The Rise of Commercial IoT in 2020
By: Jeevak Kasarkod
Tags: Retail Technology, 2020, Smart Buildings, Internet of Things, Community Engagement

IoT vendors have primarily focused on industrial and fleet management use-cases since operators are willing to pay a high premium to insure their assets i.e. both expensive equipment and workforce. In these heavily regulated industries, the technology investment cost is trivial compared to the cost of non-compliance. On the other end of this spectrum is consumer IoT that has a relatively low barrier to entry and is a huge market, look at Alexa and Ring. Between these two bookends is the massive commercial market that includes retail, real estate, restaurants, entertainment, hospitality, and adjacent industries.

Why has Commercial IoT been a laggard?

The biggest problem is that ROI on pure IoT driven business use-cases such as asset tracking, IT automation, and incident management is not compelling. ROI remains the primary metric influencing purchasing decisions in the commercial sector. As a result, commercial businesses preferred to hack together IoT prototypes for smaller tactical wins. Bad connectivity is another issue and hence they cannot afford a completely cloud-hosted model to run operations. Lastly, there is no business justification to invest and grow a data science team to analyze the volume of data generated by the IoT infrastructure.

Why is Commercial IoT ripe for growth in 2020?

E-commerce continues to rise and in the last decade has more than doubled its share of retail sales. As a result, brick and mortar businesses have to level up their game but they lack visibility into in-store customer journeys as compared to their digital-native counterparts. However, with innovations in both hardware and software, these capabilities are now both accessible and economically viable for commercial applications.

Over the past decade, industrial-strength sensors, that can work through barriers such as walls, in-combination with mesh-networking will address the client-side connectivity problems. Also, the ease of installation and lower energy consumption requirements further reduce the total cost of ownership.

Three software innovations: Artificial Intelligence (AI), Blockchain, and Augmented Reality (AR) have enabled new business use-cases at lower costs that strengthen ROI.

Machine Learning can be used by product vendors effectively to derive and predict patterns and insights and takes off the burden of hiring a data science team on the operator side. These same AI models can be executed on the edge, reducing the dependence on a high bandwidth internet connection. Computer Vision enables checkout-free in-store experiences and improves security and safety conditions. Blockchain will not only help with supply chain optimization but will enable new value-added services through smart contracts such as M2M payments. Finally, AR can enable new in-store experiences for customers safely and engagingly.

What are some leading indicators for this rise in 2020?

Since 2018 there has been a steady resurgence in digital native businesses moving into physical spaces for a truly omnichannel experience. Over the last decade, traditional businesses have been expanding their digital footprint to also own the omnichannel experience. The businesses that will finally win the omnichannel game will be the ones who can seamlessly transition customer experiences from online to offline and back online. In this regard, commercial physical spaces are evolving into community spaces which also implies less pressure of sales and more focus on community. Lululemon and other activewear brands have introduced free activity classes at their stores, shared office spaces of the likes of WeWork offer community meetups and commercial malls are evolving into experiential and entertainment environments. However, the business would still need to track engagement and conversion and tie it into their omnichannel strategy, which can only be enabled through IoT.

Operational costs are rising, causing the retail apocalypse. IoT enabled services can bring in automation and greater operational visibility to reduce these inefficiencies.

At Qopper, we are excited about the possibilities for Commercial IoT adoption in 2020.