How 5G and edge computing are changing the game for online retailers

In today's ever-evolving retail world, staying ahead of the curve is critical.

Businesses that trade globally are constantly looking for tools and technologies to help them grow: whether it’s targeting customers more effectively, increasing sales revenue, or staying compliant with global VAT and sales taxes.

One technology that is sure to have an impact on retailers is edge computing. Essentially, edge computing brings data processing and storage to where the data is generated (or "the edge") and has been praised for its ability to improve response times and save businesses precious bandwidth. But how does this benefit retailers?

Take indirect tax, for example. Edge deployments offer the ability to calculate indirect taxes locally at the point of transaction, while centralizing reporting, compliance, and maintenance. By eliminating network connectivity and bandwidth issues and allowing data to be securely transferred to a central “hub” for review only when needed, edge computing can provide a much-needed right hand to tax departments—especially when sales volumes are high and transactions are pouring in.

Today, many retailers are already benefiting from deploying tax engines using edge technology, and the emergence of new technologies is opening more doors.

The arrival of 5G, in particular, presents even more opportunities for this technology to revolutionize retail tax departments. 5G, short for “fifth generation,” is the latest advancement in communications technology, succeeding the now widely used 4G (LTE). 5G is designed to deliver faster data speeds, lower latency, the ability to connect large numbers of devices simultaneously, and improve overall network capacity and efficiency.

A smoother digital experience

For the retail sector, especially online retailers, the benefits of 5G are mainly discussed from the customer's perspective.

Most businesses in the industry would agree that one of their biggest goals is to provide a fast online shopping experience where customers focus solely on the product or service at hand rather than being held back by a slow website. 5G will make this possible by dramatically enhancing network connectivity and bring about a new set of immersive shopping features.

For example, look at augmented reality (AR) and extended reality (XR). Today’s consumers often tend to research various products online before narrowing down their choices and making a purchase. With 5G-enabled AR and XR, these two tasks can easily and seamlessly merge into one: AR can provide customers with real-time product information as they shop, and XR can let them enter a virtual dressing room or visualize furniture in their home. We’ve already seen companies like IKEA adopt these technologies to boost sales through virtual showrooms, and 5G will only make more digital shopping experiences possible.

5G-enabled edge computing can also facilitate real-time inventory tracking and analysis, enabling e-commerce platforms to dynamically adjust pricing based on supply, demand, and competitors. This will create more accurate pricing and inventory availability for customers, further promoting a better online experience.

In retail, whoever can satisfy customers’ needs in the fastest and most intuitive way wins, so by creating these seamless, innovative shopping experiences, 5G could drive more sales and revenue for businesses in the future.

More sales, more tax revenue

So, what does this mean for tax authorities? Firstly, the increased sales enabled by these new 5G shopping experiences creates a greater demand for fast, accurate and efficient indirect tax calculation solutions.

As edge computing already provides a quick solution by allowing indirect taxes to be automatically calculated at the point of sale, the availability of ultra-fast 5G networks will only speed up these processes further, further reducing latency and allowing more demand to appear on e-commerce sites during peak traffic periods.