ECOMMERCE

Downtime Threatens In-Store Operations: Why Networks Require Resilience

BY CSA STAFF

Most retailers today understand that the customer experience they offer is just as important to their success as the tried-and-true fundamentals of product selection and price competition. In order to enhance those customer experiences, keep shoppers coming in the door, and bring new efficiencies to their business practices, retailers have adopted a growing army of in-store technologies that rely on online connectivity to function.

Whether customers are aware of it or not, stores are utilizing digital, Internet-connected tools in the form of more powerful POS systems, more efficient inventory and supply chain management solutions, optimized employee deployment, and customer relationship management and loyalty programs driven by the best data available. The tools are essential to the level of service and the quality of modern retail experiences that customers enjoy (and that they base their retail brand preferences upon).

However, these shopping choices often hinge on the seamless and uninterrupted delivery of those services that require online connectivity. Because network downtime can have such devastating consequences for retailers – shutting down business operations and alienating customers with profoundly negative experiences – retailers need to recognize how important the resilience of that network is, and think through strategies that preserve online connectivity throughout primary connection outages that inevitably occur.

With customer experience tied so closely to online connectivity, network outages can make carefully cultivated customer loyalty evaporate quickly. Retailers that can operate as cash-only businesses during network downtime are mostly a relic of the past. Because so many systems at today’s retail locations depend on connectivity to function, outages mean that sales simply cannot be completed until connectivity is fully restored. Unfortunately for retailers this makes customers likely to leave the store – and less likely to bring their business back.

A study investigating the behavior of customers in checkout lines discovered that one-third of customers have actually abandoned a full cart in situations where they were forced to wait more than five minutes. Even when network outages are short-lived, they have a ripple effect that severely impacts business: shoppers who see long lines make the decision to leave, and, remembering those queues, will choose to shop elsewhere. These shoppers also spread the word about their bad experiences and influence one another, such that 50% of surveyed customers would choose not to go to a certain store because of an incident that happened to someone else. Gartner has determined the average immediate costs of network downtime to stand at an estimated $5,600 per minute, and, given these facts about customer behavior, it’s easy to understand why the real impact is even greater.

It can be a challenge, but stores need to be realistic in assessing and addressing their risk. “It won’t happen to me” isn’t a strategy. In most cases, the root causes of network outages – downed lines, inclement weather, system crashes, pulled plugs, power failure at the router, issues at the ISP, human error – can’t be avoided. These issues are fundamentally unpredictable and outside of a retailer’s control. Given that 90% of organizations report having to cope with unexpected downtime of critical systems (with a third even dealing with downtime at least once per month), retailers would be unwise to pretend they are immune to these realities.

This is why retailers are able to benefit from adopting out-of-band management (OOBM) strategies. OOBM allows IT staff to remotely access the remote equipment at any location, and successfully diagnose, reboot, and repair that equipment without a costly truck roll. Out-of-band access vastly decreases the time it takes to resolve issues. Intelligent out-of-band management systems provide automated remediation of issues, proactive monitoring of network health and the environmental conditions, alerting administrators to problems or even repairing common issues proactively and automatically. The ability to achieve remote access, monitoring, and remediation serves to bolster network resiliency and keep critical infrastructure at retail locations online and operational, while also simplifying network management and control.

Stores also increasingly require redundant, resilient network connectivity that allows commerce to continue while the OOBM solution performs diagnostics and remediates issues whenever primary connections go offline. Systems designed to failover to a secondary connection as a temporary solution when the primary connection goes offline – such as a wireless cellular connection that wouldn’t be vulnerable to the same issues as a landline connection – can keep a retail location operating seamlessly throughout that downtime. These systems will failback to the primary connection when it is restored, allowing the retailer to maintain business continuity through the end of the outage episode.

Retailers understand that customer loyalty is hard earned and much too valuable to risk losing because of connectivity issues beyond anyone’s control. Employing strategies designed to safeguard network resilience should be seen as an essential part of every retailer’s game plan for delivering customer experiences that result in loyal shoppers and continued business.


Gary Marks is the CEO of Opengear, a company that builds next generation smart solutions for proactively managing and protecting critical IT and communications infrastructure.

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FINANCE

Office Depot beats Q3 forecasts; to accelerate store closings

BY Marianne Wilson

Office Depot saw its profit rise in the third quarter as cost-cuts and a $240 million tax benefit helped to offset the impact of lower revenue.

Profit in the quarter totaled $44 million, topping analysts’ forecasts. Sales fell 7% to $2.84 billion.

Office Depot is also continuing with its plan (announced in August) to close approximately 300 stores over the next three years. It closed seven stores in the third quarter, giving it a total of 1,506 U.S. stores. The retailer is accelerating the pace of the closures, with plans to shutter 65 locations in the fourth quarter.

Office Depot is on the comeback trail after its planned acquisition by rival Staples failed to pass muster with the Federal Trade Commission.

“During the third quarter we made substantial progress on the opportunities identified in our new three year strategic plan,” said Office Depot chairman and CEO Roland Smith, who is set to retire next year. “We are recovering quickly from the disruption caused by the protracted Staples acquisition attempt, and I’m very pleased with both our progress and financial results. Importantly, I believe we have the right strategy in place to deliver shareholder value.”

Office Depot is proceeding with its previously announced deal to sell its European business to the Aurelius group. The company is optimistic the transaction can close by the end of 2016.

In addition to approving the sale of the European business, the Office Depot board also approved a plan to sell substantially all of its remaining international businesses located in Australia, New Zealand, South Korea and mainland China. These businesses generate approximately $600 million in total annual sales and an operating loss.

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ECOMMERCE

Newegg kicks off ‘Black November’

BY Deena M. Amato-McCoy

For the eighth year running, Newegg is giving shoppers access to special Black Friday promotions during the entire month of November.

A program designed to make it more convenient to shop for the season¹s most sought-after products, Newegg’s promotional month will highlight specific sales that will last for a full week.

These will range from kick-off sales and products across the gaming category to deals that will be revealed every two days and events associated with the four-day Black Friday and Cyber Monday weekend.

In addition, on both Nov. 11 and Nov. 18, the pure-play electronics e-retailer will unlock dozens of early Black Friday deals, however quantities will be limited.

“Black November gives our customers the flexibility to shop great deals when and where it’s most convenient,” said Merle McIntosh, Newegg senior VP of sales and marketing. “For the entire month of November, all of Newegg’s platforms — Web, mobile site and iOS/Android apps — will offer aggressive price cuts on gifts for everyone on their list.”

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