In online and brick-and-mortar retail you can see a tug-of-war for the customer's favor, but this battle only obscures one of the most important future trends, the Internet of Things (IoT). As a result, retail is increasingly losing direct contact with its customers, regardless of whether it is online or offline.
Digitization is advancing
But it's not just shopping behavior that is turning 180 degrees with the triumphant advance of the Internet of Things. According to Statista, around 20% of households are already connected through IoT solutions and by 2023 it will be over a third. With IoT, household appliances suddenly become intelligent: dishwashers and washing machines independently analyze the degree of pollution of their load and dose the cleaning agent accordingly, and vehicles monitor the degree of wear and tear on brake pads or tires and, if necessary, schedule an appointment directly in the workshop.
The key point is that IoT devices are already collecting and analyzing huge amounts of data and can carry out tasks independently based on them. It is precisely at this point that technological innovation meets a new customer need and poses major challenge for retailers. Because of the amount of data available, machines also record the respective need for consumables and order completely independently.
Dealers are under pressure from all sides
In short, the customer simply lets the IoT device do the shopping. After all, the networked and intelligent machine knows best when it needs new coffee powder, cleaning agents or batteries.
Thanks to “smart ordering”, the owner only has to confirm the order with one click on the smartphone, making the purchase quick and easy. The keyword is convenient shopping that comes in handy for the customer, who after all, barely wants to actively deal with shopping anyway and waste time in the supermarket or online shop. For retailers, however, ordering via IoT devices means losing direct contact with the customer since the machines are increasingly becoming their point of contact.
So, the old story of online vs. offline has nothing to do with the trade of the future, and brings us back to the original question or rather another question: “When the devices ultimately order, who will get the smart orders?” Well, the manufacturers are currently definitely in pole position since they are the ones that produce and configure the IoT devices.
To give you an example: a manufacturer of printers not only sells them but makes sure that they are always ready for use. And isn’t it a kind of a lucrative business idea to usurp the aftermarket and knock out the middlemen? From paper to cartridges in this case, the battle for dealer margins is not raging between offline and online, but for good reasons for the margin itself.
According to Statista, global sales in the printer and copier segment in 2019 were more than 12 billion dollars. At the same time, companies worldwide make over 85 billion dollars, seven times as much, with the sale of printer cartridges. It is similar with coffee machines or dishwashers: the retailer sells the device once, but the consumer goods anew week after week.
Risks become opportunities
Nevertheless, retailers should not see the Internet of Things and Smart Ordering Services as scenarios of the end of the world, but rather as an impetus in the right direction, or to put it bluntly, when one door closes, another opens.
If retailers manage to play a role in the new smart ordering world, they will benefit from product and brand loyalty. Users configure the desired product and the shop for the Smart Ordering Service once and if this setting works smoothly, they will certainly vary it less often than reaching for the supermarket shelf. Once standardized and automated, the comparison with competing products, but above all with alternative retailers, is almost eliminated. Assuming functioning logistics processes, the (passive) customer or algorithm loyalty ensures correspondingly long-term customer relationships.
Dealer must act – the door is still open
In other words, customer lifetime value meets automation, and therefore “smart ordering services” are not a “nice-to-have” but the future. Sooner or later, intelligent devices will take over the ordering of consumables in the household piece by piece.
Retailer still narrow-mindedly busy with offline vs. online considerations will be missing the point that in the future customers will neither visit the store in person nor the web shop. Only retailers who succeed in docking with intelligent ordering systems can compensate for the lack of “buy-it-yourself” customers. As I said, it’s not about online vs. offline, rather buy vs. let buy!
Ultimately, smart ordering services increase the number of sales channels to customers since the days of supermarkets, catalogues, apps, online shops are numbered. With the help of a variety of ordering options such as smart switches, by voice command or by using automatic orders via the IoT device itself, the dealers are practically always on site with the customer.
By Daniela La Marca