The Internet of Things and What it Means for Retailers
Last month, I had the pleasure of speaking with David Dorf, senior director of technology strategy for Oracle Retail, about the presentation he was giving at Shop.org's Annual Summit titled, "The Internet of Things: What it Means for Retail and What to Do Now."
The Internet of Things (IoT) has always interested me. Basically, it's a computing concept that describes how everyday physical objects can be connected to the internet, and thus talk to each other. In 2014, the IoT has become less of a concept and more of a reality as more things are connected to the internet to improve user experience and create new opportunities for technology to integrate into peoples’ lives. C'mon, who doesn't love the idea of your alarm clock waking you up and then notifying your coffee maker to start brewing coffee for you?
Dorf thinks the IoT is interesting as well.
The IoT is "spawning new devices and new possibilities everywhere," Dorf said. "With an increasing number of connected devices, and the development of more and more smart objects on top of all the electronics we currently use in-store and in-office, the potential is extraordinary."
Dorf explained that the concept of the IoT has grown exponentially over the past few years because of four things: ubiquitous and cheap wireless networks; an increase in the number of radios and sensors; growth in network addresses; and an increase in data storage availability. He also explained key concepts that will fuel the growth of the IoT. They include the following:
RFID: For IoT objects to connect with each other, they need to be augmented with an auto-ID technology, typically a RFID tag, so that the object is uniquely identifiable, Dorf said. RFID is a great "in-store weapon," adding that items with RFID tags increase can inventory accuracy by 99 percent.
Smart TVs and Connected Cars: In short, these are TVs and cars equipped with internet access that can provide online interactive media. More and more of these connected devices are being introduced everyday, and they will help move the IoT forward, Dorf said.
Wearables: These are technology devices that can be worn by consumers, and often include tracking information related to health and fitness. Dorf said wearables are among the top categories expected to take off in the IoT.
In-Store Sensors: With the use of in-store sensors (i.e., beacons), retailers can now track consumers' behavior in-store and make unique offers at the right time to drive conversions, Dorf said. With beacons, retailers have a huge opportunity to create “smarter” stores and shopping experiences for consumers, thus making them a big part of the IoT movement.
Home Automation: Home automation is technology that makes household appliances, temperature controls and other electronics “smart,” connecting them to the web so they can be programmed to function remotely.
Dorf explained that retailers have a great opportunity when it comes to home automation in regards to replenishment. How so? Dorf used the following example:
Recently, Dorf said his refrigerator notified him that its water filter needed to be changed. After digging around inside, "I got the model number and ordered a replacement," he said. "But wouldn't it be great if the refrigerator was connected to the internet and simply added the right replacement filter to my Amazon shopping cart? I think that's exactly where Amazon is going. Amazon has gone so far as to create a home automation store."
So, how should retailers think about the IoT? How should they get in on the act? Dorf cited the following questions every retailer should be asking when it comes to the IoT:
- How can IoT help with operations?
- How can IoT help consumers shop?
- What new IoT products will catch on?
How do you feel about the IoT? Is it a fad? Will it last long term? Is it on your radar? Let us know by commenting below.