How digitisation changed retail


We all know that “the Internet changed everything”, but sometimes we don’t realise how big those changes have been. Let’s have a look at one vertical sector: retail.

When the world wide web first put a user-friendly skin on the Internet in the early 1990s, people suddenly realised they could buy and sell things online. The actual implementation took a while: no-one had broadband, and proper security was impossible as the encryption algorithms such as RSA were classed as munitions by the US, and could not be sold. The first thing I bought online was the Perl script munitions T-shirt around 1992.

By the end of the 1990s, e-commerce was becoming popular - and the world over-estimated it. Amid predictions that all the bricks and mortar stores would be closing down, sites like petfood.com were overvalued, and we saw the dot-com bubble inflate and burst.

As with everything, e-commerce went through the hype cycle, going from something impossible to something that was impossible to live without. High streets did shrivel, but all the shops didn’t close down, because the companies that owned them developed ways to combine online shopping with what you might call “the real thing”.

Goods that could be delivered in digital form, like movies and books changed most, and changed fastest, along with goods that were easy to deliver. Amazon went from being a bookshop to a source of everything, and buying and selling on eBay went from an exciting and risky thing, to a dull occupation, and a default for some items.

Alongside this, the IT behind the web sites moved from in-house, to colocation to the cloud, making it far easier to have an online presence. And in a move which no one would have predicted - but seems inevitable in retrospect - Amazon dominated the cloud, through its Amazon Web Services (AWS) division.

Online services became more sophisticated, with the ability to personalize adverts and sales, and to reward loyalty. Sophisticated stock management (and harsh jobs for warehouse pickers) cut their overheads. Online sales became a major source of parcels carried by postal services.

Online Shopping

Through all this, physical shops stubbornly refused to pull down their shutters, and the survivors have got better at building digital experiences into their business. In some ways, retail bounced back, not by resisting the technological change, but by using technology to move with that change.

Payments became easier, and shops also now personalise offers to visitors, and link the online to the physical through things like “Click and Collect”. Obviously point-of-sale systems are networked, and stores hold stuff, so they also became convenient places to collect stuff ordered online.

Outside of retail, other environments started to learn lessons from this merging of online and digital: hospitals and schools have begun to treat their clients as consumers with a digital and a real presence.

But the new wave of consumer experiences are calling new technological approaches into being. They need local technology that can respond quickly, alongside the jobs that are done remotely in the cloud. They are classic “edge” applications.

The “edge” resources have to be reliable, easy to maintain and remotely manageable (a store with thousands of locations won’t have an IT manager in each). The systems have to collaborate with, and complement the cloud resources which continue to run centralised services (and those predatory websites), powered by the economies of scale.

This changes what we buy and how we buy it. There are levels of personalisation that would have been previously unimaginable, and consumers get more choices - as well as having more products to choose from (because we can see remote stock), we can choose how we will view it, how we will pay and how it will be delivered (or collected).

For products like music and books which are essentially digital, we even get to choose the form of the product, at the level of how those digits are delivered, whether it’s to our mobile devices, our cloud accounts, or pre-packaged on paper or disks.

This is not the apocalypse (or Utopia) of shops that was predicted at various stages, the change may not even seem very big, because it has been smoothed over by the need to draw consumers along with it. But it has been a massive change, which is not over yet.


Written by Peter Judge (Guest)

See Peter Judge (Guest)'s blog

Peter Judge is the Global Editor at Datacenter Dynamics. His main interests are networking, security, mobility and cloud. You can follow Peter at: @judgecorp

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