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Four valuable opportunities of the Internet of things in retail

Internet of Things (Internet of Things, IoT) is one of the most fashionable terms in IT today. It is often talked about in industry, logistics and medicine. It seems that this technology has no boundaries of application: today, with the help of IoT tools, you can build the simplest security system for a garage with your own hands, or you can implement the digital transformation of a huge factory production. 

Of course, the Internet of things is very interested in retail players. Right now, retailers are looking for new technologies to help them compete with e-commerce and online services. Everyone is waiting that IoT tools can make a small revolution in retail.

what is internet of things

What is the Internet of Things

Not so long ago, we talked in detail in our blog about the essence and principles of IoT . So now we will touch on this topic only in a nutshell. 

The Internet of Things is an array of devices connected to a network that can exchange information with each other. For example, your smartphone uploads data about your user habits through installed applications, and then, based on the analysis of this data, contextual advertising is displayed to you. A good example of the Internet of things can also be considered smart home systems, when your home automatically regulates the level of temperature, humidity, room lighting and independently affects other indicators. The Internet of Things in industry is sensors and digital equipment that collects and transmits data in real time. With the help of IoT, you can monitor the pace of production and the status of machines, for example.

In 2020, IoT began to grow even more rapidly due to the pandemic. According to Fortune Business Insights, the global IoT market has surpassed $308 billion. It is predicted that from 2021 to 2028 the average annual growth rate of the IoT market will exceed 25%.

Various companies around the world are actively investing in technologies related to the Internet of things. A Fortune study found that two-thirds of business decision makers are already implementing IoT technologies or plan to do so in the coming year. More than half of those surveyed say their companies are investing in IoT with the expectation of generating new sources of revenue, or amplifying revenue from old ones.

Opportunities for IoT in retail

Opportunities for IoT in retail

Why should retailers turn to the Internet of things and what opportunities does the technology open up? Here are four areas where IoT can help:

  • Improve warehouse and delivery performance. Let’s look at a simple example: your production sends the finished product to one or more overloaded warehouses, where they face the risk of “freezing” or falling out of the view of storekeepers. This happens often because warehouse processes lack transparency. IoT technologies make it possible to make each product visible in the warehouse system using a simple chip or radio tag. This will help automate the movement of the product at all levels of the supply chain. This means that warehouses will be used more rationally, and delivery will require less time and resources.
  • Minimize losses from force majeure and the human factor. When setting up a transparent system of presence / absence of goods, it will be much more difficult to write off a product as “lost”. In addition, the Internet of Things can protect you from losses from unforeseen situations: sensors will inform you in time about the breakdown of refrigerators in a warehouse, for example. 
  • Track demand. In combination with databases and predictive analytics tools, IoT tools will help to analyze the overall situation in the market and provide information on the demand for commodity items in real time. This allows you to predict demand and focus on the most promising market niches,  
  • Create contactless trading floors and darkstores. These two novelties in the world of retail are rapidly gaining popularity. There are no sellers in the contactless trading floors: a person walks between the racks and collects purchases, having previously registered in the store application. The system automatically determines what the visitor bought, or reads QR codes on each product. As a result, the required amount for purchases is debited from the card linked to the application. Darkstores, on the contrary, are warehouses-shops in which there are no buyers. Orders enter the darkstore through the application, employees pack them and send them by courier. In both models, IoT can be effectively used: assign a radio tag to each product to automate accounting, for example. 
  • Set up smart delivery. For example, you can keep track of where your truck with goods is at any given time. It will also be possible to regulate the speed of the car, control whether the driver is wearing a seatbelt and check how many hours he has been on the road. In addition, some retailers are following the path of Amazon and testing drone delivery. By setting the coordinates and the desired time of receipt of the goods indicated by the buyer, the delivery service ensures the fastest and safest sale of goods to consumers. 
  • Improve the maintenance of commercial equipment and prevent its breakdowns. With the help of sensors and sensors, as well as special software, you can monitor the health of working equipment, update software in a timely manner and identify problems in time. This saves money, time and nerves that could have been spent on repairing broken equipment and eliminating the consequences of a breakdown.
Problems of using IoT in retail

Problems of using IoT in retail

A fair question arises: if the Internet of Things is so useful, why haven’t all companies implemented it in their work yet? 

There are a number of challenges that anyone who wants to transform their company and start using IoT faces.

  • Lack of necessary infrastructure

Since the Internet of Things primarily implies continuous and fast work with large amounts of data, its implementation requires a technical infrastructure. Servers, equipment, expensive software – for a small business, such expenses can be too significant. 

There is an opinion that IoT should be implemented quickly and on a large scale. But practice shows that it is better to start with small projects. This will help to explore the potential of technology specifically in your niche, find out the reaction of the audience and identify the vector of application of the Internet of things. It is possible and necessary to establish such systems gradually so as not to expose your company to great risks.

  • Safety

By implementing IoT technologies, retailers gain access to big data about their product and consumers. And this is not only a great strength, but also a great responsibility. Data will need to be properly protected from cyber threats, otherwise leaks and malicious software can hurt both your business and your users. Solving this problem requires additional investments in technology and software, solving database protection problems, and finding reliable partners. 

  • Qualified personnel

Automation is one of the main benefits that the Internet of Things offers. However, important decisions still have to be made by a person: work with the results of data analysis, develop and adjust strategies, and launch advertising campaigns. Therefore, the problem of finding experienced employees also remains acute for those who are starting to implement the Internet of things in retail.

There is good news: with the growing popularity of the direction, the number of educated specialists has also increased. Engineers, coders, marketers, analysts – it is impossible to establish an effective business based on IoT technologies without such specialists. 

In addition, you can always hire contractors who have experience in implementing the Internet of things in retail. Depending on the scale of the project, it is worth making a decision: do you want to hire the right specialists on the staff, or will a partnership with a reliable contractor be enough to get started.

When to implement IoT in business

When to implement IoT in business

In any case, every retailer should think right now about the possibilities of implementing IoT. In fact, the Internet of Things is already changing retail: parcel lockers in doorways and self-service areas in supermarkets do not surprise anyone today. 

Technologies are developing rapidly, and ignoring trends can lead to a serious lagging behind competitors in the next two to three years. If you are looking for new ways to strengthen your business through digital – do not hesitate, contact our experts for advice. At the very least, it will help you get a clearer picture of the market.

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