According to research firm Statista, India’s retail e-commerce sales could reach around $20.01 billion in 2017 and expects to grow $45.17 billion by 2021. Even with this growth, Internet of Things (IoT) can take e-commerce to the next level.
The IoT has already started working its way into retail stores, and technologies will continue to disrupt the traditional retail process in the coming years.
Consider beacons, devices that retailers use to automatically send notifications and discounts directly to shoppers’ smartphones when they enter a store. You may have also noticed digital signage at some of your favorite stores. These signs push ads and price changes to stores in real-time, which create target sales for consumers. MarketsandMarkets expects the global market value for digital signage to grow to $23.7 billion in 2020 from $15.8 billion in 2015.
IoT and e-commerce have until now evolved in parallel. They are now embarking on a common journey where every connected object becomes a potential e-commerce real estate.
They show how e-commerce is evolving towards letting customers make purchasing choices based on impulse and context instead of having to browse and select among a myriad of items. They also show how a purchasing decision is vastly simplified when discovery and payment friction has been removed.
Here are some case-studies showcasing the application of IoT to remove friction from E-commerce.
- Pinterest’s buyable buttons
Social network Pinterest, which lets its members pin pictures of things of interest had introduced buyable, buttons in 2015, transforming the site into a mobile shopping mall. Buyable pins offer a simple and secure checkout to the site’s mobile app users. Users need only either personal billing information once, reducing friction in the shopping experience.
For brands and merchants, it is a novel way to reach customers while retaining full control over the shopping experience.
Online fashion retailer Zalandoallows users to get buying recommendations based on clothing items they have spotted around them. For example, users may have notice someone wearing a jacket that they like. They can take a picture and based on its product assortment, the app will propose a set of jackets to checkout that are similar to one they have seen.
Here Zalando is offering both impulse shopping and purchasing convenience. Customers are no longer browsing a stand-alone web store but choosing one item they want.
- Amazon Dash Replenishment Service (DRS)
Amazon DRS combines Internet of Things with e-commerce to provide a frictionless shopping experience that is a win-win for consumers and brands alike. It is an API that enables automatic replenishment of physical goods either manually from connected buttons or automatically from connected appliances and devices.
With a thumb-sized Wi-Fi connected branded buttons, consumers can place orders in one-click without having to input any billing or shipping details as these are catered via their Amazon account. From a consumer perspective, the benefit is convenience and not having to think twice about re-ordering consumables. As Dash buttons are brand, they also create a tight relationship between them and brand. Dash buttons act on the consumer’s intention to buy before they change their mind.
DRS is only the beginning as Amazon had filed a patent for anticipatory shipping, whereby its backend infrastructure can anticipate consumers’ future orders and place these in waiting at the closest shipping hub so as to improve delivery times.
Tapping the missed business opportunity
Today, it is well understood that adding computing and Internet to product can allow the manufacturer to capture value beyond the purchase of that objet and into data-driven business models. Car makers can now offer post-sales services, office furniture makers can now extend their business into productivity management or even wellness with examples such as the Tao chair that lets you work out from the comfort of a connected chair.
Makers of connected things can subsidize them to make money from data-driven services. What is clear is that selling unconnected ‘things’ will increasingly look like a missed opportunity.
Internet of Things will allow any connected ‘thing’ to become an affiliate for e-commerce goods that are consumed together with the ‘thing’. Any connected object could become a distribution surface and customer acquisition channel for e-commerce goods and services of every kind and description. IoT extends e-commerce affiliate and user acquisition schemes beyond websites and apps, into every physical surface. Amazon’s Dash and DRS Service offers an early glimpse of this model.
Increasing the LTV of customers
IoT will allow e-commerce to stretch across the breadth of the customer journey. The holy grail of advertising business is being able to track consumer behavior from awareness to intent to purchase, and across web, mobile and increasingly a number of physical connected touch points.
By embedding e-commerce discovery and distribution surface on physical objects, and more connected touch points across the customer journey, you are now able to cross the last mile from awareness to purchase intent to purchase and retention.