It might be good news for consumers that the U.S. retail giant is establishing warehousing and distribution facilities in Melbourne and is expected to officially launch operations in the country before the year’s end. But for retailers, the situation couldn’t be more different.

Domestic operators know they need to evolve in the face of this new and aggressive competition, yet many are unsure of exactly what strategy to take. One thing is, however, certain: business-as-usual is not an option.

From transactions to relationships
During the past decade, Australian retailers have established e-commerce channels to meet changing consumer expectations. With the rise of the web and mobile, consumers have come to enjoy the flexibility of shopping at convenient times and locations.

Meanwhile, most retailers have also continued to operate traditional physical shopfronts. Consumers enjoy browsing, fiddling with gadgets, trying on clothes, and soaking in the overall atmosphere a brand embodies. Done correctly, it draws customers in and brings them back for more.

However, attracting customers today depends on more. It’s not enough to simply provide transactions, whether online or in-person. Retailers need to create seamless, personalised experiences across channels at every touchpoint. Part of Amazon’s success is thanks to its relentless focus on the customer experience, paired with its ability to rapidly change those experiences.

If they are to match the pace of the undisputed leader, Australian retailers must become more agile across online and physical channels.

Bridging the physical and digital divide
A challenge faced by many retailers is blending physical and digital channels to complement one another. For many, supply chains are divergent and customer records are siloed within different systems. As a result, the retail experience is disjointed.

For example, sales associates often don’t know when loyal customers are on the shop floor and online portals often have no record of in-store purchases. In both scenarios, the retailer misses an opportunity to personalise the shopper’s journey and recommend companion items – something which is taken for granted on Amazon.com.

Achieving an effective multi-channel strategy and turning physical stores to a competitive advantage depends on data. Retailers need to bring it out of the depths of applications and to the forefront of business.

APIs, the digital glue that allows applications to connect and exchange data, is how to do it. In just one example which addresses a common problem, APIs can expose real-time store inventory to a website so customers can check availability prior to visiting a physical store. This eliminates frustrations resulting from sold-out merchandise.

By adopting an API-led approach to connectivity, retailers can build an application network that seamlessly connects their applications, data and devices. As a result, retailers can respond to evolving consumer expectations and market conditions. Instead of using point-to-point connections or isolated architectures, the application network provides an infrastructure for information exchange by allowing applications to be plugged into the network.

The network can be as simple as two nodes that enable two applications to share information, or it could span the enterprise and external ecosystems.

The need for speed
Surviving the Amazon age won’t happen with a disjointed approach. Retailers need to work hard, and fast, to blend their offline and online channels into a homogeneous whole.

Amazon is driving this strategy. As well as its massive online presence, it is establishing a network of physical stores. In 2015, Amazon opened a small space in Seattle’s University Village. This was followed earlier this year by the purchase of the U.S.-based Whole Foods supermarket chain.

Other online retailers like Alibaba and Warby Parker are doing the same. Alibaba purchased Suning, a chain of brick-and-mortar stores, while U.S.-based eyewear specialist Warby Parker opened physical stores and offers custom fittings and repairs.

Real stores provide opportunities to strengthen brands and customer relationships.

With Amazon opening its Australian doors soon, established retailers have a limited window of opportunity. Rather than building entire new platforms or infrastructures, it is best to start small and experiment. Not every initiative will succeed, so it’s a matter of trying, failing fast, and trying again.

It should also be remembered that data now lies at the heart of every customer experience. Backed by an API-led strategy, retailers can maximise the data they already have while tapping into new, valuable sources generated through other channels.

By getting into a data-driven retail future, Australian retailers have perhaps their best chance of standing up to the juggernaut.

ABOUT WILL BOSMA//

Will Bosma is MuleSoft APAC VP.

But even so, the term itself means different things to different people. Some equate it with a tactical initiative such as going paperless, while for others it means undertaking organisation-wide transformative initiatives that deliver speed and agility.

Research undertaken for MuleSoft’s 2016 Connectivity Benchmark Report found that 73 per cent of Australian organisations are reporting that they are already executing on digital transformation strategies with almost half (43 per cent) reporting significant progress. This was the highest result of any country surveyed for the report.

In many cases, the initial motivation for starting down the digital transformation path occurs when an organisation experiences a disruption to its existing operations. “Digital Darwinism” awaits those which don’t respond – the average life of a company on the S&P 500 index has plummeted to 18 years – down from more than 60 years in the 1960’s.

When it comes to digital transformation, some businesses mistakenly think that the changes to make relate only to their IT department. However, to truly digitally transform, a business needs to adopt an entirely new operating model that allows both the business and IT to build, innovate and deliver on stated objectives together. While some still believe it’s the large who beat the small, it’s the fast who beat the slow.

Closing the IT delivery gap
While adopting a new operating model will deliver benefits, further initiatives are needed to close the IT delivery gap. One of the most important is to enable business-wide reuse and discovery by using an API-led approach that unlocks the value of existing systems, thereby allowing for rapid innovation without compromising the security and control of critical data and infrastructure. APIs can be used everywhere – including building orchestration services or experience services in the form of new mobile apps or portals or whatever the case may be. The end result is building an application network, from the bottom up, which connects every application, every device and every source of data. Every node that is added to the network adds value to every other node.

Rather than having point-to-point connections or fixed linkages between systems, applications and data stores, an application network allows resources to be plugged in using APIs. In time, some of this will be automated through machine learning and AI.

This API-led approach allows for rapid development of new features and services without requiring large-scale changes to be made to the underlying infrastructure. The result is a more agile and responsive organisation, which can add in new technologies to drive innovation, launch new products quickly and secure improved revenue opportunities.

Taking a bite-sized approach
Building an application network does not have to be a mammoth task that risks overwhelming those involved. Instead, it can emerge as all connectivity is driven by APIs, which are treated as products themselves – and designed for consumption from the beginning. APIs that have a full lifecycle from design to retirement and are the fundamental building block for all connectivity – internal and external.

It also requires a very different operating model in IT – it’s not just about the technology but it’s also about the people and the processes and changing how they all come together to deliver speed and agility.

Digital transformation is a process that may never be finished, and organisations will find they may well have to change their overall approach to IT. Those that will truly succeed in the digital age will be the ones that leverage APIs to deliver reusable assets and improve the way they operate and scale.

By focusing less on tactical implementations like going paperless and more on a cultural transformation that shifts IT’s role from a centralised support function to a business enabler, IT and business leaders can drive digital transformation initiatives to the finish line faster than competition.

ABOUT WILL BOSMA//

Will Bosma is MuleSoft APAC VP.