The Internet of Things from a consumer perspective
Through a special arrangement, presented here for discussion is an excerpt of a current article from Oracle Blogs.
To take advantage of new data sources from sensors and machines emerging from the Internet of Things, it helps to consider what it all means to the now commonplace mobilized consumer and their journey along the path to purchase.
For CPG manufacturing and distribution processes, the use cases for Internet of Things technology are highly compelling — from machines that produce goods and generate data that help predict and head off maintenance or failure issues, to the flow of tagged goods (via RFID) through the supply chain, and knowing with confidence their quantity and place relative to demand. Having product on shelf is critical to serving consumers.
Retailers can pick up where suppliers leave off, knowing precise inventory and shelf positions for all merchandise, both in store and online. With omnichannel, this capability is crucial to simply maintaining competitive parity.
But what about the potential impact on their consumer? Mobile is becoming the ubiquitous interface between consumers and their environment, at any point along the path to purchase. Mobile is not just for texting, e-mailing, browsing and using apps, but serves as the connection point to the consumer Internet of Things — health monitors, thermostats, household appliances, security systems, automobiles, watches, televisions, and even pantry and household products.
Whether separately or in collaboration, retailers and their supplier partners have the opportunity to connect the tracking of physical goods through the manufacturing, marketing and sales processes, to consumption by consumers. That’s a complex problem for which solutions now exist.
How could this all unfold? Gartner describes "business moments" as cross-industry collaboration scenarios that provide a differentiated consumer experience that benefits all parties — the consumer and the businesses working together to deliver the experience.
Imagine a can of paint knowing it’s nearly empty or your car recognizing when you are going to the hardware store to buy another. Your furnace becomes part of the conversation, and notifies you to pick up a new filter, while the businesses supporting this experience try to connect you with a location that has both items in stock.
It is a somewhat lofty concept requiring a change of mindset for industries such as CPG and retail that are often at odds, but makes sense against a backdrop of fickle consumer attention. Supporting such complex and differentiated experiences will come to define business success.
For both retailers and CPG manufacturers, the future is nearer than they think, and consumers will come to expect and prefer satisfying experiences unhindered by limits imposed by disconnected business processes.
Imagining a mobilized consumer along the path to purchase is a good way to think about The Internet of Things.
Discussion Questions
Do you think consumer applications of the Internet of Things will facilitate collaboration between retailers and their vendor partners? What do you see as the obvious and less obvious hurdles to creating such a collaborative ecosystem?
No, not right now. Maybe never unless the interface becomes much easier and the value for consumers becomes much more compelling.
Case in point is the whole category of home automation/security products which could be the epitome of IoT for consumers. Vendors are building things with IoT and retailers are displaying them in shrink-wrapped packages on shelves.
IoT home automation products are not exactly flying off the shelves. One could argue that it is still early in the adoption cycle. But if you take time to read the consumer reviews, IoT is still complex for the consumer to setup. Unless vendors and retailers make the products come alive on the consumer’s phone in store, it doesn’t become “real” for the consumer.
And there is another consumer behavior challenge of IoT that has not been sufficiently discussed: IoT generates a mountain of data all streaming into the consumer’s phone.
When mom can barely get the kids to school, dance class and sports events, does she really have time to pay attention to streaming alerts from her furnace, refrigerator and the paint can that is almost empty?
Consumer expectations and the promises touted by the IoT will force collaboration between retailers and their vendor partners. Let’s keep in mind that this business relationship has historically been contentious. Retailers believe they own the shopper and brands believe they own their shoppers. What, where, when, how and through whom advertising, merchandising and promotion dollars flow is critical to this evolution. The shopper just wants to shop, enjoy, be surprised and delighted—before, during and after the sale. All of the posturing that goes on behind the scenes simply doesn’t matter to the shopper. Brands will want to use the promise of the IoT to bypass the retailer and create a direct and sustained relationship with their customers. The retailers need to make certain that their value proposition to their shoppers stays one step ahead of their supplier partners. Ideally they learn how to dance together!
IoT is currently the most overhyped technology category going. It offers some really good benefits, but they are unlikely to be as earth shattering as those driving IoT want everyone to believe.
