This is the third article of this series. In the second part of the article on Influence of the Internet of Things on Retail, we have discussed some of use-cases. In this part, we will discuss the rest of the use-cases i.e. Logistics and Online trading.
In addition to the actual sale, the processes in the supply chain offer a high potential for optimization. In particular, in the areas of product availability, the required inventories, the deterioration of food products and the shrinkage of goods along the supply chain, the use of IoT technologies can be used. The use of Auto-ID systems such as RFID is a key technology, as it uniquely identifies each product. This is one of the prerequisites for further optimizing the efficiency of the supply chain and for automating processes. In addition to pure identification, the RFID tag used for this purpose also makes it possible to store further product-related or logistical information, such as the expiry date, the storage location or the planned transport route.
In order to identify individual products or entire deliveries of goods, the use of barcode-based systems has been established as standard so far. However, the barcode technology has some weaknesses that favor the described problems in the supply chain. A fundamental problem is the mandatory visual contact between the barcode and the reader. To ensure this, it usually requires a certain manual effort. One tries to minimize this effort by scanning the barcodes only at critical points along the supply chain. Another problem is the lack of identifiability of every single product.
In the meantime, barcodes are increasingly being replaced by RFID technology in order to exploit the potential of using the Internet of Things. A distinction must generally be made here between the use of RFID tags at the pallet or carton level and use at the product level.
Until the transition to the sales area, the goods are usually transported in boxes or parcels. The potential uses of the Internet of Things are thus already being developed at this level. An automatic product identification by means of RFID tags enables a more efficient capture of goods receipts and outlets. The previously required manual entry is replaced by RFID gates at the goods receipts and exits. The goods can thus be automatically and uniquely identified and in the case of bundled units be checked for completeness. However, whether the units contain the correct content in the right amount can not be controlled in this way and requires the use of RFID tags at the product level. At the product level, smart labels are particularly suitable for this purpose. Another advantage is the traceability of the products. In the area of foodstuffs in particular, legal regulations stipulate that companies have to understand which companies have sourced the products and where they have been delivered. As the packages normally contain only one product batch, traceability can be ensured by supporting the Internet of Things.
The use of RFID tags at the product level offers the widest possible range of applications in the salesrooms, since the goods are sold here as individual elements to the customer. In particular, it can increase product availability, reduce inventory and control the shelf life of food. Product availability plays an important role for retailers as it is a prerequisite for generating revenue. Studies have shown that especially the discrepancy between the target stock and the actual inventory leads to a reduced availability of goods. The use at the product level makes it possible to determine the exact number of existing goods, separated according to storage area and sales area. With the appropriate infrastructure, even the inventory in the individual shelves can be analyzed. In this way, overstocking and misplacement can be detected, as well as an efficient reordering of products based on the actual inventory. This leads to an improved availability of goods and a reduction of the necessary inventory. By storing information about the expiration date of a product, non-salable products can be directly recognized and sorted out.
The decision whether to use the RFID tags only at the parcel or carton level or down to the product level must be made on a case-by-case basis, since both variants have their respective advantages and disadvantages. The use at the pallet or board level already offers a great advantage with comparatively little effort, but has the disadvantage that, for example, the contents of a box continue to remain unidentifiable. On the product level, however, object-specific identification is an advantage and the higher cost due to the large number of RFID tags required is a disadvantage.
Influence of the Internet of Things (IoT) on in Online trading
Online retailing has grown rapidly in recent years and is an integral part of everyday shopping life. Compared with stationary retail, however, the motivation to introduce IoT projects is low. The applications of the Internet of Things are currently being driven forward in the areas of marketing and sales largely by the online mail order company Amazon. They are experimenting various technologies in order to integrate online trading more and more into the daily lives of the customers. The advantages are obvious: market shares can be increased and sales per customer increased. Even new customers can be attracted by the innovations, which also leads to an increase in sales. By way of example, we present a few possible applications that have already reached market maturity.
Amazon Dash Button: Launched on the US market in 2015, the Amazon Dash Button allowed the customers to place pre-defined orders for consumer products at the touch of a button. After a customer has ordered such a button, it is configured with the corresponding smartphone app. By configuring it can be determined which item is ordered in which quantity after the push of a button. On the one hand there is the possibility to order a completely self-configurable dash button, but due to extensive cooperation with well-known manufacturers of consumables, dash buttons for certain products can be ordered. These are products such as detergents, coffee capsules, razor blades or personal care products. After pressing the Dash button, an order is generated automatically, which must be confirmed in the corresponding smartphone app. In principle, the order can be placed completely autonomous, but the authentication by the customer should provide the opportunity to correct accidentally triggered orders or to change the amount to be ordered. The quantities that can be ordered are mainly larger storage packs, For example, since the shipment of a single bottle of detergent only in the rarest cases is economical. The ability to bundle orders, but also smaller units can be offered. The required products are collected during fixed periods and then ordered together. In this way, a kind of shopping list can be created, which is then processed at any time. However, Amazon sees this type of order only as an intermediate step, because in the future even a push of a button can become superfluous and items can order their consumables autonomously. however smaller units can be offered. The required products are collected during fixed periods and then ordered together. In this way, a kind of shopping list can be created, which is then processed at any time. However, Amazon sees this type of order only as an intermediate step, because in the future even a push of a button can become superfluous and items can order their consumables autonomously. however smaller units can be offered. The required products are collected during fixed periods and then ordered together.
