Certain implementation challenges have also been identified that need to be solved for future success.

Introduction

Cloud computing includes planned delivery of the computing services like analytics, databases, storage, servers and many more. In recent times cloud services are being used extensively in retail sectors. Cloud services help to reduce costs associated with computing, storage and infrastructure strategies. Cloud computing has helped in the rapid transformation of the retail sector providing efficient inventory management, improving user experience and enabling data security (Attaran and Woods, 2019, p496(2)).

Aim

Identifying the impacts of cloud computing in the rapid transformation of retail business is the main aim of the research.

Objectives

    To identify the multidimensional impacts of cloud computing in the overall transformation of retail businesses

●      To investigate the effectiveness of cloud computing in improving inventory management, organisational data security and enhancing customer experience

Literature review

Causes of infusing cloud computing in retail businesses

The concept of cloud computing denotes information sharing using the internet. As indicated by Gajjar (2020, p 982(2)), cloud computing helps retail management to access the computing abilities from any location through a physical infrastructure that is supported by the internet. Cloud computing helps in handling unpredictable and seasonal demands. Many retail organisations work internationally, a shared network helps to create a shared environment of virtual communication cross-borders. Improvement of customer service is another advantage of infusing cloud computing. Informational flow is enhanced by cloud computing; therefore, retailers can flexibly connect with the consumers using it (Gajjar, 2020, p982(5)).

Digitalisation is important for matching the modern trend of business. Digitalisation is providing agility, data intelligence, value propositions and customer-centricity to retail organisations.  Cloud computing helps in managing and processing retail data. Additionally, it also helps in making tactical decisions in retail supply chain emergencies (Malenkov et al, 2021, p3(5)). Walmart is an example of a big global retailer. Each year the company spends a million dollars on technological system development for tracking and developing millions of process transactions. The cloud network of Walmart is the largest among the retailers (Forbes, 2017).

Data Analysis and Findings

The recent pandemic has ignited the digitisation of retail organisations. Due to the ‘new normal restrictions. Manual business processes are being hampered and the cloud platform is serving as the unified place of all business operations. 47% of the US retail organisations have completely turned all of their manual operations into digital during this pandemic (Lv, 2021, p298(3)). The buying habits of retail customers are changing rapidly. With manual analysis, tracking the change of changed customer behaviour is difficult. Cloud computing has improved the prediction process in the retail business. Managing several cost-effective streamline operations, timely reporting of business operations is important.  Flexibility in scaling up and down the business is one of the advantages that cloud computing is providing in the way of transforming retail organisations (Malenkov et al, 2021, p4(2)).

Cloud computing enhances inventory management of retail businesses

In retail business ordering, tracking organisational stocks and storing are important. All the activities belong to efficient inventory management by the businesses. Raw material management, checking the socks of the finished products and efficient warehousing are improved by proper inventory management.

Several retail companies operate through multiple stores at multiple locations. Without a unified inventory management system, it is not possible to keep track of the storage across all stores. As discussed by Agbola and Amoah (2019, p46(2)), cloud computing helps retailers providing wide visibility of the stocks across all stores. RFID is a recent cloud computing technology that uses waves of radiofrequency for data transferring. Retailers tag the inventory items using RFD and the materials are automatically tracked by the tags. Certain advantages had made retailers adopt RFID technology in retail inventory operations (Zhang and Gong, 2021, p2(1)).

RFID tags are free of the line of sight as barcodes. From a distance, it can be read which helps in quick inventory management. Moreover, rapid updating of the inventory can be tracked using this technology. Cloud computing effectiveness in the terms of RFID technology, reduces 50-80% of the total distribution centre costs (Agbola and Amoah, 2019, p55(1)). A unified system does the counting, check0-in and shipment verification of the sticks. Therefore, labour costs are significantly reduced using loud computing.

Types of coding systems used by the retailers
Figure 1: Types of coding systems used by the retailers
(Source: Agbola and Amoah, 2019, p.55(2))

Coding is effective in managing retail inventories efficiency. As indicated by Agbola and Amoah (2019, p.55(2)), before the implementation of the RFID system, the retailers used to use the barcode system in tracking the inventories. The implementation of cloud computing in inventory management has helped to reduce the inventory management costs by the retailers. 

Complex event processing (CEP) is an effective organizational tool that aggregates multidimensional information. Based on the present time scale, CEP analyses and identifies the cause-effect relationship between different organisational functions (Peng et al, 2019, 53(2)).

