Does the Internet of Things need a showroom experience?

Discussion
Dec 16, 2015

Four early employees of Nest Lab, acquired by Google last year, have opened the first brick-and-mortar store dedicated to the Internet of Things.

Located in Palo Alto, the software-powered store, b8ta, currently has 60 items, some available at Best Buy and many heretofore only available online. The category range includes: connected home, electric transportation, smart toys and sensory augmentation devices.

In a twist, b8ta’s business model relies on manufacturers paying a monthly subscription fee to be in the store. The Los Angeles Times likened the relationship to slotting allowances charged by grocers.

For consumers, the store offers advantages to the online experience in selling gadgets since customers can touch and try the merchandise. It also breaks from traditional physical retail, not only because all products are displayed outside their boxes but also in spaces such as a kitchen or living room to help consumers understand how Internet of Things devices work with each other. Real-time information for every product, including inventory, reviews and price comparisons, are also available.

b8ta launch preview

b8ta Launch Preview – Photo: b8ta

But the biggest beneficiaries are the device makers that have been forced to sell products directly on their websites or through crowdfunding campaigns. Product can arrive at b8ta’s store "in a matter of days, where similar deals with traditional retailers can take upwards of a year," according to a statement.

Moreover, rather than counting on a third-party retailer to nurture a new product to market, vendors are given complete control over marketing, pricing, training and inventory from an intuitive online dashboard. Changes sync automatically through in-store signage, accompanied by notifications to store staff. Real-time insight into conversion metrics enable vendors to "curate every step of the customer journey to control their brand identity and consistency."

A challenge appears to be drawing traffic to attract new subscriptions. Wrote Mark Bergen for re/code, "Despite techy buzz, drones, smart-home gadgets and virtual reality things have not hit enough sales to be a full-on category, let alone a holiday fad."

What do you think of the b8ta business model? How much do you think the Internet of Things trend will benefit from a showroom experience? Should tech-vendor start-ups be excited?

Braintrust
"The b8ta photo accompanying the story would have you believe that customers are going to throng their store, but the Re/Code story is right — we’re not there yet."
"Experiencing products is much better than reading marketing jive about them, but it’s not clear how much experiencing really goes on here. Tech companies should not bet the farm on this and look at all distribution options."
"I passed on commenting on this story this morning because a phone call interrupted. But after reading Chris Petersen’s comment I just have to jump in to say "Amen to Chris!""

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15 Comments on "Does the Internet of Things need a showroom experience?"

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Cathy Hotka
BrainTrust

The b8ta photo accompanying the story would have you believe that customers are going to throng their store, but the Re/Code story is right — we’re not there yet. The devices we have today are too limited and too kludgey (and too geeky) for mass popular acceptance. When they’re ready we will throng the store, but not this year or next.

Ken Lonyai
BrainTrust

It seems like the business model is going to be very hard to sustain over time. Right now the store offers some novelty/hopefulness that producers — especially start-ups — may be willing to pay for to widen their exposure. Ultimately, as the very same products get into other retailers that don’t operate that way, b8ta will be under pressure to operate differently.

Experiencing products is much better than reading marketing jive about them, but it’s not clear how much experiencing really goes on here. Tech companies should not bet the farm on this and look at all distribution options.

David Dorf
BrainTrust

I agree with Cathy’s comments, but someone has to go first. I do think IoT has huge potential in many areas. I recently configured my Echo to control my Nest thermostat — “Alexa trigger nest 68.” (Because reaching for my iPhone is just too much trouble.)

Chris Petersen, PhD.
BrainTrust

Amen to b8ta! IoT will not take off as a category until consumers can experience the value of these products in their every day lives.

The challenge of IoT is that value prop does not really emerge until the devices are connected, or used as “solutions.” A “store” or place makes perfect sense for products that need to be touched and demoed.

In the big box stores most IoT products are “displayed” and employees are ill-equipped to provide any real demonstration. Most IoT products are not even connected to Wi-Fi in retail stores. So b8ta will be a success if they truly have employees who can engage consumers in the IoT experience.

What is especially intriguing is the b8ta business model. The manufacturer subscription model could be a breakthrough in an emerging category. Results count … manufacturers will readily pay if b8ta proves they can sell IoT.

Jonathan Hinz
BrainTrust

This is a great opportunity to connect consumers with IoT technology and dispel the confusion that exists for these technologies. IoT has been plagued with challenges, from software compatibility to hardware, but most importantly the misconceptions that exist on what IoT is and how it can help the lives of the average consumer.

Any business model that gives consumers more insights into the product and service they’re buying is generally a good starting point. I’m excited to see the outcome of this approach in the coming year.

Ed Dunn
Guest
1 year 6 months ago

Let’s look at the underlying retail business model and remove the hipster novelty aspect of the IoT which many already proclaimed will not sustain. There are several factors here that show how retailing will manifest in 2016.

For a retailer, this format would be a great way to showroom concepts for crowdfunding or crowdsourcing interest. A grocery store can create a mini-showroom to showcase a new packaging concept or new product and gauge interest before signing on the vendor. A shoe store can showcase a new concept and accept pre-orders and pre-interest, and crowdfund the initial purchase order shifting the risk away from the store buyer to the engaged customer.

