According to Gartner, Internet of Things (IoT) is expected to grow to 26 billion installed units by 2020, and IoT product and service suppliers will generate incremental revenue exceeding $300 billion, mostly in services, by 2020.
Truly, IoT has caught the imagination of the technology world and there are many predictions about the impact it will have in the coming years.
While many of these impact areas are yet to emerge and are currently more of speculation, there is one area which is beginning to see real action, and that is retail and e-commerce.
The retail sector witnessed the single biggest disruption with e-commerce and online retail. IoT has the potential to cause a similar disruption to the retail and e-commerce space, and can fundamentally alter the way the sector is operating today.
Impact on Retailers
IoT provides retailers with a wide range of options to make their operations more efficient and provide significantly higher value to their consumers, including:
- Supply chain, inventory, logistics and fleet management are perhaps the areas where the impact will be most felt, at least in the initial years. Existing technologies such as bar coding and radio-frequency identification (RFID) already let retailers monitor their inventories. IoT will enable this to be taken to the next level with significantly more data coming in the monitoring systems and products moving through the supply chain. This can considerably improve supply chain efficiencies and enable leaner inventories. Large retailers such as Walmart are already using IoT for supply chain and inventory management.
- IoT is already showing signs of revolutionizing the way retailers interact with their customers when it comes to real-time analytics and promotions. This is where big data and IoT meet, and the possibilities can be endless. Using a mix of connected devices at the store as well as customer data, retailers can tailor make promotions and experiences for customers. In many ways IoT will enable brick-and-mortar retailers to have the kind of real-time customer information that online retailers always had.
There are many other areas that IoT will help retailers, such as higher staff productivity, better security, better and faster customer service, better maintenance and warranty services, better vending machines, kiosks, digital signs, etc.
Impact on Consumers
What is often discussed less is the potential impact that IoT could have on the consumers. In many ways IoT could fundamentally change the way we shop and interface with retailers.
There has been much written about refrigerators that place order when stocks run short, of washing machines placing order with the retailer when washing liquid supplies run low etc. However, these are just the tip of the iceberg in terms of potential areas where IoT would have an impact.
IoT could help customers significantly reduce the time and effort for shopping, and at the same time, provide them with more choice and more customization. With IoT and smart analytics, it is very much possible to have a scenario where we can have customers enter a connected store and be guided by the store to their favourite products using variables such as online search histories and previous shopping activities. Shoppers can get a fantastic experience!
Retailers, of course, need to first win the trust of their customers for this to happen, as the customer needs to allow retailers to access multiple data streams that come in from their devices.