What does Cloud Commerce mean?
Cloud commerce means outsourcing part of the IT requirements to build and maintain a retail business. Cloud commerce providers provide infrastructure, management, and even the software necessary to handle retailers’ operations through their online and offline channels. More than the physical transfer of capabilities, cloud commerce implies a total shift in the conception of companies’ relationship with their commerce platforms. In cloud commerce, companies pay only for the services they use instead of investing resources to build everything from scratch.
Why is it called cloud commerce? Cloud computing is a term that gained mainstream popularity around 2006 when big tech players like Google and Amazon started offering users the possibility to access files, software, and computer power through the internet instead of storing everything in their devices. Analogously, cloud commerce enables vendors to access servers, platforms, and software through the web. In traditional commerce, a company internally hosts all the hardware necessary to function. Vendors with a conventional commerce approach also develop and manage all the code that builds their commerce solution.
By making the implementation of new features more accessible and quicker, companies have the agility to experiment and react quickly to unexpected market changes.
Cloud commerce builds on the advantages of specialization. The premise is to liberate resources so a company can focus on business matters. Cloud commerce is born out of the zeitgeist of continuous innovation. By making the implementation of new features more accessible and quicker, companies have the agility to experiment and react quickly to unexpected market changes.
Nowadays, it is clear that the customer journey takes place through different channels. New devices multiply the number of touchpoints that retailers have with their customers. This offers both exciting opportunities and poses considerable challenges for companies. Although a company with a traditional setting can also enable a multichannel experience, building every necessary feature is increasingly expensive and takes time. A system that quickly adjusts is essential to keep up.
Models of Cloud Commerce Solutions
Infrastructure as a service (IaaS)
Infrastructure in this context refers to the physical resources needed to run an e-commerce architecture. In IaaS, users rent servers, networking gear, and storage and build their e-commerce platforms and apps on top of them. Under this model, users retain almost total control over their technology stack (management of applications, operating system, data, runtime).
Platform as a service (PaaS)
In this cloud commerce model, vendors take advantage of infrastructure platforms that handle essential tasks in managing infrastructure. Companies book pre-defined resources to concentrate on developing features for their e-commerce app. On top of managing the required infrastructure, the PaaS providers take care of the operative system, the middleware, and the runtime.
Software as a service (SaaS)
In SaaS, vendors offer a full-functioning software solution. There are significant differences in the degree of customization vendors can accommodate. Some platforms are based on rigid architectures with fixed capabilities. Other SaaS solutions rely on flexible architectures that allow adding extra features and personalizing e-commerce applications. Composable commerce is an e-commerce paradigm that provides maximum flexibility to users by enabling the combination of modular capabilities chosen from the best providers.
Benefits of Cloud Commerce
Resource optimization and predictable planning
Cloud Commerce providers charge users according to what they use. This mode of commerce shifts IT operations from a capital expense to an operative expense. Instead of significant upfront investments to run an e-commerce business, cloud commerce users pay predictable monthly fees. The cloud commerce model frees up essential assets that can be used in other parts of the company.
Minimal maintenance costs and lower total costs of ownership
Besides the initial investments, cloud commerce also minimizes the maintenance costs of keeping an application up to date. Cloud commerce providers are responsible for fixing problems or bugs in their products. The result is having the lowest total cost of ownership of running an e-commerce platform.
Up-to-date code and highest standards in security
Servers of cloud commerce are constantly investing in new and better features. That is their way to stand out from the competition. Moreover, cloud-commerce servers are required to keep the highest standards of security. For users, this translates to enjoying continuous innovation.
Easy innovation and minimal time-to-market
By paying for existing services, e-commerce entrepreneurs considerably reduce their time-to-market. Cloud commerce solutions also allow easier experimentation since failure costs are minimal. If the cloud commerce solution is flexible, a company can add an extra feature without necessarily developing it. Through Application Programming Interfaces (APIs), complete personalization will remain possible.
Scalability on demand
For e-commerce sites, efficiently handling peak traffic is crucial to make the most out of important dates (Black Friday, Giving Tuesday) and seasons (Christmas). Traffic variability is high, and it is challenging to plan with rigid capabilities. Cloud commerce solutions are designed to enable on-demand scalability. This flexibility is also helpful for a longer-term vision, helping the business grow without needing to adjust the foundations of the e-commerce architecture.
Traditional commerce implementations that host servers internally struggle with multi-country operations. Different countries have laws protecting what companies can do with the data they collect from their users. Transferring data from one country to another might require companies to provide additional safeguards. Cloud commerce easily enables operations in different countries since the providers take care of data residency compliance by allowing companies to store data in different regions.