Online retail is growing but only because of existing tech infrastructure

Technology has a habit of marching forward rapidly during challenging times.

In WWII, for instance, the aviation industry went from biplanes to jet-engined aircraft. The coronavirus is causing a similar acceleration in technology in the retail sector, with more and more companies looking for ways to improve their digital presence. The old high street model seems to be pretty much on the way out.

It shouldn't come as much of a surprise that sales are moving online. Governments have forced stores to close, and people are trying to social distance to prevent catching the virus. But all of this upheaval and the transition to online services is only possible because of how tech companies built out the infrastructure over the last decade. 

Go back ten years, and practically nobody had even heard of the cloud. In fact, that term wasn't on the radar. Tech geeks were still calling it "distributed computing," reflecting the idea that it could happen anywhere. They saw how they could use a combination of the internet and server farms to provide computing services remotely. But they still hadn't built out the system to any degree. 

Then, bizarrely, boffins at Amazon saw the potential of the idea and began building out their server farmers. The company constructed giant air-conditioned, high-security warehouses to contain all of the infrastructures, and then began selling off capacity in chunks. Firms then used AWS database migration service providers to transition from in-house IT.

The cloud experienced rapid growth after 2011, becoming crucial to practically every e-commerce business in existence. Companies realised that they didn't have to bring any of their computer systems in-house. They could just farm the entire thing out to the big tech and retail providers. 

The retail sector would have all but died with the advent of the coronavirus had it not been for Amazon and other companies building out the digital infrastructure. Now practically every major store in the industry has an online presence, and this is what will save them. 

Food retailers already see their online operations boom. We're seeing double-digit growth in trade. Household goods retailers are also seeing similar levels of expansion - as are gadget sellers. 

The clothing retailers are the odd ones out. While they saw impressive growth in online sales last year, they've seen a collapse in the months running up March 2020. The reasons for this are pretty clear: people are worried about their incomes, so they're cutting discretionary spending. And they also lack the motivation to buy new clothes. Everyone is working in their pyjamas, and nobody is going to parties. 

What's interesting for the retail sector is just how much capacity is out there. The entire industry is having to expand its operations massively and, yet, we've seen barely any change in cloud service prices. You would have thought that such enormous demand, fees would go up, but that hasn't happened at all.

Retailers have been able to make the switch seamlessly. Now their task is to sort out their digital marketing so that they remain visible on SERPs.