Better Shopping through Cloud and Big Data

While my shoe budget is pretty big, spa services even bigger, REI is another important retail investment! I absolutely love that store.

I was introduced to REI when my twin sister needed supplies to hike the John Muir Trail. What a cornucopia of outdoor equipment! While she knew REI from her mountain climbing days, I was totally new to it. Little did I know that part of REI’s success was powered by big data in the cloud.

So as a Cloud Computing Evangelist, not only did I feel a personal responsibility to shop in REI frequently, but I wanted to write about them too.

The REI / PivotLink story is a superb example of how cloud startups can reshape one business while building another — and create jobs in the process.

In my earlier blog, “Yes Virginia — Cloud Computing Will Create More Jobs than the Internet!,” the Sand Hill study clearly shows how cloud computing impacts job growth and can enable any size company to

  • define new business models more opportunistically to create customer value, and
  • streamline supply chains via real-time collaboration around data that was not easily accessible before.

REI is a testament to how companies can access their business intelligence (BI) from startups like PivotLink to dynamically manage demand and supply in a cost-effective way that was not possible before the cloud.

Not only could REI keep their shelves better stocked for shoppers like my sister, but they have also had a “nine percent increase in sales and a 1.6 percent increase in profit.”

While REI used analytics to optimize product performance, trends and product mix to improve sales and operational execution, PivotLink innovated its subscription model. Their original service terms did not fully capture the new value created from data aggregation and analytics that benefitted not just REI, but each of its supply partners as well.

So the two companies actually evolved their business models and grew their revenue together.

The overall cost-benefit to REI was enormous since the PivotLink BI Software as a Service was a mere fraction of what REI would have spent to build an on premise BI solution.

According to Trident Capital’s Senior Managing Director and PivotLink Board member Evangelos Simoudis, PhD, the unique benefits offered by BI cloud startups like PivotLink include:

  • much faster business collaboration between retailers and suppliers, and
  • minimal IT cost of the “cloud-to-cloud connection” to access even more data for better business planning.

While the two factors above reduce risk and enhance capital efficiency for the investor, they also lead to a more satisfying experience for the shopper.

So thanks, REI. And see you Saturday!

Jacqueline Vanacek is vice president and cloud computing evangelist at SAP.