IoT in e-Commerce: How a Connected World Can Change Trade
The Internet of Things is one of the hottest topics today that penetrates all spheres of life from healthcare to commerce. The commercial sector was among the first to adopt the idea of intelligent devices monitoring goods: Coca-Cola, for example, was implementing vending machines that reported how much stock they had left and whether the drinks were cold as early as 1982!
Such great interest and enthusiasm are indicators of the potential of the IoT in commerce even before it moved to the Internet. Nowadays, when e-commerce is getting more and more of the market, the possibilities for the IoT application become boundless.
E-commerce, or internet commerce, refers to the activity of buying and selling goods or services via the internet, as well as the transfer of money and data to execute these transactions. E-commerce is often used in connection with the sale of physical products online, but it can describe any kind of commercial transaction made online, using such technologies as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange, inventory management systems, and automated data collection systems.
With such a broad scope of e-commerce, it goes without saying it may benefit from the Internet of Things in many ways.
The Internet of Things helps e-commerce businesses analyze their market and customers’ needs to differentiate themselves from their competitors. Collected data from IoT connected devices will be more and more used in the future to get insight into people’s lifestyle and habits and to create a better-targeted marketing campaign based on new knowledge.
For instance, businesses would be able to recognize shopping patterns in search trends and online browsing and to sell targeted products to their customers. The IoT allows tailoring products, services and offers to customers’ choice On the other hand, getting more insights into consumers’ behaviour enables businesses to influence purchase decisions.
With the IoT possibilities for personal recommendations are endless: personalized advertising can, for example, target a specific group of customers. In the connected world, you can turn on a heater in winter, and the device would send information to an online store where you have an account and they would be able to send recommendations for slippers, hot cocoa, warm sweater and so on.
If you think that this is distant future, remember that even now some insurance companies are getting data collected by car rental companies about drivers habits and issues obtained through IoT devices such as GPS, movement and speed sensors, etc. One step further to an e-commerce platform — and drivers would get personal discounts for winter tires, glasses — or anti-alcohol drugs.
Countless consumer surveys profess the importance of mobile phones to the purchasing process. But since the usability of mobile retail apps is still lower than desktop versions, people would rather go to their main computer to make a final decision. Therefore, marketers have to tie the mobile and desktop marketing together for each individual customer. The Internet of Things can detect devices that belong to the same individual, allowing businesses to market to the individual rather than the device.
In the Warehouse
Probably one of the applications that comes immediately to mind and one of the oldest that’s still applicable today is detecting when you’re running low on a product and automatically ordering more before you run out. By now, the whole stock management process can be done by the IoT.
IoT sensors, RFID tags or other types of chips make the management of inventory in real-time possible, streamlining the entire flow. These IoT devices improve the monitoring and tracking of inventory items, reducing human errors and human hours required to track the inventory.
At the same time, keeping track of inventory is not the only function of IoT chips. With their help, such information like product type, manufacturer’s name, expiry dates and batch IDs can be automatically stored in the system. This can help warehouse workers find correct items, track and analyze the number of sold products and make predictions on future sales. Smart shelves are useful in reducing customer dissatisfaction due to out of the stock products.
Ambient conditions control
IoT helps not only optimize inventory but also monitor and control conditions in warehouses: temperature-monitoring sensors, to name one example, can be used to check the optimum temperature for perishable products and send alerts whenever needed. The same can be applied to other ambient conditions, such as humidity, vibration, or noise levels.
In the warehouses, IoT sensors can be also used to control the state of equipment, for example, they can examine the forklifts for predictive maintenance to reduce the loss of productivity.
Ultimately, the IoT is one of the first steps to warehouse robotization: Amazon uses warehouse robots in the picking and packing process. At present, robots can move at 8 km/h and load parcels of over 300 kg and these figures will be growing.
On the Way
Logistics and supply chain management
Starting with order preparation, an interrupted and efficient supply chain is crucial for a successful e-commerce business.
The IoT ensures that goods move from one place to another without risks of being lost. RFID and GPS technologies can track the shipped items in transit at every stage of their journey. IoT devices can provide the full picture, giving information about location, track, temperature, the driver, or even the weather. It also becomes possible to manage the route and speed of the shipped products, along with predicting the arrival time periods, avoiding losing shipments or misplacing them. Sensors can be used in delivery trucks as well for real-time monitoring of the deliveries and decreasing losses.
Industry giants like Google, Tesla Motors, Volkswagen, Mercedes-Benz, BMW or Nissan have started to introduce IoT for cars. Though nowadays we can speak only of slow-speed robots working at warehouses, the fast development of self-driving vehicles makes it possible to use them to deliver parcels sold on e-commerce platforms. Posten Norge — Norwegian postal service, for instance, has already declared its plans to use small self-driving devices to deliver parcels in the months to come.
Focus on customers
Alternatively, the IoT can be used to enhance the delivery customer experience by sending automated messages to inform customers of the status of their package. For example, the first notification can be sent a couple of days before the delivery date, and then another a couple of hours before the item arrives, so that the customers don’t have to worry about missing the delivery and the state of their order.
By the Consumers
As a rule, smart home systems are not associated with e-commerce. Nevertheless, they can impact the way consumers will buy things online in the future. Rather than sitting down at their computer and browsing for the item they want, they will simply tell their assistant to buy it. This, in turn, will change the marketing strategy of e-commerce brands, as they will have to optimize their websites and products to appeal to AI rather than to a human. For example, if a user asks their virtual assistant to buy some sticky notes, the assistant is likely to select the same product for everyone who makes the same request. This could lead to a significant boost in sales for the item in the top spot, while others are ignored entirely.
That means that in the nearest future businesses will have to appeal to assistant AI’s in the same way they now optimize our websites for Google’s search algorithms.
Dash Button, offered by Amazon, is a small battery-operated device that can be stuck to any surface in a house, and it lets consumers instantly order household items they are about to run out of. Once they have set up a Dash Button using the device’s accompanying mobile app, all they need to order more of a product is to push the button and the order will be immediately automatically placed via the home’s Wi-Fi.
Dash buttons are an excellent way for businesses to establish their brand in a household long-term. They also can help manufacturers of durable goods maintain a relationship with their customer over the decades-long lifespan of their product. In the future, a refrigerator might come with several customizable buttons that can be used to order one’s favourite products.
Instead of a Conclusion: IoT Big Data Management
Though applications of the IoT in e-commerce are impressive, the real alpha and omega of the IoT is big data. Yet, if row, that data is useless. All information has to be stocked to further be analyzed. This is the only way you can unlock the real benefit of the IoT in your e-commerce operations, by getting the 360° view of your customers’ activities and identify relationships. Only with big data analysis you will discover opportunities and be able to engage with your online customers in the most relevant way.
Deep machine learning is the technology that is able to deduce data relationship and will go side by side with the IoT in every new development step.