‘Internet of Things’ Helping Ecommerce Merchants

The adoption of Internet of Things has grown in the retail world since I last wrote about it in December 2013. While larger companies are profiting from this technology, many smaller merchants are not positive whether it might help them. This post helps clear a few of those doubts.

Internet of Things — IoT — Imagine a community of connected devices that can communicate with each other, and might also be retrieved via a wireless connection using Wi-Fi or mobile phone networks. An exceptional example is a vehicle or a system that can be remotely accessed to track location. This is a 1 time transmission of information i.e., a user sending a request to check at the place of a car or a gadget.

The technique becomes more useful with two-way communication, after a device senses something and then sends info. As an example, a car could alert the owner if a man or woman is trying to break in by deploying a sensor to detect broken window. This two-way communication is the principal reason for the increased adoption of IoT.

Retailers have been using one type of sensor, radio frequency identification, or RFID, in their warehouses for monitoring inventory for several years. RFID can be utilised in brick-and-mortar shops for many diverse purposes like smart labeling, which can detect theft.

With costs for a single label, or sensor, coming down to about 5 cents, more retailers are embracing these solutions in their environment. It’s beneficial and makes economic sense to do so. These tags are really small, as shown from the picture below, which makes them easy to deploy. They often have adhesive backing to attach labels. They typically have a little built-in battery that can last up to three years, more than sufficient for tagging one thing but also enables reuse of the tag.

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RFID chips are incredibly small, the fraction of the size of a penny. Courtesy: Alien Technologies.

IoT for Inventory Management

Let’s use an example to illustrate. Say that a merchant has $5 million in annual revenue with $1 million of inventory in its own warehouse at any given time. This inventory comprises 10,000 items. Assume the retailer incurs an yearly inventory reduction of 0.10 percent, or $1,000. Each product setup with a $.05 RFID tag will cost the retailer $500 — 10,000 items times $.05 each.

This cost could easily recovered by reducing the losses. The RFID tag can send an alarm when an item is removed — i.e., stolen or lost — in the warehouse. The label can also increase efficiency in the warehouse, as it can enable better inventory tracking and boost the order picking process.

Added IoT Sensors

Retailers can use unique detectors beyond RFID to improve operations. There might be temperature-monitoring detectors to inspect the ideal temperature for perishable products and send alerts when necessary. There might be sensors that track the forklifts in the warehouse for predictive maintenance to reduce loss of productivity. There might be sensors in delivery trucks to monitor the deliveries in real time, reduce losses, and make the delivery routes more efficient. Each sensor has a unique identifier to make sure it is not difficult to determine the source and take action accordingly.

Getting Started

Using IoT requires hardware and software. Many vendors — Softweb Solutions, Zebra, Novotech, Xively, SST — now provide end-to-end solutions. These vendors will work with a merchant to understand its own requirements and specify the kind of sensors and software required to implement the solution. This may involve sealing the sensors and deploying them together with the computer program. Furthermore, there are vendors that sell cloud-based applications, thus eliminating the requirement for an on-premise setup.

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