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06/25/2021

Offline Retail: The New Edge Case

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Over 80% of the world’s population owns a smartphone. This means consumers are always on and always connected. They expect the same of their favorite businesses, too.

In retail, the answer isn’t just having an e-commerce storefront or a mobile app. Physical retail is far from obsolete, so it’s equally as important for stores to also be online and connected. 

But what is the optimal setup to make this possible? There have been claims in the market that the Internet is not enough for a brand to successfully run their store operations. That the only way to guarantee reliable connectivity is to implement a local server with failover capabilities. 

Not true. I’ve encountered this type of thinking several times in my career. The most significant example is when I was told no one would use a cloud-based e-commerce solution. Now it’s nearly unimaginable to do it another way. 

Similarly, there is no business case today for stationary, local hardware collecting dust in brick-and-mortar retail. Yes, you want to have solutions in place to support customers in all scenarios. But being offline is effectively an edge case now with the ever-increasing bandwidth and ubiquity of Wi-Fi.

No retailer needs to settle for a disconnected store. Extremely remote rural areas will even get Starlink soon, but again these locations are edge cases, and building out your connected store strategy based on them drags the whole business down. 

As a retailer, you should never plan to operate without Internet access — especially if you want to be an omnichannel organization. Every modern customer journey and store associate workflow requires connectivity. There is no argument for a local server if you have a cloud back-end and a mobile front-end.

In fact, with the multiple redundancies this setup provides, the risk of going offline is really slim to none. And, the risks are far outweighed by the enormous benefits of fully connected stores and store associates.

Local Server vs. Cloud Model 

When it comes to the local server model, it’s important to remember when it was invented and for what need. Both are very specific. During the days of dial-up Internet, a local server was how you synchronized data when you didn’t or couldn’t have an online connection.

They were also around at the start of broadband because it was cost prohibitive for individual retail stores to have Internet access. However, servers were never meant to be a long-term failover method.

Today, there are many ways to have not only an affordable Internet connection but also a stable one. There are vendors that can set up proper Wi-Fi and LTE routers at the cheap for brands with dozens or even hundreds of stores. It is also possible to have data-only SIM cards in devices that cost very little.

We shouldn’t consider having a consistent, high-quality Internet connection solvable. It has been solved and there are many brands who currently operate like this. 

A local server setup doesn’t provide any advantages really, just more cost and complexity. You can see how legacy in-store technology providers are scrambling to offer “cloud” alternatives, but most likely they want a giant on-premise contract with you.

Your store is more valuable when floor space is dedicated to stock not servers. Pretty soon your stores won’t even need a printer or credit card terminal.

With a server architecture, the R&D investment goes into setting up and maintaining the system overtime. It doesn’t allow for automatic updates, at least not without additional software or installation requirements. Both the vendor and the retailer lose because they can’t enjoy the speed of innovation that is native to a true cloud-based solution. 

Additionally, real estate is expensive. Your store is more valuable when floor space is dedicated to stock not servers. Pretty soon your stores won’t even need a printer or credit card terminal. Clunky store equipment is on its way out the door, so why would you invest now in an infrastructure that was designed for retail 30 years ago?

Similarly, it’s not a good idea to rely on a model with inherent security concerns. It is very hard to hack an iPhone, for example, but local servers are always susceptible to ransomware attacks. 

5G Ushers In Even More Connectivity

Running stores with Internet-powered solutions is going to become even easier with 5G technology. The new standard for broadband cellular networks is faster, handles a higher volume of data, and has nearly zero latency. This opens up a whole new path to purchase for today’s consumers.

It’s also designed such that it is easy for an individual retail store or a mall operator to add it if the local reception isn’t strong. Further, 5G networks don’t require the same amount of IT management effort as a Wi-Fi network. Thus, it’s much easier to maintain. 5G dramatically enhances all the current benefits of Wi-Fi and LTE.

For example, eSIMs, the next evolution of data coverage, will become commonplace not in just smartphones but in all devices. With these in your store solutions such as the point of sale, you can in fact guarantee consistent connectivity because there won’t be the same interferences as with Wi-Fi. Even if your store is offline in some other capacity, the associate is always online. 

We really don’t have to wait for 5G, though; any 4G LTE Internet connection today can handle the amount of data exchange between stores and the service backend. Just look at the forward-looking retailers that are using video chat with customers from stores. Video requires a lot more bandwidth than other activities, yet they are doing it with ease.

In the catastrophic event of an entire store going dark, mobile technology has the ability to capture transactions and synchronize those to the cloud when service is restored. This is likely minutes or hours and not days, which is why it’s unnecessary and unwise to invest in infrastructure other than the Internet. 

The Present and The Future Is Online

The retail industry needs to stop obsessing over the old fear of being offline. Your customers are always online. Plan to be right there with them. Too often retailers shy away from investing in an online capability. They’d rather have the vendor solve it in some other way, such as with a local server or an offline mode. But these other ways are going to be more expensive and to the disadvantage of the customer experience. It’s a lose-lose situation. 

The fact of the matter is, your stores can’t be offline. It’s truly that simple. Your point of sale is not going to be the only application that requires the Internet, either. Remote selling, inventory, payment, security. If you want to maximize all your assets and give the best service, these systems need to be online. 

It is very possible to run your stores today with wireless uptime that is virtually 100%. Tomorrow it’ll be even easier with 5G. Don’t ready your business for disconnected experiences supported by outdated capital assets. Ready your business for always-on connectivity with a light, flexible, mobile tech stack, built for mobile-first consumers.

Stephan Schambach is founder and CEO of NewStore.

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