It seems like everyone’s getting into the Internet of Things (IoT) these days. The truth, however, is that we’ve barely cracked the surface of the number and types of companies who could be selling IoT products and services to their customers and — for whatever reason — aren’t. Most of that market noise you’re hearing is from the vendors themselves, and from the traditional retailers who successfully sell IoT products in the same way they sell other products such as WiFi routers, laptops and diapers.
But there’s another breed of company that has a real opportunity to drive new revenue across their business by offering IoT products and services to their customers. These “nontraditional retailers” include utilities, health care providers, telecom service providers, multinational corporations and other companies that have a built-in consumer base of customers. By taking on the responsibility of helping their customers think through the myriad IoT options that are emerging in their “primary” markets, and bringing an increasingly sophisticated and curated suite of IoT products and services to them, they can build strong IoT businesses alongside their core business and, in turn, become more meaningful to their customers.
Some companies have already started down this path, but to find success, anyone who wants a play in selling IoT solutions to consumers needs to start thinking like a retailer, regardless of their original line of business. But what does that mean exactly?
1. Know your customers.
Retailers know who their customers are and, more specifically, what products and services their customers are looking to them to provide. They constantly have their ear to the ground looking and listening to their customers and understanding their likes and dislikes. Companies like utilities and, to a certain extent, health care providers haven’t had to dig too deeply to understand the subtleties of their audiences to the same degree as retailers do. They need to start.
2. Curate products and services to meet those requirements.
Since retailers are being trusted by their customers to bring a certain class of products to them, they have become experts in curating the products that meet those requirements. They deliver the broadest set of products and services they can to meet those customer expectations. They’ve developed specific roles within retailers — buyers — whose job it is to figure out what types of products and services their customer wants and needs. And these buyers are watching daily, weekly, monthly sales rates, ground truth for what customers will really pay for, using that information to continually refine their offerings.
3. Decide how to deliver those products and services.
Retailers have many decisions to make when choosing channels through which to sell their goods. Will they be delivered online? Through a storefront? Are they being sold through call centers? Through indirect channels? Through distribution? Do they have professional organizations that work on their behalf? How they go to market is a big part of a retailer’s process, and its one non-retailers need to master quickly.
4. Determine how you will support customers post-sale.
Now that they have your products in their homes and use them every day, what kind of support will they need and how will you provide it? Do you use an information management platform like InfoDesk? Do you hold workshops? What materials do you need to develop to support customers? Retailers historically have done this very well. The success of non-retail companies in this space is dependent on whether the customer sees them as a value-add — not just when they buy the products and services, but when they use them.
5. Decide whether you will sell you own products, or products from other companies.
Will they be of your own making, or will you sell those from third parties? Retailers go to market with thousands of third-party products, but there also has been a sharp rise in the sale of private-label products by every big retailer. Some retailers, such as those in the fashion industry, have gone all the way from selling third-party products to being 100% private label retailers. How can non-retail companies combine the best mix of white label and third-party products to best meet the needs of their customers?
The telecom service provider market is a good example of how non-retailers can approach the market. Many telcos sold products through third-party retailers and, over time, dropped in place their own direct retail infrastructure — first as a complement, then as a primary channel for reaching their customers. Other industries such as health care and utilities haven’t yet progressed this far, at least in the IoT space.
“Thinking like a retailer” when it comes to the IoT is no easy feat. It’s folly to think that because you do something else well as an organization that you can suddenly be a retailer. There are highly sophisticated processes inside retailers that focus on the selection and delivery of products, for example. Non-retailers need to put in the legwork to understand the internal organization — the people, processes and technology — that is required to be a competent retailer.
Becoming an IoT retailer is a double-edged sword. On one hand, customers will judge companies on their ability to deliver value to them as customers against the other, often more mature options in the market. Companies need to have the chops to do everything it takes to ensure success. On the other hand, if you aren’t the company supplying IoT products and services to your customers, some other company will eagerly fill that role, relegating you to a bystander position.
The bottom line lesson for companies: Don’t underestimate the value you can bring to your customers by delivering IoT products and services that are a natural extension to your existing business. The value of doing so to your own company will be immense. And the danger of not doing so should not be underestimated.
Rick Rommel, partner at Sprosty Network, is a respected and entrepreneurial industry leader who has built innovative businesses in the consumer electronics, retail, and aerospace industries. As SVP/GM at Best Buy, Rommel created Best Buy’s $2B+ global private label consumer electronics business, the company’s most profitable internal startup. He also led Best Buy’s New Business Consumer Solution Group to accelerate global business innovation. Rommel’s passion for innovation led to the creation of the RetailXeleratorTM scale-up accelerator, work with Stanford University, and board of director/investor support for Brilliant, an award-winning smart home startup. He holds a BA, Science/Physics, and an MS, Computer Science, from Loyola Marymount University.