eCommerce is, without question, soon to be the behemoth in the room (if the “room” is the global economy). The top 3 online retailers generated almost 100 billion US dollars in revenue in 2017. According to Statista, by 2021, e-retail revenue is expected to grow to 4.88 trillion US dollars.
Retail eCommerce sales worldwide from 2014 to 2021 (in billion U.S. dollars)
The world of shopping is changing—let’s face it—it’s already changed. Ecommerce stores now must find ways to compete for customer loyalty, the same way brick-and-mortar stores have been doing for the last 100 years. New technology is allowing online retailers to do just this.
The Era of Connected Devices
IoT, or the Internet of Things, is the latest buzz in the technological disruption that is occurring everywhere we look. IoT is comprised of all the everyday objects that are connected to the internet. These devices communicate and share tons of data back and forth. We use these devices every day—our phones, Alexa, smart TVs, and, for some of us now, even refrigerators.
These types of devices bring tremendous benefits into our lives, but they also represent a huge opportunity for businesses everywhere, especially ecommerce retailers. Online stores don’t have the benefit of meeting their customers face to face like traditional retailers, so internet connected devices give them the opportunity to get to know their customers in a meaningful way.
According to Iflexion’s ecommerce team, the winning combination of technologies for today’s ecommerce is IoT + big data. The deployment of smart devices into ecommerce brings value via intelligent insights that increase customer engagement and truly spur a business forward. More and more connected devices are revolutionizing the way business is done and the data that companies are gathering is growing exponentially. Harnessing this big data improves business productivity and, ultimately, the online shopping experience for consumers everywhere.
3 Ways IoT is Changing Ecommerce
1. Behind the Scenes Upgrades
So far, the back-end of business management has seen the greatest impact from IoT. Internet connected devices have drastically improved the entire supply chain process—from inventory management to delivery. RFID chips and sensors have become affordable for even the smallest of operations, streamlining the entire flow. This technology allows inventory management to occur in real time reducing person-hours all while providing more accurate information.
RFID-based inventory management makes it easier for companies to stay on track of supply levels helping warehouse workers to locate products when necessary. For ecommerce stores, this can reduce the time to market and nearly eliminate out-of-stock surprises. Inventory tags and smart shelves reduce human error when it comes to reordering stock by ensuring that when a customer places an order, the product is there for them. Less hassle managing the warehouse and inventory also means more time to focus on other aspects of the business.
In addition to easing inventory and warehouse management, the same technology helps ecommerce retailers and customers track and monitor deliveries. An uninterrupted and efficient supply chain is vital to any ecommerce business. IoT ensures that both parties have precise estimates on when packages will reach their final destination and nearly puts an end to lost shipments. While real-time shipment tracking has been around for some time now, the technology, along with the data being collected, is being harnessed to improve routing and logistics.
2. Maintenance, Warranty, and Theft
For ecommerce stores that sell higher-end goods, products under warranty, or anything that needs to undergo scheduled maintenance, IoT devices can keep up with all the details. Data can be sent directly from the products to the retailer, helping to identify issues or malfunctions perhaps before the customer is even aware of them. This type of data can be used to ultimately anticipate potential complaints, improve products and customer service, and resolve issues quickly. These devices can also provide GPS locations in case of loss or theft.
General Electric is probably the best example of a company fully utilizing this technology to the benefit of both them and their customers. They have a complete suite of “smart” appliances. Customers can keep their clothes from getting wrinkled by initiating an extended tumble directly from their phones, get alerts if they leave the oven on, and automatically order dishwashing detergent.
However, more important than these time-saving features, General Electric can remotely perform advanced diagnostics, alert owners about upcoming scheduled maintenance, and gather tons of usage data that helps them make long-term product decisions.
3. Personalization (in tandem with big data)
Ecommerce companies have been using big data to drive decision-making and personalization since ecommerce came around. Tracking customer preference for particular products, order history, and shopping behavior allows retailers to increase a customer’s engagement, which leads to better customer service and, in turn, increased revenues.
Consider the success that Amazon has had leading the way in online shopping. The data Amazon gathers is incredibly accurate in providing targeted search results on their platform. Every time you shop on Amazon, you will see “recommended” and “similar” products based on purchases of previous customers looking at the same product as you. This data is now being used in a predictive manner as well. Ecommerce platforms now know what we need before we even know we need it.
Now that ecommerce retailers have harnessed the power of big data for product recommendations and predictions, just where does IoT come into play? Data from IoT devices takes everything one step further. These devices can provide insight on brand preferences, environmental conditions, and product usage.
One online women’s clothing retailer now offers a pair of internet-connected shorts that measures the shopper and ensures that their new jeans will fit perfectly! Amazon’s Alexa is also a great example of a connected device that is changing shopping for the average consumer.
More than just changing the shopping experience for the consumer, these devices are constantly able to collect data that will continue to drive business and marketing decisions. Utilizing innovative technology allows ecommerce retailers to deliver a highly personalized shopping experience.
It’s Only the Beginning
The collection of big data to drive business and marketing decisions is the most obvious benefit of IoT, however we have only seen the tip of the iceberg when it comes to internet connected products and devices.
The IoT community is going to expand exponentially over the next few years with an estimated 30 billion IoT devices in use by 2020. This growth is going to have a tremendous impact on e-commerce retailers and online shoppers. If businesses utilize the technology, it will result in massive benefits for both their customers and their bottom line.
Written by Emilia Marius