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As 2020 approaches, the phrase “Internet of Things” (IoT) has been powering an increasing number of consumer electronics, appliances and other goods — even if most buyers don’t realize it. Regardless of the language used to describe the phenomenon (e.g., “smart fridges” and Alexa, the cloud and “devices that talk to each other”), consumers now expect a degree of connectivity between everyday home products and electronics. 

 

Consumer IoT will account for $108 billion in sales by the close of 2019. Around 1.9 billion smart home devices are expected to ship this year. The first 5G IoT consumer electronics will power new opportunities to maximize sales. This fast and versatile new cellular network technology will likely hit fast-adopting markets towards the end of 2020.  

 

Meanwhile, total FMCG (Fast-Moving Consumer Goods) sales will hit $721.8 billion in 2020. Savvy operators in the FMCG industry have long been treating IoT devices and networks as a platform to boost sales of even the most mundane of everyday household items. The coming years will likely see the cost of IoT hardware and services fall even as more competitors embrace connected consumer goods, giving FMCG companies a strong incentive to invest in IoT solutions.  

 

Engaging with the minutiae of daily life through these devices allows companies unprecedented insight into their customers’ behavior. In a recent survey, consumers aged 1834 said they primarily expect technology to deliver customized experiences. Those over 35 expect technology to improve their quality of life. IoT connectivity makes it easier not only to discover and purchase consumer packaged goods but also to channel data to innovate new products and business models. 

 

As the first use case below shows, the term “device” is almost redundant. In 2020, IoT in consumer-packaged goods begins on the outside — the packaging itself. 

 

Here’s a look at three ways IoT in FMCG will boost sales and change the way we shop.


Use Cases

The Internet of Packaging

In 2020, smart packaging will grow from a niche tactic to an industry default. FMCG brands will use it to stimulate consumer engagement, provide a customized experience, and boost value and service. In the long-run, smart packaging will integrate more closely with autonomous delivery vehicles to provide greater convenience at a lower cost to consumers.

 

Interactive packaging can be as simple as a QR code, readable by a smartphone or store-provided device. The code triggers an experience that may inform, entertain or facilitate payment for goods without a stop at the cash register. Digital printing, RFID tags, and NFC protocols extend the communicability of products via their packaging, creating a window for AR or AI integration.

 

One example is the collaboration between Bombay Sapphire gin and the Shazam app. Together, they created a printed label that buyers could use to access exclusive augmented reality content and video recipes via their smartphones. Consumers are most receptive to ideas and activities related to products at that exciting moment when they’re handling them in the shop or unwrapping them at home. This time is optimal to harness the two-way flow of data and marketing.

 

More sophisticated smart packaging applications are possible with the increased use of sensors and app integration. Smart bottle caps that count how many vitamins you’ve taken or buzz to remind you to take a sip of water are among the pioneers in this category.

 

Humans waste around one-third of food intended for consumption: embedded sensor technology in packaging can indicate freshness or cold-chain compliance so that consumers need not depend on a stamped "best before" date that bears little connection to what's going on inside the packet.

 

All told, producers stand to benefit from smart packaging as a solution for compliance, track-and-trace, warehousing and brand protection.

 

In-Vehicle Payment Systems Are En Route

Comfort, convenience … connectivity? IoT-networked consumer vehicles are predicted to deliver a $72 billion revenue in 2020. Manufacturers will integrate more complex electronics into a more significant proportion of the cars they produce. The automotive industry is still figuring out exactly what consumers want from this development, but with such high stakes, they are unlikely to hedge their bets.

 

5G means lower latency and increased mobility (i.e., sustained connections in fast-moving vehicles, such as cars or trains). IoT is ready to get on the move without compromising service or safety. Commuters are already spending $212 billion a year from their cars, and 66 percent say they would spend even more if the vehicle integrated purchasing and payment tech as well as voice shopping. After all, you're not supposed to use your smartphone at the wheel!

 

The potential uses of consumer-connected cars are manifold. The priority in 2020 will be to go straight to the money by making in-car payments a reality. Gas stations, parking lots, toll booths and drive-thrus will benefit from offering the convenience of instant, touch-free payment. Businesses such as these, as well as repairs and rentals, will benefit from being voice-search friendly and visible in online or proprietary price comparison services.

 

Finally, dealerships can use their vehicles' connectivity to improve customer retention through smart after-sales service and the use of apps to enable an ongoing conversation. After all, 95 percent of customers show up to the showroom highly informed. Keeping cars connected is a great way to stay at the forefront of consumer research.

 

Business-to-Robot Commerce

As consumers learn to trust and even take for granted the presence of IoT in their homes and vehicles, they will confer more and more agency on their "things" to complete tasks on their behalf — including purchases. For example, your networked car might order a recharge of windscreen-washer fluid or book itself in for a service.

 

“What does CX (customer experience) even look like for a thing?,” asks Don Scheibenreif of Gartner.

 

Businesses and developers are still figuring it out. Increasingly, for FMCG businesses, the customer may very well be a robot (think of Cortana, Siri, and Alexa, for example). More precisely, the customer will be a hybrid of human, artificial intelligence (i.e., Alexa), and the interface between the two (i.e., the smart speaker). In 2020, businesses will optimize their services to communicate with and cater to these cyborg shoppers.

 

Connected "things" will have the power not only to buy but also to negotiate and give feedback. They will ask for more details about a product (if a required feature doesn't show up in the product's listing) and make decisions based on the answer. They will also have the intelligence to strategize. For example, they will automatically buy in bulk to reduce costs if they know their human owner won't end up with a surplus or spread purchases through the calendar according to a preset budget or sequence in which goods will be needed.

 

All of this means that businesses will begin marketing to "things" as well as people. Promotions, interactions and CX will be not only machine-readable but also persuasive to robots. These robots — it could be the customer's home printer, fridge or wearable — will make decisions based on the rules, context and preferences established by the customer and the manufacturer.

 

At the business end, FMCG companies need to maintain excellent products and services (while redefining what that means to a robot) and begin to take advantage of the opportunity to persuade a smart fridge or a fitness watch that theirs is the best product for the owner.


A Network of Products

 

IoT is becoming the norm as features in more and more everyday devices and products. This opportunity is fabulous for FMCG businesses that need to focus their imagination toward IoT benefits for consumers and if their ideas are to engage users.

 

None of these use cases takes place in a vacuum. It bears repeating that the internet of things is, after all, a network: developments in any one node impact the others and rely on cooperation and compatibility to function to their intended potential.