Digital Transformation
min of reading
November 16, 2021

Getting ready for a 'digital tsunami': VAT free- day

David Orlando Peña
Marketing LATAM
Me apasiona la innovación, la comunicación estratégica y el Marketing de contenidos. Me siento muy afortunado de haber encontrado lo que me llena y de hacer de ello mi trabajo.
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E-commerce has become the solution for many retailers given the health crisis and the preferred option for consumers.

However, many of us have heard someone talking about a bad experience when shopping online. Orders that were never delivered, hours of waiting in line to pay, lost data, endless phone calls waiting for someone to deal with a complaint, are just some of the things that have affected business. 

We must keep in mind that Colombia is a country in the midst of a digital transformation process and that the health crisis has drastically changed consumer behaviour.

The National Federation of Merchants (Fenalco) reported that during the first day of the 'VAT-Free Days', six million electronic transactions were carried out, representing a virtual traffic of 100.000 people per hour.

Many organisations collapsed during the day because their legacy systems and digital infrastructure were not designed to scale and withstand unexpected peaks in demand. For that reason, some companies adopted a digital queuing strategy. In this way, 'queues' reduce parallelism of calls (purchase orders) and allow servers to handle the demand smoothly over time, preventing the entire system from collapsing.

Fenalco forecasts that the three 'VAT-Free Days' scheduled for the final months of this year in Colombia will exceed sales by 20-30 per cent of those recorded during the days in 2020.

Now, what exactly is a VAT-free day and why is it so important for the technological development of the retail sector in Colombia? VAT (Value Added Tax) is a percentage increase in the price of every item sold. The VAT-free day is one of the solutions proposed by the Colombian government to boost trade. For 24 hours - applicable to three different dates - products can be bought VAT-free (19% below the usual value) throughout the country.

This initiative is very important for the technological development of the country as it encourages retailers to move faster in their digital transformation process and enable new channels and renew their digital infrastructure so that they can support high traffic peaks, and, even better, scale an operation by integrating other key partners such as payment methods, logistic allies, etc. This creates a more complex digital ecosystem that allows you to deliver a better service to users.

Six useful tips to prepare digital channels to take advantage of large traffic waves

1 - Plan and forecast demand

Technology projects typically start with planning and predictable channel usage for the products to be commercialised. These calculations are the baseline for the planning of the entire architecture. Based on the expected volume, resources are provisioned to meet the need. Contingency for high traffic peaks must also be considered.

2 - Prepare your sales channels

During the buying process, a prospect uses different channels to make a purchase (sometimes simultaneously). Covering only one channel is not enough. The development of cloud infrastructures allows for self-scalability and a very satisfactory elasticity for most scenarios. However, when there are traffic peaks in the channels, it is uncertain to predict the proportion of the volume that may arrive in the event of a seasonal increase due to an unpredictable cause.

Opening up different channels allows portfolio diversification and delivers a better customer experience. Read also: What impacts can a seasonal increase in demand bring to your integration architecture and how to get ready for it?

3 - Perform overload tests

Perform stress testing (overload or performance testing). Testing consists of preparing the environment along with numerous information/requirement loads, simulating a scenario of simultaneous accesses and various sales and product searches in a short period of time.

4 - Implement anti-fraud mechanisms 

Over the last year, online fraud grew by 409 percent in Colombia. Avoiding fraud is one of the most tedious tasks to carry out and even more when you are running a large volume of transactions.

Price increases: Avoid raising prices before the VAT-free day (the famous 'double the half'). In this way, you can ensure good promotion to consumers and transparency in the marketing of products.

Online fraud: You have probably heard about online fraud. Cybercrime does not rest and e-commerce must be increasingly prepared to combat it. Ecommerce platforms already have many tools that can help prevent fraud. However, whenever you activate an alert and when the volume of orders is not very high you can do a manual review of these, be careful with the following orders:

  • Orders where the user has tried to pay repeatedly;
  • Orders placed from areas far away from the place where you usually send your shipments and where the payment pattern is probably not mapped;
  • Orders from new users with very high tickets;
  • Orders in which the e-mail address is suspicious or generic.

5 - Monitor your performance

As the idiom goes: 'You have to keep one eye on the telescope and one eye on the microscope', i.e. you have to make as many sales as possible while ensuring customer satisfaction. Particularly in this period, an efficient organisation must have focused teams that follow up closely, so as to ensure that the whole system is available. If something unexpected happens, the team can take action and measures to avoid a major impact.

6 - Celebrate results

These periods definitely generate incredible results that should be celebrated and shared. They are also great challenges for IT, Support and logistics teams as they require great efforts from everyone involved. Celebrate the results and the effort of your team! A few beers after a hard day's work will never go bad, especially when the objectives have been met.

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