The furnace needs a new filter when it needs one. All IoT does is create a more efficient channel of discovery for the consumer to know about it. However, if the consumer is not in a rush to get a new filter or not immediately financially capable of buying one (or doing preventive washing machine maintenance, etc.), the magical revenue stream that manufacturers and retailers perceive IoT to deliver vanishes.
For early adopters, techno geeks and those with disposable income, new IoT-enabled gadgets will drive incremental revenue for retailers. After that, just like the Internet, it will take a decade or more until it reaches true mainstream adoption.
Certainly the possibility of collaboration with each device, the consumer, retailers and manufacturers exists. Not everyone you meet or work with becomes your best friend. You will probably not want to collaborate with every device or retailer or manufacturer in an always-on mode. Find the way consumers want to or will collaborate. One hurdle is that of security of the data. Another hurdle will be the ability to opt in and opt out at will.
If we are to understand retailers as the Apple Store, Verizon Wireless, AT&T Wireless and the rest of the voice/data providers I will say yes. As for the other retailers, as in all other retailers, there is little hope for them to drive technology at the user level. In fact the communication providers will soon see the Internet of Things as the new frontier and/or battleground for market share. They already are aware of this or will be left to the land of the beepers very soon. Look for early front runners, as in Apple, Sprint and others to be rolled over by the big carriers in the next few years. A look at information technology history will disclose how good Apple is at not keeping up and being pushed aside. There is no indication this will change according to the investments being made.
Great article, Gib! I believe there are two primary ways that retail and CPG enterprises can take full advantage of the transformational opportunities the Internet of Things represents: 1. the invention of new IoT products or services, and 2. the optimization of business operations to deliver new services, upset long-standing business models and find new and radical ways to connect people to the world around them.
The further immersion of the consumer into the IoT will demand true CPG/retailer partnerships to drive collective brand value and enthusiasm/loyalty. New levels of business insight and consumer demand are driving a new “innovation agenda.” As barriers to entry fall and new competitors emerge, increased responsiveness and automation are today’s keys to gaining market advantage and creating competitive differentiation.
It will be a while until consumer apps really take advantage of the IoT, maybe four or five years. Sure we’re seeing item-level RFID help with things like inventory management and display control, but that doesn’t help retailers and suppliers with intent to buy analytics. In the immediate future, most effort will be put on advances in manufacturing and transportation that will boost productivity and keep the supply chain efficient. When those apps are proven and yielding benefits, retailers and suppliers will turn to the consumer front, where the early applications will focus on locational technologies that will let marketers know where shoppers are when they buy and where they have been in order to map out the intent to buy process. A pushback here will be privacy, which should be addressed through opt-in measures and incentives.
Here’s what I think most of us are missing: It’s the Internet of THINGS. Machines and devices connecting to other machines and devices. And that will work just fine until you bring human beings into the picture.
“Collaboration” is not a mechanistic concept, it involves intent, mutual purpose, acceptance, flexibility, desire, initiative, leadership, alignment, appreciation and on and on. Injecting source code into your very veins will not give you these things.
Seems to me the proponents of omnipresent chips are those who have given up on human-common unity. If you really long for an age where devices (largely the agents of advertising IMHO) tell you what to do, I un-friend you. If you long for meaningful relationships and the joy of aligning human energy toward the highest-imagined possibilities, if you don’t mind forgetting to get the milk every once in a while, if you like to be surprised by spontaneity and joy, we can be BFFs. Love is the only universal energy that can truly connect us all. Amen.
It isn’t the things that will make or break this idea—it’s the connectivity, or lack of it, and concerns about privacy.
Today the IoT is an abstraction since most of the things we interact with aren’t connected. But as more and more things join the network consumer demand will force collaboration across categories.
How far are we away from all this?
I don’t know, how long does it take to retrofit an entire planet?
I do like this article but to me it’s not so much getting the industries to work together as it is getting the consumer to care.
I already have my new Cub Cadet lawn tractor emailing me when it needs an oil change, but do I really need every appliance in my house letting me know it needs something? Do I need a text telling me the bird feeder is almost empty or paper towels automatically getting ordered when the holder senses the shortage?
What I really need is an app that tells me when my Italian Greyhound is about to “do her business” on the living room carpet.
Now that would be useful.
As the IoT evolves, we will certainly see more and more collaboration, however, I’m thinking baby steps for a while. One application at a time.