Amazon Dash Stick: A forerunner of the Amazon Dash Buttons was the so-called Amazon Dash Stick. It is a small handheld scanner that allows the customer to capture barcodes from articles. These items will then be matched against the Amazon database and will be added to the cart depending on availability. For this purpose, the scanner must be connected via Bluetooth to a smartphone on which the corresponding app is installed. Alternatively, the customer can place orders through the integrated microphone. The underlying speech recognition software also matches the product you are looking for with the available inventories and makes ordering easy. The readable articles are also mainly consumables for daily needs and food. The customer is offered a time saving by this type of order, since the items no longer need to be searched manually. Furthermore, there is the possibility here of generating a strong customer loyalty, which in the long term can lead to higher sales.
Amazon Echo: Another application scenario for IoT technologies has Amazon created with the introduction of the so-called Amazon echo. The device is a combination of speaker and microphone, which must be constantly connected to the Internet to ensure its functionality. However, ordering products only plays a minor role. The user can, for example, use services that provide him with current news, weather forecasts, sports results, and so on. For this purpose, the device connects to a cloud-based database which holds such information. The main goal here is no longer the order task, but the networking of the everyday life of the customers. In this way an even stronger customer loyalty can be made possible because the company is always present for the customer. Of course, a multitude of data can be collected and evaluated, which allow extremely accurate customer profiles. Of course, the privacy of customers is in conflict with this. The added value for the customers is thus reduced by the transfer of private data.
Dash Amazon Replenishment: Amazon is currently developing a concept for autonomous home appliances in collaboration with various major equipment manufacturers. Similar to the smart vending machines in the stationary retail trade, these are then to automatically recognize missing resources and reorder them. For example, there are washing machines, coffee machines, water filters, refrigerators or printers. If, for example, a printer detects that only a small number of pages can be printed using the current ink supply, it could order new color cartridges on its own.
In the light of the examples presented, it is easy to see how networked devices are increasingly being used in everyday customer life. While the actual business of online retailers may at first glance take a back seat, the goal here is, of course, to strengthen customer loyalty, increase sales and increase market share.
In the field of logistics of online retailing, many similarities can be found in the processes with the stationary retail trade. The availability of goods, the necessary stock levels, the automatic recognition as well as short lead times are also the declared goal here. Similar methods and technologies are used as in the logistics of the stationary retail trade. In particular, RFID technology plays a significant role. For the online trade and its customers, the use of tracking has become increasingly important in recent years. Logistics companies such as the market leader DHL, but also almost every other parcel service provider, such as DPD, offers a variety of services to make parcel shipping easier for the customer and more efficient. Many retailers see this progress in the IoT area as very economical, as online commerce is becoming more and more important.
Through the package tracking and the various statuses, the customer of the logistics companies can monitor where their package is currently located and when they can expect it. In order to be able to use these services, the respective logistics companies, apart from the access via the homepage, offer their own smartphone application for the customers. Thus, the package can be uniquely identified on the basis of the consignment number, which can usually be found in the order confirmation or in the order history in the customer account. Many online retailers are implementing the data provided by the logistics companies into their own customer portals, thus offering the customer better service. A typical shipment tracking by the logistics companies usually reaches five different package statuses, take DHL as an example company :
- The order data for this shipment were transmitted electronically to DHL by the sender : The first message within the shipment tracking means that the sender has transferred the package data to DHL by computer before the package leaves the shipping department. After that, it usually takes about 6-12 hours until the package arrives at DHL, or until the parcel pickup at the sender.
- The shipment has been processed in the Package Center : The DHL parcel center in the sender’s region has collected the parcel, which is now sorted to be subsequently transported to the destination region. Certain transport routes after this process still imply the intermediate step. However, this message is only displayed if an intermediate package center is passed through on the transport route.
- The shipment has been processed at the destination parcel center : The parcel has now arrived in the destination area and will be delivered to the nearest post office. Subsequently, the delivery is delivered via the DHL delivery agent.
- The consignment has been loaded into the delivery vehicle : The deliverer has loaded the package onto his vehicle and will usually deliver it on the same day. As a rule, this status entry takes place in the early morning.
5. The shipment was successfully delivered : The delivery has been successfully delivered. In this case, DHL still offers the option of specifying alternatively a desired location or preferred neighbors via an own customer portal, which accepts the package in case of own absence. Through collaborations, such as with Amazon, this information can also be provided by the retailer, if the customer gets the opportunity to deposit such a preference in the customer account. In special cases, it can also lead to an unsuccessful delivery. This is usually indicated by two different statuses: (a) “The shipment has been damaged and will be returned to the parcel center for post-packaging.” (b) “The shipment has been deferred and delivery is expected to be on the next working day.”
As a further development of traditional consignment tracking, the parcel service provider Dynamic Parcel Distribution (DPD) offers a so-called live tracking service. In addition, the customer can see the position of the ordered goods in real time and track the way to the door. After the order has been received by DPD from the sender, the customer will be sent a link for live tracking by e-mail or a push notification will be sent to the service provider’s smartphone app, from which the corresponding information can be retrieved. In addition, DPD will provide the customer with a time window of approximately one hour on the day of delivery, when delivery by the driver is expected.
In the next part of the series, we will discuss the Opportunities & Risks on the present topic.