IoT and E-Commerce : Chances and Risks for Publishing Business

Within only a few decades after the internet became available for public the whole coexistence mechanisms in the global community have been constantly undergoing dramatical transformations. The extreme dependence on web services in the day-to-day life seems to be the sign that by now we have reached the utter possible digital connectivity level. However, the newest trends prove the opposite as the expansion of internet based technologies is taking a new turn to it.

The term Internet of Things or short IoT has been a pretty hot topic these days. This respectively new concept stands for creation of a network or a system of physical objects that are connected to the internet. The things become smart and become able to collect, evaluate and exchange data what triggers some action or a number of actions in the IoT chain, requiring only little or even no human intervention at all. The secret lies in embedding sensors and chips into objects due to which things become able to collect data and to extract relevant pieces of information out of it, applying data analytics. The information, collected within a system of smart things, will be sent to the cloud where the final data processing takes place. On the basis of the evaluation signals will be created and sent to other smart things or devices in the network.

Driven by the desire for more efficiency, people are most likely to buy more smart wearables like smart watches or smart clothing in the future (the global retail revenues are expected to soar up to 53.2 billion U.S. dollars), as well as build more smart houses (the global market revenues in the field of Smart Building are presumed to increase threefold in comparison to the year 2014). The number of installed connected things within smart cities will presumably reach 3,33 billion by the year 2018. The number of IoT connected devices worldwide is likely to swell up to 75,44 billion till 2025 in comparison to 13.4 billion devices in 2015. Taking into consideration the estimated i.e. 8,1 billion people that would mean 9,3 devices connected to IoT per capita.

Systems of smart things can be ultimately useful for such fields of business as health care, urban management, automotive, energy, logistics and for e-commerce etc. With IoT it is now becoming possible to provide medical help to patients faster, to foresee and avoid traffic jams or car accidents, to automatize the inventory of goods in warehouses and shops, to reduce energy consumption in cities and so on and so forth. The possibilities of the IoT, known to us today, are astonishing and we are just starting living smart. So let’s buckle up and see what the future holds.

IoT and E-Commerce

Electronic commerce is a modernized way of business organizations for buying and selling goods or services over electronic systems, such as the Internet, computer networks, email or mobile phones. It may be applied to various business functions, also known from traditional commerce, like marketing, sales, distribution, financial transactions over service and support. E-commerce represents a paperless exchange with business information by means of, for example, an e-mail or electronic data interchange.

Since e-commerce took the stage, selling has never been so efficient and at the same time challenging for business. The internet offers companies plenty of possibilities to promote their products: on their own websites or social network channels, sending personalized emails directly to the customers and many others. A gold mine for marketing opportunities for e-commerce has been discovered with the introduction of the IoT cross platform data analytics, as it’s become possible for merchants to get an insight into areas of the end customer’s reality that was a pure supposition before. Artificial intelligence tools enable online tracking of customers’ buying patterns, purchase history what shapes detailed digital profiles. The tendency to shop on various devices that, as a rule, dispose of geolocation features allows matching user profiles to the devices the buyers use. This means that every customer can be offered exclusive products or services, fitting perfectly his or her preferences and needs.

Due to smart technologies shopping in the Web has become a unique experience for every customer. Businesses aim to make the buying processes in their online shops as frictionless and as fast as possible, in order to keep up with the competition. This serves as a main driver that facilitates the development process of the global e-commerce. Fast, efficient, personalized, visually appealing, reliable, customer friendly, by 99,9% completed through machine to machine communication. Could shopping be any better?

Smart retail means Omnichannel

IoT technologies make steadily their way not only into e-commerce but also into retail, blurring gradually the boundaries between virtual and real. Unified commerce, i.e. a merge of physical commerce and e-commerce into centralized infrastructure, based on the outmost customer orientation, is a new challenge that merchants face these days. The basic principle of the smart system is to offer the buyer a consistent shopping experience across all the channels and devices be it a web store, an app or a physical shop.

Omnichannel retailing is one of the solutions to link up online, offline and mobile shopping. It is an approach that brands use to provide their customer with an integrated shopping experience throughout different yet complementing one another channels. It does not matter where the shopper starts his customer journey on the website, mobile phone or in a store, as either path should be same immersive.

Despite a number of similarities Omnichannel retailing cannot be mixed up with the multichannel approach. The latter presupposes distribution and advertising on multiple channels, yet independently from one another. This does not let the customer painlessly switch channels and experience the same convenient shopping in each of them. Omnichannel clears boundaries between devices and networks making buying seamless and unified.