This also offers the benefit of endless aisle or mobile shopping interaction — move the product on display via QR code to the mobile shopping cart as part of checkout and the customer can select to ship to home, have local delivery or pick up in-store.

Ben Ball
BrainTrust

I passed on commenting on this story this morning because a phone call interrupted. But after reading Chris Petersen’s comment I just have to jump in to say “Amen to Chris!”

The IoT is a blur to most of the people who can afford to actually buy and use the appliances/technology. Sure, the affluent Millennials will look for the IoT in the apartments they lease or the condos they buy. But what about the Boomers who are remodeling or down-sizing to a new home? We don’t get how this stuff works together — but we do understand what it can do when we see it in action — and we like it!

b8ta can fill the same role that AOL and now Facebook are filling — be the “entry level” for less savvy consumers. They will appreciate you, stick with you and spend their money with you.

gordon arnold
Guest
Google is not the only company interested in the Internet of Things but they have much more potential to stay with this new market because of their technological offerings. At first glance it is easy to misinterpret this as a 21st century RadioShack but take a closer look into the design and purpose of the new “b8ta” and you just might see the latest information technology frontier. A place where consumers can find, try and buy new gadgets for the home or office. New technologies won’t get lost in the countless pages of social media offerings that are an annoyance to consumers in the form of pop-ups and spam. Take a look at where technological advancements are being sold successfully with good margin will see the Apple Store as the leader. The success lies in the try-and-buy sales floor that has little or no inventory except for impulsive high-margin add-on merchandise. AT&T, Verizon and the other direct-to-consumer company stores were the real pioneers in try-and-buy but with limited offerings focusing on their wireless and video products and services only. Another refreshing addition to this 21st century brick-and-mortar model is an ample supply of intelligent well-groomed staffers willingly working with consumers.… Read more »
Shep Hyken
BrainTrust

We have barely scratched the surface of the Internet of Things. Here is why I like the b8ta concept. It gives customers a hands-on demo of what the items do. The showroom experience is key. People are still confused about what the Internet of Things is. The more people that understand it, start using it, etc., the quicker these items will take off. What better way to showcase the “Things” (products) than on the showroom floor.

I see it as something similar to the apps for your smartphone. Used to be just a small number apps in the beginning. Now the public knows what they are, how to get them and how to use them. It will be the same for the Internet of Things.

Lee Peterson
BrainTrust

I think it’s great. Staples should do this now. Best Buy should try it too. Grocers should do it with center-store items. On and on. No one wants to actually “shop” for those items, plus, there’s much brilliance in the deals with the vendors; really well played.

In my opinion, showroom stores (awesome ones) are the future for brick-and-mortar retail. Just ask Bonobos, Tesla or Apple. Service Merchandise was WAY (too far) ahead of their time.

Ralph Jacobson
BrainTrust

There are more and more IoT items finding their way into the mainstream consumer lifestyle each year. 2016 will be a massive shift toward the trend, I believe. This particular store has some interesting items for those who like gadgetry, however, promoting more popular items may draw even bigger crowds.

Lee Kent
BrainTrust

While I totally agree that IoT items need to be experienced, I am not high on a standalone brand winning in this market. Consumers need to see these items in context and I would believe most would like to know and buy into the brand that will be selling it to them.

Much of IoT is about extended service offerings built into the products, etc. Tell me, will consumers want that service to be backed up by say, Best Buy or b8ta?

My 2 cents goes with the former.

Doug Garnett
BrainTrust

I don’t know what to make of this business model. I suppose I start skeptical because we’ve had so many of these models pitched to the market and so few succeed.

That said: IoT desperately DOES need showroom experience — but it would be most successful within traditional stores.

The idea that there is benefit from all these connections is not obvious to consumers and they desperately need a place to “get it” — to see how it comes together. Otherwise they will continue to broadly ignore the market with only a few exceptions.

Karen S. Herman
BrainTrust

Makers unite! Really like the b8ta business model, especially getting maker devices directly into consumers hands to experience and explore, but I’d much prefer the physical destination to be an uber cool pop-up store that travels around the country or a converted shipping container that makes a strong ecofriendly statement. Makers deserve to showcase in a more disruptive manner.

Tom Martin
Guest
Tom Martin
1 year 6 months ago

While there’s potential in connecting customers with unique experiences, the retail market simply isn’t ready for this to work on a mass market scale. Because there is only one physical store, having products in stock and available hasn’t been problematic. If they do expand their retail locations, it could work like a small, unique specialty store in that each location would have different products depending on how manufactures deliver goods. Some manufacturers are startups and this is their only distribution, so scaling that to multiple locations just won’t work at this time. Whether online or offline, customers are continuing to ask for immersive experiences, and we may see more concepts like this pop up. I expect to see more, especially in the tech arena.

wpDiscuz
Braintrust
"The b8ta photo accompanying the story would have you believe that customers are going to throng their store, but the Re/Code story is right — we’re not there yet."
"Experiencing products is much better than reading marketing jive about them, but it’s not clear how much experiencing really goes on here. Tech companies should not bet the farm on this and look at all distribution options."
"I passed on commenting on this story this morning because a phone call interrupted. But after reading Chris Petersen’s comment I just have to jump in to say "Amen to Chris!""

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