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Ecommerce 2020: Enabling new business models with IoT

IDC forecasts that revenue from the Internet of Things (IoT) is expected to exceed $1 trillion USD by 2022 with nearly all the earnings coming from industrial IoT including smart buildings, smart utilities, smart cities, smart production, smart retail and smart health. This creates an opportunity for manufacturers to introduce new revenue streams by bringing to market IoT-enabled business models.

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These business models are represented by an Assortment of use-cases which can be tailored based on the requirements of specific business and business, and below are some of the most popular classes:

  • Automated Inventory Replenishment: stock is tracked through RFID chips, smart shelves or by other means. Whenever the stock runs low — an order is placed automatically with the producer.
  • Industrial Vending: manufacturer installs vending machines onsite at customer locations. Client employees can obtain items from the vending machine with their badges or other types of identification; an automatic order is delivered directly to the manufacturer.
  • Usage-Based Consumption: manufacturer offers equipment to client on”as-a-service” basis and is completely accountable for the equipment performance. Customer only pays for the actual equipment use that’s tracked via internet connection.
  • Predictive Ordering: detectors installed on client premises aggregate various information and analyze it in order to predict future use of materials and equipment. Orders are created proactively and can incorporate stock replenishment, maintenance, free products and much more.
  • Purchase Result: manufacturer offers equipment to client on”as-a-service-basis”. The usage is tracked by the sensors installed in the equipment and the client pays a share of earnings or a share of savings created by the IoT-enabled equipment.
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When the producer has figured out which use-case has the most potential for incremental revenue, the next challenge is to construct the solution which may support the chosen use-case. The Company requirements for the IoT-enabled use-cases will differ from the traditional business models:

  • Larger variety of transactions will be implemented without any human intervention
  • Products and services will become more diversified combining different versions
  • For some of the Company models number of transactions will increase while the average order size will reduce
  • Multiple backend systems will be involved in business processes ranging from ERP to analytics
  • The value chain will become more complicated as one use-case might involve multiple businesses, including spouses

This will bring about a different set of technical requirements for an end-to-end solution. The solution will rely on a complex ecosystem such as IoT parts, equipment, connectivity, platform and business applications.

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While a number of these solution components can be implemented and owned by various parties such as spouses, the majority of the time producer will have the transaction layer represented by the trade platform. There are numerous important requirements a trade platform should meet to permit the IoT use-cases. It should:

  • Be an API-first platform to empower zero-touch automated ordering of services and products based on inputs from equipment and other resources.
  • Offer an extensive product catalog supporting diverse services and products including physical, subscription-based and partner-enabled.
  • Have a strong integration platform to allow interoperability with a profusion of backend systems such as ERP, analytics, fulfillment and others.
  • Support for flexible pricing models including package pricing, contract-specific pricing, per unit-pricing, tiered pricing and various kinds of rebates.
  • Enable various kinds of ordering such as ordering through APIs, bulk ordering, quick ordering and in-flight changes to orders.
  • Provide the capability to handle enterprise accounts including complicated organizational hierarchies, roles and responsibilities, multiple billing and shipping addresses.
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Due to these requirements, conventional monolithic commerce platforms aren’t the best option for the IoT-enabled use-cases. To succeed with new business models producers will need to move away from monolithic, full-stack solutions and towards API-first headless platforms that can be properly configured to match with the particular requirements of an IoT use-case.

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