Retailers and brands are now starting to use the Internet of Things (IoT) at scale. They are connecting smart devices and low tech items alike to the internet, enabling them to send messages, broadcasting locations and orders, that result in increased brand awareness or commerce transactions.
According to Vodafone’s 2017/18 IoT Barometer Report, worldwide adoption of the technology rose among retail businesses to 26% in 2017 from 20% in 2016 – and 9% of retailers now have 10,000 or more connected devices. It’s not just the products themselves: smart packaging and retail space are also being connected up in a way that presents new opportunities – and challenges – for those that seek to deploy them.
What does this look like in practice? Cameron Worth, founder of UK IoT agency Sharp End, says the technology enables a new kind of retailing in which the best customer engagement is barely there.
“It’s about being invisible a lot of the time,” says Worth. “We work a lot on invisible service design, where the things that happen around you that you don’t play a part in are the most wonderful.”
Take the drinking vessels made from coconuts that Sharp End designed and connected to the internet for the Malibu rum brand. Visitors drinking Malibu registered their details to their coconut cup so that it acted as a bar tab. When they wanted to reorder their drink, they twisted the connected base of their vessel. Doing so broadcast the order to the bar, and staff found them by tracking the coconut cup, refilling their drink. At the end of the night, drinkers settled the bill.
“You can twist the base of a vessel then all this stuff happens on the back end and the output is you have a pina colada delivered to you without needing to queue,” says Worth. “These are the services that are more interesting right now. It’s when customers leave a space saying everything just worked.” He adds: “That was very much a nod in the right direction of where we think overall service design is going to go in on-trade environments. It definitely wasn’t the finished solution but a step in the right direction. The biggest thing we’ve found, one of my favourite learnings from a pilot ever, was when we were trying to scale it up, is that every coconut is unique: there’s not a one-format shape for a coconut, so when doing injection moulding to protect circuit boards at the base of a vessel, there wasn’t actually any factory solution that you could go into. We really got stumped by nature at that point.”
The IoT at work
Other examples of the Internet of Things at work right now include Amazon Go, functioning in a connected retail space – a convenience store in Seattle. Shoppers who have pre-downloaded the Amazon Go app on their smartphone collect their shopping in the usual way. As they add items to an actual basket, they are also added to a virtual basket. When they leave the shop they are sent a bill that is charged to their linked credit card. Customers can top up on commonly ordered products using wi-fi connected Amazon Dash buttons, with dozens of brands now using these devices. Amazon has said that UK shoppers tend to use their Dash buttons to buy essentials such as toilet paper and cat food – but also coffee. Between its 2016 launch and June 2017, the five most commonly used buttons were from Andrex, Finish, Ariel, Gillette and Nescafé Dolce Gusto. Connected devices can also order their own refills, using another Amazon innovation, the Amazon Dash Replenishment Service. A growing range of smart products, from printers to washing machines and water filters, are enrolled in the service.
Nike is testing a retail app that personalises the customer shopping experience. When a shopper with a smartphone equipped with the app arrives in the store, it recognises them and shows them relevant products in the app. It also enables them to check for product availability locally, checkout and pay through the app, or reserve products that are held in lockers so that customers can try on items before they buy. The approach is now being trialled in flagship stores in Los Angeles and Portland, with plans to scale it up.
IoT technology can also be very straightforward. Vodafone, which operates the V by Vodafone IoT network, has enabled consumers to attach their own items, from cars to briefcases and even pets, to the Internet of Things through products including connected car dongles, activity and location trackers. The simplicity is key to uptake. Vodafone Group launched that capability late last year, when its chief executive Vittorio Colao said the IoT was already beginning to transform the way that businesses operate. “Over the next decade, the expansion of IoT into consumer markets will bring about an equally dramatic shift in how people manage their daily lives, at home and in their leisure time,” he said. “V by Vodafone makes it simple to connect a wide range of IoT-enabled devices.”
First steps to an IoT strategy
Smart packaging, space activation and connected products are the three key areas, says Sharp End’s Worth, where brands and retailers are starting to think about their IoT strategies.
Smart packaging can carry NFC chips or, still more simply QR codes, that the customer can interact with via their smartphone.“One of the most obvious opportunities right now is looking at the products people buy and thinking how can you connect to your consumers through those,” says Worth.
He also sees opportunities in using existing retail space to connect with customers, turning it into a platform that underpins new types of services and customer experiences. Currently, he says, Sharp End tends to approach retailers on behalf of the brands that they stock, finding opportunities for brands to use the space where they are stocked to interact with customers. “We’re working brand first, taking innovations to retailers and saying ‘can we pilot this in your stores?’ I think there needs to be a lot more work done with the retailers themselves to say how well do you create the capabilities to be able to take this to brands to be able to create new revenue opportunities.”
But in all these areas, says Worth, the most important thing is to start with the retailer or brand’s pain points. From there they can develop solutions that work. The Malibu trial, for example, overcame the pain of queueing for a drink, while Amazon Go also aims to remove the pain of queueing – this time in a supermarket. Amazon Dash Replenishment removes the pain of running out of items such as laundry liquid, water filters or printer ink.
It’s important, says Worth, that solutions are trialled at a small scale with low-cost versions of the technology to show how this might work at scale. That enables brands and retailers to get boardroom buy in before investing in larger scale and more expensive roll outs.
This is a shorter version of a longer feature that will appear in the IRUK Top500 Mobile and Cross-channel when it is published this autumn. Click here to find out more about this series of reports.
Image courtesy of Sharp End