The Internet of Things (IoT) refers to devices with the capability to connect to the internet such as smartphones, tablets, and laptops. More recently it also includes many other devices and appliances that we are use every day of our lives, such as wearables, cars and kitchen appliances. They all can be connected through IoT and gradually more and more devices will be added to the list.
Internet of Things Value Chain
The value chain is a critical part of the business model. IoT has a complex value chain. Multiple stakeholders need to cooperate to deliver on the promise of IoT. Below is a simple version of the key activities and players.
Businesses have discovered endless possibilities within customer’s home. For example, in-built readers in refrigerators can count eggs or bottles of milk. When there is a reduced level of an item left, it can send the owner a reminder to re-stock or the product can be added to the shopping list automatically and sent off to the supermarket to order products which will need replenishing. This is where the retailer needs to consider the future technological capabilities will soon shape how successful they will be.
IoT can go a lot further than simply ordering products at home automatically. Online retailers have access to more data about their customers, such as their habits and preferences; they now possess the ability to adjust inventory and delivery services for every customer accordingly.
In 2016, Zebra Tehcnologies carried out a study to envisage the landscape for retail companies in 2017. The study’s methodology included interviews with nearly 1,700 retail decision makers from North America, Latin America, Asia-Pacific, Europe and the Middle East. The respondents represented a wide spectrum of retail segments, including specialty stores, department stores, apparel merchants, supermarkets, electronics, home improvement and pharmacy chains. According to the study, through engagement with the use of location based technologies by 2021, nearly 79% of retailers will be able to customise store visits as retailers will be aware of when and where a specific customer is in the store. The orchestration of IoT technologies that can provide a more responsive, real-time customer experience is the ultimate goal retailers want to achieve over the next five years. Exercises such as managing inventory levels through automated software applications will allow retailers to improve their customer service considerations alleviating out-of-stock issues along with overall inventory efficiencies and maximisation of margins through reductions in wastage.
This approach is in preparation for the progression of the integration e-commerce and in-store experiences, as a critical element to successful multichannel experiences for customers. The first generation of digital natives otherwise known as ‘millennials’ will represent over 75% of the worlds workforce in less than 10 years. These digitally proficient consumers have grown up with the expectations of a responsive online and offline shopping overall experience. The Zebra Retail Study reveals that over 90% of retailers will implement buy online, pickup in store by 2021. The majority of shoppers currently use their smartphones while shopping as in-store shopping assistants, making this integration essential for the future success of any retailer. There will be a requirement for significant investment in sustainable cloud based technology, such as using predictive and software analytics for loss prevention and pricing optimisation along with cameras and video analytics for operational purposes and improving the overall customer shopping experience. Market-basket analysis, customer segmentation and centralized customer data and intelligence are the top tech initiatives retailers are now prioritising.
The majority of existing business models can be also applied within the IoT. The companies who utilise these initiatives through IoT will be in a position to create endless opportunities and strong sales performances. Successful companies will consider more than one business model and will have a look at holistic IoT architecture. An example where this is already being initiated is Walmart which develops a technology that will let customers order products online and deliver them via driverless shopping carts directly to the customer’s car at the parking lot. Customers simply need to select products of their interest, sensors will then record customer’s shopping list, and the items selected will automatically be picked and delivered by a robot. Key success factor of IoT will be the alignment of current technologies with future IoT infrastructure. In particular, connected devices open opportunities by turning IoT stakeholders from passive to active participants.