What changes if IoT makes your home the home shopping network?

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One of the (many) promises of home automation solutions is automated grocery and staple replenishment. The core idea here is that anything which is regularly bought could simply be repurchased by pushing a button, or by a sensor realizing that you are, for example, out of milk. A recent VentureBeat piece predicted that 15% of all purchases could be passive buying experiences by 2020. Amazon’s Dash button is a great example how this is supposed to work, and we have been hearing about the smart fridge for some time.

15% seems like a very plausible number for the overall spend, and could be an under estimate in terms of number of transactions. Spending on food for the home, household supplies, personal care and healthcare was approximately 15% of spend in 2007, less than half the spend on housing itself (typically a single bill per month), and about the same as transport, which is perhaps 5 or 6 payments for most people (assuming a car or monthly commuting capability). It seems reasonable to think about this as being as much as a third of all specific purchases a consumer makes in a given month, which is obviously a huge change in the way products are purchased.

Part of the promise here is addressing the issue that customers don’t want to shop for single staples, today they manage this by buying in bulk, or periodic trips to the supermarket. To beat that experience the promise needs to be not far from “push a button and the laundry detergent is to be magically in the utility closet.”

How to deliver on that promise?
Perhaps the biggest challenge here is in managing delivery of single items to the home. This experience is already stretched, unless you are one of the lucky few in a doorman building the experience of using ecommerce solutions today is far too often an experience in getting used to where the Fedex office is in your city, and wondering why UPS isn’t open at the weekends.

Scott Rafer, organizer of Haulery, and investor/advisor to several companies in the home delivery and logistics space, commented “IoT driven shopping needs to focus on delivering end-to-end customer satisfaction, rather than optimizing a single piece of the puzzle… which is what I see too many of today’s ideas doing.”

There are various solutions here, but none have obviously achieved critical mass yet.

  • Scheduled deliveries can work well for some, but for many the scheduling doesn’t work with the rest of life, and again being home during a window is not the same as replenishment by button.
  • On-demand delivery services are emerging, and so far work best in crowded cities (hardly staple items, but interesting to see Postmates and Apple working together in New York).
  • Third party drop off/collection locations, like lockers in stores or car parks, work quite well, but are still not delivering the level of convenience that sensor based shopping promises, and typically need a certain level of density.
  • Smart locks/trusted home access have just started to become possible (August and the like might enable this, for example). Are we ready to have a delivery service in the house, even if well monitored? Drones of course can get round this by delivering to back gardens, or similar, assuming smart enough guidance systems.
  • The delivery challenge is an example of a topic I’ll be coming back to in future posts- innovation is rarely co-ordinated, yet at the same time assuming the rest of the world won’t change as you innovate in one area often leads to dead ends (fax machines anyone?).

    What are you going to buy?
    Sensor-based or automated buying also creates real challenges for the food retail and CPG players- an entire industry has been built around managing shelf space and working out how to best display products. What will happen to supermarkets? Do they become (even more) semi-public warehouses, with most of the interactions being at the drone dock or Postmates handoff point, with automated pickers dominating the aisles while a few hold-outs push trolleys around?

    For the CPG companies themselves “laundry detergent as a service” is going to change significantly how they have to market products. Instead of jockeying for shelf space, companies will be faced with consumers making longer term commitments to specific products, not because they necessarily want to, but simply because it’s taking away from the one touch convenience promise to have to think about which detergent or which ice cream you want today. Offering a coupon or 2 for 1 or the like won’t cut it any more. Consumer brands and products proliferated with the emergence of the self-service supermarket, will the current level of variety die with it too?

    Net- I don’t really want to have to buy laundry detergent at the store, but we face an awkward few interrelated innovation steps, not just the development of individual IoT sensors/switches in the home, and likely changes in how products are sold, before auto-replenishment beats what we have to do today.

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