Motivated example of a retail store enabled with RFID

Figure 3: Motivated example of a retail store enabled with RFID

(Source: Peng et al, 2019, 55(1))

The above figure denotes that RFID helps in data management and stock tracking without manual interventions. RFID technology can align different kinds of data with other information like attributes (Peng et al, 2019, 55(1)). Managing customer demand is the most important challenge that retailers need to solve. RFID technology helps in stock tracking, therefore, retailers using this are never out-of-stock. RFID is also changing the meaning of data warehousing. The query process is also simplified by the Application of RFID. In the pandemic situation, RFID has completely reduced the need for manual management of retail inventories, RFID is solving the issues with the help of a unified cloud computing network (Zhang, 2017, p3(1)). Due to the current pandemic, manual handling of the organisational storages have become obsolete. Moreover, restrictions on the channelization of the materials and other things have contributed to adopt the RFID technology for managing inventory by most of the retail organisations. Therefore, it is efficiently transforming the whole inventory management process of the retail organisations (Peng et al, 2019, 55(3)).

Organizational data security and customer service improvements are done by cloud computing

Customers are an important part of the retail business. The retailer needs to communicate with the customers continuously. In order to manage the authenticity of the huge number of data, privacy loss and data leakage are to be restricted. As described by Wang et al (2020, p381(2)), BAA or business associate agreement is an official agreement that retailers need to gain from the cloud computing providers. This contract exhibits that safeguarding PHIs is important. Usually, retailers maintain track of the investment data, sales figures and the data associated with customer feedback in the local network. The DDoS attack is one of the threats that can leak stored confidential data. Storing data in the cloud help retailers to protect those from leakage with the help of encryption, internal firewalls, event logging and many more.

Key advantages of implementing cloud computing in the retail process

Figure 2: Key advantages of implementing cloud computing in the retail process

(Source: Paramita and Wiradinata, 2018, p150(1))

The above figure denotes that collaboration and sharing are the key attributes of effective customer service. Cloud data helps retailers to make customer purchase predictions using data analytics. This information helps the retailers to understand customer choice and preparing marketing strategies likewise. Point of sale (POS) denotes the place where the purchase actions happen Paramita and Wiradinata, 2018, p151(2). Cloud based-POS is the part of the sales system that acquires all the information related to transaction processing from a cloud service. Cloud POS system makes the payment system easier and the translation time is reduced for the customers (Yoo and Kim, 2019, p223(3)). In these ways, cloud computing is also transforming customer service in the retail sector.

Big data inundate a business process in a day-to-day process. Big data refer to a huge number of essential organisational data that need to be managed to manage the core competencies of a retail organisation. Customer information analysis is very essential for purchase prediction. As indicated by Ying et al (2021, p391(4)), cloud computing is fully applicable in analysing big data. This information is required for the perceived sales growth of the retailers. As an example, it can be said that retail companies using cloud data can make individual profiles for different customers. In this way, retail companies can value the needs of the customers (Felix et al, 2018, p115(4)). All these attributes are being possible by implementing cloud computing in the retail sector.

Big data constitutes an important part of organisational ethics. Evidence of the data related to organisational transactions and the processing of the customer feedback needs to be done officially. Based on the unified cloud computing network all the organisational data are stored in a single cloud space which is accessible by all other employees related to the process (Felix et al, 2018, p115(2)). In this way, cloud computing is helping big retailers to use big data in several processes.

Challenges associated and their impacts on cloud computing in retail business

Retailers face several challenges, in the way of implementing cloud computing in retail operations. Cloud technologies are updated constantly and with each update, the features of the cloud operations change (Alouffi et al, 2021, p57793(3)). This demands a highly technologically skilled workforce in the organisation who can deal with the updated functions. Thus, lack of expertise is a notable challenge.

Analysis On External Judicial Practice And Internal Governance Mechanism

Cloud computing reduces the overall labour costs and makes the organisational process unified. However, at the initial stages of cloud computing, process costs are high. Access to application software over a faster internet connection increases the costly investment in computer software and hardware. Cloud computing is making the payment system completely digital in retail organisations. However, the increased cost is an important barrier in implementing digital payments. Presently all the associated transaction costs are being absorbed by the retail company but in future, they can be passed on to customers (Seethamraju and Diatha, 2019, p5180(3)).  Generally, all the employees of a retail company use the cloud platform to acquire information. Thus, keeping password security is very important in retail organisations. Any individual with the portal password can enter the cloud and steal information.  Alouffi et al (2021, p57793(3)), denote those multiple levels of protection layers are essential for managing password security in retail organisations. Apart from these challenges, network stability, managing the migration operations are challenging events that retail organisations face during implementing cloud computing in organisational operations (Attaran and Woods, 2019, p497(3)). 

