The Internet of Things – the future of e-commerce

The Internet of Things – the future of e-commerce

The Internet of Things (abbr. IoT) includes in a broad sense all devices which are monitored and controlled by the Internet. In contrary to what the name Internet of the Things suggests, it is not the Internet of things, yet of data. Sounds mysterious?

What is the Internet of Things?

The Internet of Things includes devices connected to the global network which are controlled and monitored remotely. The crucial aspect of the Internet of Things is the type of data generated by specific devices – not the devices themselves. Therefore, the potential which lies in the data delivered by things is essential. IoT is a gigantic melting point of smart devices – those which send out data and communicate with one another.

Therefore, do not ask what a “smart” device can do for you, better ask what you can do to utilize the potential of data sent by that device; and how you will handle the Big Data generated by such devices.

The Internet of Things is based on four main pillars. Firstly, and most obviously – IoT would not exist without the devices which collect and send measurement data which represent their functioning. Secondly – and here there is no surprise either – we need the Internet, that is an effectively operating communication network, which will connect different devices. All incoming data will be collected by IT systems and subsequently processed by analytical inference facilitating systems.

The advancing technology is changing today’s world on many levels. The Internet of Things also has an effect on e-commerce, and what is more – it changes the purchasing experience into more methodical, streamlined, and user-friendly. How does this happen?

The Internet of Things in e-commerce

The e-commerce industry is growing rapidly year by year and there is no indication that it would slow down. No wonder that IoT begins to play an increasing role also in this type of commerce.

Let us take a look at some of the benefits that can be achieved thanks to IoT. The solutions of the Internet of Things facilitate communication with a customer as well as create new distribution channels. They also enable measuring of sales effects.

Many devices, one conversion – it turns out that the conversion from mobile devices is four times lower than when conducted from the computer level – it is all such surprising given the fact that smartphone users admit that their devices are essential in their purchasing process and have played a significant role in consumer decision making (they have a bigger influence than a visit to a traditional store). One of the biggest challenges in this case is how to connect paths of users who often begin their purchasing process on their smartphones, continue on a tablet and finalize it on their computer. The data are based on cookies, which come from different sources (various browsers) and do not connect, therefore, it is difficult to integrate the whole purchasing process into one, coherent form. Thanks to IoT and inter-connection of many devices, it is easier to adapt mobile traffic in e-commerce (with the use of many contact points: a mobile version of a website, application, common cart, and logging in order to buy something).

I don’t know about you, but what irritates me most in online shopping are too high shipment costs and long waiting time. More and more of e-stores offer same-day dispatch (within the territory of your country), but this option may soon turn out to be obsolete and consumers will be expecting a same-hour dispatch. It is obviously a costly solution for stores, as it means that they will need to have their own mini-warehouses in each town. Thanks to NFC (Near Field Communication) tags, every product will enable real-time monitoring of stocks. Due to the inbuilt GPS sensors, every shipment can be tracked down with high precision. And if there is a shortage of a given product in the warehouse, the user may search for a different location in which the item is available, which reduces the risk of a store losing a potential customer.

Amazon went one step ahead and introduced the DASH Button. How does it work in practice? Smart devices, connected to one another through a network, may send information about the demand for – e.g. a chemical agents. If you are running out of washing powder, your washing machine will send a signal. The owner does no longer have to worry – neither about the lack of coffee in his coffee machine nor dishwasher tabels.

The Internet of Things is also a completely new approach to the handling of the complaint process. Imagine you have bought a broken mp3 player and the device sends the information about the failure to the store. A customer service employee receives the information about the need for replacement of equipment and orders a courier in advance. The whole complaint process is fast, efficient and does not take customer’s time.

Thanks to IoT’s achievements, products can also be recommended to the customers in a much more advanced way. Imagine a situation where you have just ordered new hiking boots, you decide to go hiking and in the evening you receive a text message saying “Got soaked in the mountains? Order a waterproof protector for your boots now.” Sounds unreal? It’s enough when a boot sensor collects your location data (you are in the mountains) as well as weather information (it rains) and sends it to the store.

What other benefits come from IoT? Generally speaking – the Internet of Things increases the customer satisfaction level and enables sellers to provide more comprehensive shopping experience to their customers, leading to their high engagement in the process. Personalized and contextualized interactions with customers facilitate the process of predicting their needs on a much higher level.

In this way we may sell items based on previous shopping lists, loyalty programs, the history of viewed products, or a web browser search history. Bluetooth sensors combined with smartphone applications allow for tracking the moves of a user visiting an e-store. This gives the vendors more detailed information on what customers are searching for – what has a positive effect on their future purchasing decisions. Thanks to transmitters, they may also automatically send out information about promotions and discounts immediately after a person opens a store website.

Better stock management. Given the big number of things entering and leaving a warehouse, tracking each product may be very difficult. The IoT sensors and RFID (Radio-frequency identification) tags may be used for real-time stock management, thanks to which, the flow of information is more efficient. This means a better (and automatic) monitoring and tracking of incoming and outgoing shipments. In e-commerce, saving of time and human effort allows to focus on key business aspects.  

IoT has a lot more to offer in terms of marketing activities and a much better chance for getting to know customers. In fact, it opens up unlimited possibilities for marketing and promotion. For example, a shoe seller called Meat Pack decided to implement a very creative promotional action for its own brand. In 2012 when customers with the store’s application, installed on their devices, visited their competitor’s shop, they received a notification that they can use up to 99% of a discount for their next purchase in Meat Pack. There was only one condition: the discount will be dropping 1% per second until the customer reaches the store. This made users literally storm out of competitors’ stores and run to Meat Pack.

***

The Internet of Things is a continuous communication of various devices with intelligent sensors and functions, data exchange with other devices, and the Internet. Year by year the technology is becoming more and more popular. It had only been a matter of time before e-commerce began to use it as well. All we have to do now is to wait for the direction it is going to take. There is one thing we can be sure of – things will get hot!

Katarzyna Gądek

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By Daniele Zedda • 18 February

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