Omnichannel is already an actively applied method and we can see that in many successful enterprises. There reasons for retailers to consider to invest in their own Omnichannel strategy are presented in the following statistics:

Omnichannel retailing provides merchants a way to let customers experience brands across all retail channels, rather than solely in the shop. It’s a mechanism that can help retain customers, increase customers’ loyalty and subsequently target higher sales. In addition, shoppers’ engagement can be intensified, by implementing more personalized marketing measures, as omnichannel presupposes profound cross-channel data mining, which allows particular specification of the target receivers. Most important, there are no boundaries that stop buyer from accessing a product and making a purchase. Also in-store where the customer can get detailed information about every product, since shop assistants have direct access to the stock and to the shopper’s profile information, to offer the best deal.

One of the great examples of Omnichannel implementation is Starbucks. The famous coffee house chain offers a service in its website and in the app to order and pay before the actual arrival to the shop. The order can be picked up in the shop of the customer’s choice. A perfect solution for a fast breakfast on the go in the rush hour. The coffee lovers will hardly be able to get lost on their way to Starbucks, as the app for mobile devices provides navigation to the nearest location. What makes Starbucks Omnichannel even more attractive is the rewarding system for being a client and for paying with a Starbucks card. This allows shoppers to collect bonuses for every purchase they make. The card can be recharged on any device even directly before the purchase as the balance on the card will be updated immediately across all the channels.

IoT in physical shops

Where sensors come into play there is no need to wait in long lines at the checkout counter in a shop. Wait checkouts! Where are they?

This shock you may have, first entering the new experimental Amazon Go shop in Seattle (USA). What customers see first, when entering the shop, are scanners like we know them from metro stations. However in Amazon Go not a ticket has to be scanned but a QR code, generated by the app specifically for every account. As soon as the QR code is scanned, smart cameras start tracking customer’s movements around the shop. Fitted with RFID technology smart shelves that are linked to each item make it possible to detect when products are taken from or returned back to the shelves automatically and to keep track of them in a the virtual cart of every customer. After shopping, every shopper can just walk out of the store. The money for the purchases will be withdrawn from the customer’s Amazon account automatically. The whole Amazon Go concept is perfectly fitting to the goods, offered in the shop, i.e. ready-made meals that “mobile eaters” can literally just grab on the way, when in a rush.

The major players in the mobile device industry have delivered their own versions of mobile wallets e.g. Apple Pay, Android Pay, Samsung Pay. Registration is made once only, that involves saving bank account information or credit card information. Basically it is possible to pay with NFC in every shop that has a reading device which supports NFC.

Chatbots

Another IoT technology that is currently disrupting the traditional retail process is chatbots. Communication with businesses may be quite frustrating for customers at times. Filing complaints, requesting details about some particular products via email or by telephone is considered by most buyers a big obstacle, too much of an effort and just an unnecessary time loss. As a result they eventually end up losing interest in a brand or a particular product. This drives a huge gap between a merchant and the end customer that ends up in a low customer retention.

In order to provide quicker and personalized pre-, while- and post-purchase services merchants are gradually implementing digital communication solutions, based on artificial intelligence, called chatbots. This smart IoT interface imitates a human conversation per voice recognition or messaging. The aim of the current booming trend of creating chatbots for Facebook Messenger and WhatsApp is to merge services so the user does not have to switch between applications (instead of opening single apps to compare prices to order flowers the user can do it directly in one messenger bot) as well as provide opportunity of a direct and less formal C2B communication, regardless of business hours. Currently chatbots are being used for: booking (hotels, trips), ordering (flowers, tables in restaurants, cinema tickets), informing (news, weather), shopping (helps to find clothes, shoes, accessories etc.), entertainment (Messenger Chat Bot Sequel Stories – tells a story engaging users), healthcare (advice from a doctor), requesting product or service details.

At the F8 (Facebook Developer Conference) in April this year Facebook has announced launching new features for interaction and searching for chatbots in the messenger. Now it is become possible to access the Chat Extensions, as Facebook calls the bots, from a group chat i.e. use group bots. This means that the members of a group conversation can team up and, for instance, create mutually shared Spotify playlists, make bookings, shop together etc.

Up to now there was no unified way for users to search for chatbots. Facebook solved this problem by designing a discovery tab. Here the users can browse for bots, by applying filters to specify a specific service category, install chatbots and check out general trends in the field.

Chatbots created a big hype in e-commerce. One of the best bots among brands is the H&M one. This bot is like a personal stylist that can be used when looking for inspiration or a new outfit. First of all the chatbot is building a user profile, asking for the sex of the user, his or her taste in clothes (by showing pictures of different styles that the user has to pick out). Afterwards the bot provides a list of items around which a new outfit will be built. Next it suggests four related items and shows their total value. The user can like or dislike bot’s suggestion. If the user reclines the outfit, the bot offers the next one. This chatbot also gives an opportunity to share outfits in social networks.