Discussion of the major findings

From the result, section, it can be said that there are certain impacts of cloud computing that are helping in the digital transformation of the retail business.

Cloud computing is revolutionising customer service

Due to the pandemic, the digitisation of business processes has been triggered. Retailers generally put the highest amount of focus on agility. Cost is the top driver in this case. Managing the public cloud applications while maintaining data security can only be enhanced through a hybrid cloud. As per the Australian retail data, 87.5% of the retailers think that concept of hybrid Cloud is an effective IT operation model (Power retail, 2020). Referring to the first objective, it can be said that this report has helped in identifying one of the great impacts of cloud computing on retail. Attaran and Woods (2019, p515(2), have said resulted that cloud computing technology helps the retail organisations to connected with the key stakeholders of the organisation like the customers, su8ppliers and others. SaaS based platforms are being migrated to cloud based structures. In another study, it has been identified that cloud computing is providing multidisciplinary support to the retail organisations, starting from implementation of RFID and inventory management software for managing inventory to overall organisational surveillance and security (Gajjar, 2020, p979(1)).

Better communication is established

Cloud computing helps to maintain strong communication between the customers and the employees. Being a customer-oriented society, great communication is the key to improving customer service. A cloud-based system enables a unified information system and communication system like the online feedback from the customers, chatbots (Wang et al, 2020, p389(2)). These are helping the retail processes effectively. Improved communication is a remarkable impact of cloud computing in the retail sector. Data security is an important part of organisational communication process. It can be said that block-chain technology associated with cloud computing enhances the communication process of the organisations. Cloud computing is effective in keeping data integrity, maintaining security and increasing efficiency (Alouffi et al, 2021, p57785(2)).

International Business Management of Amazon

Helping retailers to value customer feedback in creating new products

Data analytics is important for the creation of new data. It has been discussed that cloud computing enhances the analysis of customer feedback. Using the website traffic and SEO information, fashion retailers can understand the industry trends. Based on the analytics, the retail organisations, design upcoming products and that are capable of attracting the market (Haji et al, 2020, p2180(2)). Moreover, at the initiation stage of production, web prototyping tools backed by cloud computing saves retailer from initial costs. Customer service is very important for the retail business, as the whole process is customer oriented. Proper utilisation of big data for improving customer service with the help of effective social media strategies have been reported to be effective for the Singapore based retail organisations (Ying et al, 2021, p400(3).

Cloud computing is assisting supply chain management

Supply chain, as well as inventory management, are the most important two attributes of the retail business. In order to enhance the capabilities of retailers, cloud computing serves as one of the best tools. Supply chain records, supported by Cloud data help the retailer to make proper changes in their organisations (Attaran and Woods, 2019, p497(3)). RFID is another tagging technology that has helped retailers to point out the products from a huge inventory (Gajjar, 2020, p979). RFID has helped to check the placement of an order, comparing stock of different locations and many more. Thus, addressing the second objective, it can be said that cloud computing is effectively improving retail inventory management. Inventory management is an effective part of supply chain management. It has been observed that using the cloud computing technologies in the inventory management helps in managing the organisational activities, 12% more than the non-sharing approach (Zhang and Gong, 2021, p3(2)). Agbola and Amoah (2019, p47(3)), have indicated that through the survey results of 146 SMEs, it can be said that proper using of coding enhanced by cloud computing has direct positive impact on the inventory management of SMEs.

Summary

From the key findings of the research report, it can be said that efficient inventory management improved customer services and strong industry insights are some of the basic advantages of cloud computing in retail. Due to the pandemic, digitisation of almost all technological processes has been essential. In this context, the adaptation of cloud computing measures by retail companies has been increased. However, certain concerns are related to managing a huge amount of cloud data. Cloud computing is providing a unified platform for retailers to manage all of the organisational activities using a single network. From the entire research report, it can be concluded that cloud computing is creating a revolution in case of retail industry. The recent pandemic has triggered this adaptation more.

References

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