How to use IoT in Retail and eCommerce?

The uprise of Internet of Things, a technology that allows data sharing between connected devices over the Internet, marked a new paradigm shift in the e-commerce space. With IoT devices making their way to online stores, this trend has radically transformed the way consumers shop online. From AR-powered mirrors that allow potential customers to try makeup products virtually to drone-empowered same-day delivery – year by year smart technologies are becoming increasingly intertwined with the e-commerce industry. 

The future of this duo is promising. According to the latest research, by 2022, with the current pace of Internet of Things, the retail market is expected to process more than 78 billion dollars. These figures should motivate business owners to be aware of cutting-edge tech trends, keeping up with the opportunities that they offer. In a nutshell, IoT allows online entrepreneurs to build a bridge between a store and a buyer where the buyer can interact with the store at various levels.

How To Use the IoT to Grow An E-commerce Business

The Internet of Things is an ecosystem of interconnected smart devices that can communicate with each other. The technology has changed the e-commerce and retail industries considerably. For instance, such processes as logistics, inventory management, customer support, and so forth have never been so smart and effective. Here are some of the most auspicious ways in which online entrepreneurs can gain from IoT.

1. Better logistic and tracking

In a highly competitive world, even a minor delay in the delivery process may cause a decrease in user satisfaction. As far as the success of any store significantly relies on seamless and smooth supply chain management, IoT enables business owners to track orders from the moment of purchasing to the second they reach the customers’ doorstep.

With AI-powered detectors such as GPS and RFID (Radio-Frequency Identification), retailers can easily track the route of the shipped goods and deliver particular information about the order (way time, temperature, traffic status, weather, location, and personnel identities, etc). Digital data encoded into RFID labels are captured via radio waves by a reader. As a result, this gives both retailers and customers greater visibility over the process of order fulfillment.

2. Drone delivery to ship faster

According to Business Insider, one of the biggest expenses and challenges is last-mile shipping. This term is used to denote the final step of the delivery process – the point at which the package finally arrives at the customer’s door. Taking into account that the last-mile delivery costs count for 53% of the overall transportation costs, companies are trying to come up with a reasonable solution to cut down the expenses and save time. 

Drone delivery is expected to be a perfect solution to the issue. Such big brands as Amazon, Walmart, and Google have already entered the game by introducing their own drone delivery service. Since then, this trend has been growing popularity among both industry giants and small local businesses. Delivery performed by robotic drones allows to kill three birds with one stone:

  • reducing total delivery costs
  • the ability to get to the areas that are tricky to reach
  • reducing vehicle downtime by ignoring road jams and other road problems.

3. Better inventory and warehouse management

Managing warehouse and tracking inventory is getting trickier as your business grows and the number of products expands. Internet of Things streamlines and automates the entire flow, as well as eliminates human errors in ordering/reordering items due to smart sensors and RFID tags. As such, with smart shelves, such product-related information as the expire date, manufacturer’s name, product type, batch ID is automatically stored in the system without human intervention.

IoT can lend a helping hand in providing e-commerce retailers with full control over the items going out and coming in of their warehouses. Moreover, the sensors allow to track and control storage conditions. As such, they can check the temperature for perishable goods, compare it with the optimal one, and send alerts whenever needed.

Besides, smart robots are good at performing various tasks and are used in different spheres of warehouse management. For instance, Amazon’s fulfillment centers are great examples of places where humans and robots work cooperatively to get packages to buyers on time.

4. Enhancing relationships between manufacturers and end-users

Connected devices contribute to creating long-term relationships between manufacturers and end-customers. IoT can help re-engage those who have already bought a product, urging them to make other purchases. 

Let’s assume that a person buys a coffee maker. However, the machine needs separate filters which should be changed monthly to continue working properly. Due to the smart sensors embedded and compatibility with Alexa, Google Assistant, etc, the system gets and processes information about how often and how long the coffee maker is used to notify the end-user whenever it is time to buy a new filter from the manufacture. Besides, the user can set up the machine in such a way that the order for periodically purchased goods is formed automatically as per a certain schedule.

5. Personalization (in tandem with big data)

Many e-commerce companies have been using big data to streamline processes and drive personalization since this opportunity came around. By tracking customers’ preferences, interests, order history, shopping behavior, as well as the products they put to their carts, marketers, and retailers can boost customers’ engagement, understand their demands, which leads to better service, and subsequently, increased revenue. However, implementing AI-powered section in your store is not an easy task, you can appeal to an e-commerce consulting company for help.

Lots of online retailers use big data analytics to provide their buyers with a personalized approach. Let’s take Amazon as an example. The data the company gathers helps in providing targeted search results on the platform. When a customer shops on Amazon, they see “recommended”, “just for you”, “similar products”, and other sections targeted to the shopper’s needs. The system makes assumptions based on order history, previous buys, as well as on purchases of other buyers looking at the same products as the customer. That said, with IoT, e-commerce platforms take everything one step further and may know what we need before we realize we need it.

e-commerce iot retail

6. Automated shopping processes

One of the most prominent advantages of IoT in retail, apart from sending you notifications when you out of some products, is that the ability to order the needed products automatically. For instance, Samsung revealed its “Family Hub” fridge that orders groceries, plays video, and even lets you see inside it remotely.

With the uprise of Internet of Things, automated checkout is now becoming a reality. Introduced by Amazon Go, the technology that allows customers to never wait in lines, automatically detects when a product is taken from or returned to the shelf and keeps track of them in a virtual cart. This means the shopping process becomes automated so buyers walk in, make purchases, and walk out with the cost billed to their mobile devices.

iot amazon go store

Image Credit 

By connecting your customers’ home with your online store, you not only provide them with unrivaled customer experience but also establish long-term mutually beneficial relationships.

Summarizing

The main benefit that IoT brings to online retail and e-commerce is the ultimate automation of all the store processes from logistics and checkout to selling and analytics. Even though Internet of Things still has lots of challenges related to safety and security, technology is a key to disrupting modern-day online retail. Store managers can break the wall between brand, product, and customer, improving communications, cutting down operation costs, and attracting new shoppers. 

Alex Husar

Alex Husar, a CTO at Onilab with 8+ years of experience in Magento and Salesforce. He graduated from Czech Technical University and obtained a bachelor’s degree in Computer Software Engineering. Alex’s expertise includes both full-stack dev skills and a strong ability to provide project-critical guidance to the whole team.

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