As the holiday shopping season approaches, many retailers prepare for the annual surge of consumer traffic, which can increase online and in-store visitation by nearly 20%. While this spike presents significant revenue opportunities, it also brings challenges, particularly in the realm of location-based services. Retailers relying on geolocation tools may find their maps bills unexpectedly escalating, potentially doubling during peak shopping periods. This article examines three key reasons behind this phenomenon, coupled with strategies to mitigate rising costs.
1. Increased Demand for Store Locators
During peak shopping times, a store locator becomes invaluable for customers seeking nearby locations, checking inventory availability, or confirming operating hours. With thousands of consumers simultaneously querying these services, the volume of API requests soars dramatically. For instance, a retailer may typically handle 1,000 store locator queries a day, but that number can easily spike to 10,000 or more during Black Friday and Cyber Monday. Each of these requests incurs costs, meaning retailers can see their bills climb steeply.
Example: A well-known retail chain experienced a 300% increase in store locator usage during last year’s holiday season. As a result, its geolocation service costs ballooned from $2,000 in October to nearly $6,000 by December, primarily attributable to these spikes.
2. Surge in Address Autocomplete Requests
As online shopping becomes increasingly integrated into the retail experience, address autocomplete features play a crucial role in streamlining the checkout process. These tools help consumers fill in their shipping details with minimal effort. However, every keystroke a customer inputs generates an API call to the service provider. Therefore, during periods of intensified traffic, the number of autocomplete requests can mushroom.
Consider this: if a retailer typically accommodates 10,000 checkout transactions daily, a holiday surge could elevate this figure to 50,000 or more. This translates to significantly higher costs for address autocomplete services, as API calls multiply alongside transactions.
Example: An e-commerce company reported a cost increase from $1,500 to $5,000 for address autocomplete API usage due to heightened holiday traffic, highlighting the necessity of careful financial planning around these tools.
3. Address Validation Requests Skyrocket
Address validation serves as a critical line of defense against delivery errors, ensuring that shipping and billing information provided by customers is accurate. During busy shopping periods, the volume of address validation requests can multiply, paralleling the increases seen in store locators and autocomplete features. Retailers that fail to manage these spikes risk incurring excessive costs associated with high volumes of validation queries.
For instance, if a retailer experiences a traffic increase from 5,000 orders a day to 20,000 during the holiday season, the corresponding number of address validation calls will also rise, leading to increased billing.
Example: A retail brand noted that its address validation costs went from $750 in a typical month to over $3,000 during December, primarily due to volume-driven surcharges.
Finding Solutions to Rising Costs
With the primary geolocation service providers like Google Maps and Mapbox often charging based on usage, retailers need to be strategic in managing their location tool expenses. Fortunately, alternatives are available that may significantly reduce costs.
For example, companies like Radar offer APIs and SDKs that provide similar functionalities at a fraction of the price. Radar has the potential to help retailers navigate challenges, offering savings that can total hundreds of thousands of dollars for larger enterprises, making it a viable partner during peak shopping times.
Brands Making the Switch
Several retailers have successfully transitioned to using Radar’s tools to alleviate financial pressures. Famous Footwear utilizes Radar for its address autocomplete feature, while QSRs like Panera have turned to Radar for their store locator needs. Retail giants like DICK’S Sporting Goods have also begun to leverage Radar for more cost-effective address validation.
Conclusion
As the holiday shopping season fast approaches, retailers must remain vigilant regarding their geolocation expenses. Increased traffic may lead to greater revenue, but without proactive measures in place, rising API costs can quickly offset financial gains. By understanding the reasons behind potential spikes in maps bills and considering alternative solutions, retailers can position themselves to not only survive but thrive during this critical period.