Bots are a rapidly developing technology that is only at the down of its evolution, even though it’s already gradually disrupting the market. Chatbots are believed to be increasingly used in the sector of customer services and to big extent replace human working forces in the future. Bots have a very big advantage: they are able to process huge amount of information in a blink of an eye. In e-commerce it is currently aimed to make chatbots even smarter, by programming the ability to analyze stock information along with customers’ social network profiles, buying history and preferences, geographical location and even mood to make the best and most personalized product suggestion. All this data has to be handled by the intelligent assistant in a matter of milliseconds and it is really hard to believe that this will be the limit.

Opportunities and risks of IoT for publishing business

IoT is a whole new digitally nourished ecosystem that has endless potential yet also it bears some risks. Due to its media driven nature publishing business can profit tremendously from IoT. Here are some opportunities and ideas for how IoT could be useful in publishing.

Chances

Prompt spontaneous purchases of single articles from different magazines or newspaper at train stations or airports.

To implement this idea would be enough to have a machine with a screen, to view single articles, and data transfer capabilities like NFC or Bluetooth. The user would have to have a fitting app on his mobile device to enable data transfer and make a purchase. If the customer likes some particular article he could just hold the device face up on the left or right side of the machine. With only one swipe on the machine screen in direction of the phone the data transfer to the customer’s device could be initiated. Transmission of the article could be rendered as a real life animation of shoving a piece of paper from the machine screen to the customer’s shopping cart in the app. After an immediate transfer the article would be shown as a miniature in the shopping cart. In case the customer changes his mind about the article he could just swipe it away or back to the machine’s screen. The total value would be rendered in the bottom. All the user would need to do now is just to press the button pay to make a purchase. Special monthly or yearly packages could be developed for frequent customers.

Self-promoting books

With IoT it would be possible to make items in bookstores talk to customers through their Bluetooth, other data exchange features enabled phones or possibly with the help of smart shelves. This would allow books to self-promote them when a customer takes it from the shelves. In order not to disturb other customers headphones could be connected to the shelves. Frequent customers could be detected by their mobile devices and be addressed by the books by the name.

Bring products closer to the customer

IoT could be implemented more into daily routine and linked to media related actions and objects. For example a mug could tell news when you drink coffee in the morning.

Chatbots as a new distribution channel

Chatbots is a very promising technology for publishing houses. Especially magazines and newspapers could launch their bots to reach the younger target group, to provide an opportunity to read selectively and in small quantities. Such content as videos or images would be inevitable in this distribution channel. Content in the bot could be linked to flexible payment methods like pay per article or per certain amount of content. This would allow the publishing houses collect more data about their target group and subsequently offer personalized products. Also other services like past time suggestions at the local level could be included in the bot in cooperation with partners.

Environmental benefits

Protection of the environment is a very topical issue nowadays. IoT solutions and high connectivity would allow publishing companies to optimise their workflows and develop frictionless and most important paperless digital processes.

Risks

Despite the wide range of opportunities that IoT is promising all the risks it brings must be considered.

Unemployment

One of the drawbacks of the smart ecosystem is the fact that it excludes humans out of the processes. This might cost a lot of people their jobs and as a result soaring unemployment rates. People with IT knowledge thought will be needed to implement and maintain the programs, which means a big qualification shift in the educational sector.

Bankruptcy

Implementation of IT is for most publishers a big financial obstacle. There is though a big risk for small and middle businesses not to be able to keep up with the competition as the initial investment is too high what can be deadly for them.

Data security

The general issue with IoT is personal data security and security leaks in smart systems. Hacking would mean not only data losses for publishers but also possibly a ruined brand image. A chatbot, for instance, could be hacked and reprogrammed to spread unwanted content. Such issues could scare off the customers. Moreover, making big quantity of physical objects smart and connecting them to one another has always a risk of opening a gate for cyber attacks like it happened with smart TVs.

Energy supply

And finally the energy issue. Energy consumption within IoT networks has been a topical problem for years. Big achievements have been made in this field. However there is a still a lot of room for improvement. This problem can be limiting the implementation spectrum of potential IoT solutions, developed in the publishing sector.

The head spinning technological development is showing that IoT is our future so even more connectivity and digitalisation is awaiting us. Although the whole potential of the IoT technologies hasn’t been even remotely fully discovered it’s already likely to disrupt the existing processes and systems as well as the way we consume products, media and information.

Olga Alves, Ana Karlovcec, Tina Burner, Eleni Sarantopoulos, Jessica Schlag