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IoT for retailers: opportunities and challenges

Jan 16, 20194 mins
Internet of Things

The disruptive power of the Internet of Things is transforming retail, but there's much more to come. An ecommerce expert shares insights on what to expect in the IoT/retail world.

retail experience
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The rise of the Internet of Things (IoT) is already having a profound impact on the world of retail, both online and in the brick-and-mortar world. But according to Darin Archer, chief marketing officer of ecommerce software vendor Elastic Path, we haven’t seen nothing yet.

Via email, I asked Archer about the opportunities and challenges the IoT poses for retailers, and he offered some illuminating answers, including how IoT devices are “especially useful for routine purchases” and how they will increasingly pit retailers against manufacturers.

Opportunity in the home, the car, online, and IoT devices

That retailer/manufacturer competition will play out in four key fields, Archer said: the home, the car, online and social media, and from devices themselves.

With modern digital assistants like Amazon Alexa or Google Assistant, Archer noted, you can already make purchases by voice command alone. But while retailers can continue to supply goods and work between the manufacturer and the consumer, he added, manufacturers can make re-ordering or re-stocking happen at the push of a button or automate it altogether (think water filters in the fridge). 

Retailers have a better opportunity leveraging the IoT in the car. Because driving is often combined with a purchase event, Archer said, retailers can get more sophisticated about knowing when a consumer might arrive at their store and use that information to tailor their shopping experience. One key, he added, is continuing to make strides towards “intelligent inventory insights to pull off a magical experience.”

Online and in social media, the retailers’ goal should be to promote digital engagement: “How convenient and butler-like can the retailer be as shoppers go about their day?” Archer asked. “Think John Turturro’s character Emilio Lopez in the movie Mr. Deeds.”

But perhaps the biggest potential for disrupting retail comes when IoT devices take over the shopping function themselves. “Eventually, my toilet orders more paper and my laundry soap comes as needed based on my washing machine’s monitoring,” Archer predicted. In those scenarios, he wonders, who sells you toothpaste: Target? Philips Sonicare? Or Colgate-Palmolive? 

Retail’s online challenges

Retail IoT success depends on delivering a positive, consistent, customer experience, Archer said: “Consumers need to have a unified experience across all online and in-store interactions, whether purchasing at a brick-and-mortar location or through a voice assistant, a wearable device or a smart fridge.”

At a minimum, for example, customers should always know your store hours (even on holidays), available inventory (or appointments), and ideally be able to reserve it for pickup in the store or have it delivered.

“The IoT blurs the line between in-store and online experiences,” Archer said, “which puts more pressure on underlying systems and requires additional in-store bandwidth. Brick-and-mortar shoppers now use mobile devices to check reviews or compare prices, and many retailers also use connected devices in store. Any disconnect between in-store and online systems can become quickly become a customer experience problem and a lack of connectivity can be a turn-off.”

The next steps for retailers

Many retailers have successfully exposed inventory information by store to create an “availability to promise” capability so that when mobile users “buy” something, that specific item in inventory is immediately set aside for them. The next major step, Archer said, is consolidating selling platforms so store employees, customers, field technicians, and customer service personnel all see the same catalog of product information, pricing, and promotions, so they can facilitate new orders or update existing ones.

The rise of apps and digital wallets promises to let retailers know who is in their store at any given time. This will help them move beyond pilot implementations and one-off testing to actually track the ROI of their IoT investments. Also, Archer points out, once retailers know a customer is approaching the store, instead of just sending ad notifications, they can have the buyer’s purchase ready for pickup, so the don’t have to get out of the car or disentangle their child from their car seat.

Right now, Archer said, a lot of the best retail IoT examples sit behind the scenes in the back-office — accelerating fulfillment “pick and pack” with mobile devices, for example. But he expects “much better examples in the next 24 months now that Amazon Go is in multiple cities and companies like Microsoft and AVA Retail are creating platforms for the rest of the industry.”


Fredric Paul is Editor in Chief for New Relic, Inc., and has held senior editorial positions at ReadWrite, InformationWeek, CNET, PCWorld and other publications. His opinions are his own.