Internet of Things (IoT) technology can be a transformative force in retail. It’s already changing how consumers shop, and it’s giving advantages to retailers that can leverage it effectively.
As a merchant, IoT can enable you to offer better customer service and improved interactions with customers. You can see less waste and retail shrink, while witnessing streamlined productivity of staff and resources. However, not all transformation is good.
Embracing IoT technology demands careful consideration, planning and strategy. You must optimize tools and processes to see the benefits of IoT adoption.
Opportunities for IoT-Savvy Businesses
Amazon’s cashless, cashier-less Amazon Go stores were a well-publicized application of IoT technology in the retail space. But, there’s a lot more to IoT-enabled retail that’s taking shape.
Take voice-assisted commerce as an example. While this technology is still early in its development, the promise of shopping via voice-enabled devices like Amazon Alexa or Google Home could be a game-changer. Megaretailers like Walmart showed interest early-on and the channel is projected to multiply twentyfold by 2022, reaching $40 billion in annual sales.
IoT applications for retail don’t have to be as dramatic as introducing new modes of shopping. They can supplement the in-store experience, adding new dimensions to your interactions with customers. For example, in-store sensors can trigger personalized discounts for shoppers as they move through different parts of the sales floor. There are also beacons, which send notifications to users’ phones based on proximity. 73% of shoppers claim beacon-triggered content would make them more likely to purchase items in-store.
Hence, both brick-and-mortar and eCommerce retailers can benefit from upgraded supply chain and inventory management. Additionally, IoT tools allow retailers to monitor the conditions of products throughout the supply chain, preventing loss due to damage, spoiling or contamination. You can also know how much of any given product is on-hand at any time, preventing shortfalls or overstocking.
Are There Potential Issues Arising from IoT Adoption?
Think about IoT technology’s greatest advantages: the possibilities for personalization, the intimate knowledge of users’ preferences and the close integration of different tools. These advantages can easily become vulnerabilities.
Like any tool, IoT technology does carry some risk, especially the potential for fraud. After all, think about the scope of data you share with IoT-connected devices. Personal identification, financial information, medical records, biometric identifiers like fingerprint and voice signature translates to a lot of personal data floating around.
Fraudsters would generally regard this kind of data we share with IoT devices as a treasure trove. They can come up with new methods of accessing and manipulating consumers’ personal information every day from various points of attack.
IoT integration means having lots of devices connected to a network. Each node in that network is a potential point of vulnerability. Plus, these networks are inherently decentralized, making it extremely hard to survey for signs of attack. Computer scientist Kevin Curran put it well when he said, “In the future when toasters are connected to the internet, how do you know they won’t be running a spam botnet?”
Leverage Opportunities, Mitigate Risk
Gaining a competitive edge in the market demands a responsive IoT strategy, but it must be counterbalanced with concerns about new risks. Yes, always look for ways to leverage new tools, but also consider the security implications at the same time.
One of the most important points is to focus on identifying users. If you can’t do this with a high degree of reliability, then your strategy is destined to fail. Not only will your targeting be off-balance, but you open the door for fraudsters.
One way to address this risk is to look into more advanced fraud scoring. Providers like Kount examine a wide range of fraud indicators to verify your customers’ identities. Fraud prevention experts search both historical and offline data to determine the level of risk each transaction represents.
Another point you can’t afford to overlook is data protection.
Using IoT technology successfully means you’re storing a considerable amount of information; both your own internal data, as well as your customers. If hackers manage to breach your network, it could be a disaster.
We’ve seen plenty of high-profile breaches already. As the data stored in companies’ systems get more detailed, in-depth, and increasingly difficult to manage, the problem is going to get worse before it gets better. That’s why it’s important to take these steps now and to be ready for an IoT-integrated marketplace today.