insights!-Episode #85: Smart devices, dumb decisions? The role of IoT in e-commerce

Sonja Fuhrmann:

Today we're talking about the Internet of Things and why anyone involved in e-commerce in any way shouldn't ignore it. Joubin, what actually is this notorious Internet of Things?

Joubin Rahimi:

We already use this in very, very many places, and it starts with the smartphone. That's also a device that can measure a huge amount. And classically, the Internet of Things is something where I have small sensors that are in devices or distributed somewhere in the landscape and send data, mostly not actively doing anything, but could. Has IoT, as it's also called, really developed as dramatically as is often said in recent years? I think even much, much more, but at the moment you read nothing about it in the press, because AI ...

Sonja Fuhrmann:

Why?

Joubin Rahimi:

AI is on everyone's lips. ChatGPT and co, that's mainly what's being talked about, and IoT not yet.

Sonja Fuhrmann:

Wrongly?

Joubin Rahimi:

There are wave movements. So, I don't think it's that tragic that it isn't talked about, but it's used and we all use it. Anyone driving an electric car uses a huge amount of these IoT services.

Sonja Fuhrmann:

How is IoT used in e-commerce?

Joubin Rahimi:

That's a really good question, because I'd first like to take a step back. It's often said: "E-commerce, that's all virtual." No, it isn't. It's real. A virtual world is not a real world. But it is real. E-commerce is real, but it is digital. That first of all, it is digital. Why does that matter? Because IoT is also digital and also real, and it's even more about the link into the physical world.

Sonja Fuhrmann:

Describe it quite specifically.

Joubin Rahimi:

And that's actually the exciting part. And if I think about it, and I'm going to take a big leap now: I'm a manufacturer of, say, tennis racquets. There's Head, a racquet manufacturer, who say: build to performance. So I have racquets aimed at performance-oriented players. You could say that's a marketing angle. No, Head then goes a level further. They've developed a small sensor, or a sensor, that goes into the back of the racquet's shaft, and this picks up the movement, the vibration, and can be your personal tennis coach, because it can then precisely detect: did you hit the sweet spot on the strings or not? Were you too late, too early, hitting the ball? And that's obviously incredibly exciting. What does that have to do with e-commerce now? For one, IoT there is a means to an end. I can make the racquet smarter and, as a manufacturer, I can then differentiate myself further. And the first point is, I can develop digital services, like the coaching app, which is rolled out either free of charge or for payment. That's point one. Point two is, if I have the data on usage behaviour, I can communicate with the customer completely differently, on a customer level. We see that with Philips Hue. You can tell I could talk about this endlessly. Philips Hue is also used by quite a few people, and that's nothing other than IoT combined with smart home.

Sonja Fuhrmann:

Yes. How can the Internet of Things provide even more personalisation in shopping?

Joubin Rahimi:

I think, in shopping, only if you have a physical link – so if you're in the shop and there are sensors that notice something, or if you have corresponding experiences at home, to think it through quite far, for example. You've got smart home set up, and it notices you're not there but your heating is on. It could say: okay, let's turn the temperature down, or it notices the temperature is warm but you can't turn the heating down, and offers you something to buy again. That's always about making that connection, building the bridge between the real, physical world and the digital world.

Sonja Fuhrmann:

How do you think IoT will change e-commerce in future? These are indescribable possibilities you're showing me here.

Joubin Rahimi:

Yes, and I think with this question everyone also wonders: What comes next? What's the answer to that? Where does this go from here? I've already mentioned this bridge, and ultimately it's about generating new services. Because to say I only have e-commerce as a topic isn't right. We don't think in terms of e-commerce. We want to buy something, we want to procure something. We have something in mind. And that's where IoT simply helps develop topics and products that we couldn't develop before, because it flows into the physical world. What does that mean again? Let me jump right to the far end of the arc. We can also head towards bioimplants and so on. There are already small implants that measure insulin levels. We have watches that measure things. And this will simply go a level further too, to say: okay, I can optimise myself even better. I don't think I like this drive, but the drive for self-optimisation will be around for a while yet. And especially where illness is involved, or care needs, you can do a lot more with IoT, meaning with measuring, and an indication that happens automatically. So many possibilities through a stronger interlinking of the two worlds.

Sonja Fuhrmann:

If a company is on board now and says: super exciting, I want to get going, what do you need to watch out for? Can you just dive straight in or are there pitfalls?

Joubin Rahimi:

So they're manifold. Right, let me structure this briefly. Suddenly you have hardware in play where you never had hardware before. Meaning you have to deal with the hardware. And typically retailers have never, or rarely, dealt with genuinely electronic hardware. At most with an RFID scanner or a barcode scanner and so on. But now you have small, highly technical devices that send data over another medium. Meaning you have to deal with this topic of transmission, network and hardware. And ultimately, what's the business case behind it? Can I monetise it? And we talk a lot about B2C, but also in B2B. We have a customer who's a sewing machine manufacturer within our group, and they have sensors built into the sewing machine that detect when faults occur. And then to say this service: okay, I need maintenance, I need to replace the needle, the motor, or I have the mis-stitch, they get paid for this service. So it's actually not about IoT at all, but knowing IoT in order to get access to such innovations, that's the key.

Sonja Fuhrmann:

That's the key and the future. Thank you very much.

Joubin Rahimi:

Absolutely. Sure.

Sonja Fuhrmann:

Joubin, that's it for now, and thanks so much for listening.

Joubin Rahimi:

And as always we look forward to your comments, remarks, ideas. Let us share in your thoughts, and everyone else too, let's discuss it.