The kind of collaboration alluded to in the post above is not just outside the realm of possibility for retail today, it is also not a blip on the radar yet. Retail has so much on their plates already just to catch up with consumer demands.
This is fun stuff to think about and I am certain some budding start-ups/entrepreneurs will be on the scene soon. Perhaps an application or two with lots of consumer value will emerge, but methinks we have miles to go yet….
And that’s my 2 cents.
I recently read two interesting stories about “the internet of things.” One involves televisions that can see and hear their viewers. The other addresses how wireless technologies in vehicles can compromise a driver’s security and privacy.
To me, it is simply a matter of greater transparency, education and choice.
If consumers want TVs that can hear their conversations and cars that gather their driving histories, they certainly have the right to possess them. The onus is on organizations that take advantage of these technologies to educate their evolving consumers about how the technology works, what information is gathered and used, and how it can deliver on customer expectations.
The makers of consumer goods should not be browbeaten into stopping technological progress and developing products to meet consumer demands. Rather, they’d benefit from advocating for greater education, awareness and promotion of emerging technologies as well as their implications (positive and negative) to the marketplace.
Whether the smarts are built into TVs, cars or robots, the guidelines should be the same.
You can read my full blog post including links to the two news stories here.
The IoT is a hot topic and some of the applications are simply amazing. While most of the hype has been focused on the consumer, the idea of using IoT applications between retailers and vendors (and let’s include distributors) is still hot, just not hyped. I can see better inventory controls, just-in-time delivery and much more. I don’t see any real hurdles other than the acceptance and agreement to use the technology.
I voted “somewhat unlikely” that we’ll see retailers and their supplier partners leveraging Internet of Things concepts to deliver better customer experiences over the next couple of years. Five to ten years, maybe, when the “mobile grocery shopper” is more prevalent, and not the overblown hype it is today.
The best outcome? Eliminating or drastically reducing out of stocks, a goal the CPG and retail industry has been pursuing forever without much reduction to show for it.
I am now in a competition with other “Nester’s” regarding my energy use. Perhaps soon, I might be in a competition to show that I am the first one home due to my keylock/Nest integration and have proof of my casual lifestyle that will feed my online data application to prove I live a balanced life. These are the unexpected side effects of technology, just like the electric light and machine productivity led to longer days and the advent of leisure activities. We owe baseball to Alternating Current and Tesla! Who knew?
The same sequence of causality will probably be true with IoT and the winners will be those who think analogously as in Jobs (Steve, not the Biblical one): “The computer is the bicycle of the mind” So what is the IoT?
Perhaps IoT is the eye’s and ears of my time and money? It’s my 7th cents as in sense but it saves me pennies which reduces my costs which lessens my need to work and so on. It also enables me to say to the retailer, “my data tells me that what you are trying to sell me is overkill for the way I live and want to live.” That makes IoT the greatest consumer tool to fight against consumerism and minimize excess consumption or feature overkill. That possibility has implications on merchandising, marketing, product design and so on. So, the answer is yes. To whatever the question really is.
The key question is, will the consumer own their sensor data? If retailers, vendors, CPGs and manufacturers own the data, the scenarios described are technically possible, but a long way off.
No. Not one of the scenarios described benefits me as a consumer in a way that is meaningful. So why would I want to give up my privacy to data collectors I have not only no control over but no insight into what they do with the data?
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I believe retailers and suppliers will experiment with IoT, but because they don’t see things from a consumer point of view but rather see consumers as targets, you will continue to see things like the faux pas of Target informing a teenage girl’s parents that she’s pregnant.
Notice how the article is about dealing with “fickle consumer attention” rather than about “changing consumer needs” …
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Also take the imagined example: I can currently figure out which retailer has the paint I want in stock by simply picking up my phone and calling. And unlike the empty can of paint, I actually know that the reason the can is empty is that I’m driving to the store to show what color I want to contrast it against.
Or perhaps I’m going to show how crappy the coverage of this paint is, or that the paint is defective in some other way. Or I want to drive to a competitor’s store and show them what I used, to ask if their paint is compatible.
The number of variants is quite broad, so much so that even in this simplistic scenario we cannot accurately cover them all. And research shows that when automated systems fail even five percent of the time, humans start to consider them unreliable and try to work around them.