Look around you. Look at the electronic devices in your room, in your house, in your life. Well, take a good look at them, because soon not only will they be able to order for you, but they will have already ordered before you’ll have even realized. That’s right: your washing machine, your fridge, your car, your TV: that’s the future of e-commerce.

Your detergent is running out? Your washing machine has got you covered. That block of parmigiano you’ve been eating for the past two weeks is almost finished? Your fridge will place an order at that special Italian deli that has just opened up. You’ve found parking but you have to pay 2$ an hour? No worries, your car has already taken care of the bill. Your TV batteries are running out? Well guess what, your TV has already ordered a new batch.

IoT and e-commerce have grown in parallel until now. And while e-commerce is the biggest revenue generating business model of our generation, the Internet of Things is only now leaving the hype phase, ready to finally become a revenue-creating reality on its own: by 2020, the IoT market is set to reach a value of $1.7 trillion (VisionMobile 2015).

We have already seen a glimpse of the future detailed in the initial paragraph thanks to objects such as Amazon’s “Dash Buttons” who already allow you to reorder from renowned brands (i.e. detergent Tide) with the press of a button. Amazon’s offer to clients who want to purchase the Dash Button paints a pretty clear picture of the enormous potential of an IoT driven e-commerce: Amazon essentially offers them for free. If you buy a Dash Button, it will cost you $4.99 but Amazon promises you that once you buy it, you will receive a credit for $4.99 after your first press. Essentially, by selling you the Dash Button, Amazon knows that it is selling you an e-commerce channel that will take you (and your money) straight to Amazon’s webstore. While the technology of the Dash is currently very simple (the button is essentially a WiFi connected device on its own) Amazon’s underlying strategy for selling it is clear, and is paving the way for what is to come.

While I’ve mainly discussed an outcome that involves B2C e-commerce, there are already signs that the Internet of Things will also be the future of B2B e-commerce.

As we’ve heard in Michiel Shipperus’ presentation a large number of B2B web stores are now becoming integrated with the company’s Enterprise Resource Planning (ERP) system: this automates the process of ordering from the customer’s side with the process of stock management from the company (seller)’s side. Once an order is placed in the webshop, the stock level in the warehouse will be automatically adjusted. What happens now is that, once the stock in the warehouse becomes too low the company orders a new batch of components for that given product for production. But what if that process were automated? IoT is thus a very logical next step for the future of B2B e-commerce.

The implications of all of this? The entire product supply chain, from manufacturing to retail, will at one point become entirely automated. The implications for us? Our car will be able to order food and drinks for us, but are we sure we’ll be able afford the car in the first place?

References:

https://www.visionmobile.com/blog/2015/12/the-internet-oa-things-is-about-to-reshape-e-commerce

https://www.amazon.com/b/?node=10667898011&sort=date-desc-rank&lo=digital-text

www.sana-commerce.com

In such a scenario, where tech and connectivity are so crucial and essential, the traditional players can no longer rely on their traditional expertise and are thus forced to lean on startups to “carry” them in this transition.

Just in the past two years traditional auto players (manufacturers and suppliers) have spent a combined $74.4 billion investing in new startups (VB 2016): if we compare this to the annual average of $17.7 billion in the industry in the past decade (VB 2016) we can noticeably see something is deeply changing.

As Brian Brennan, a senior vice president of Silicon Valley Leadership group, says “a large and growing proportion of a car’s value is tied up in software that underlies its various systems” (Mercury News 2016). Software has become more and more enticing for consumers and auto brands have to adapt.

This is why car manufacturers such as GM, Toyota and Volvo have all invested billions of dollars in startups working on auto software or autonomous vehicle technology. But as manufacturers are trying to stay afloat by acquiring the technologies and the human capital from startups, auto suppliers who were once partners in the car manufacturers supply chain are now competing in the same territory and are now also been gearing up on software: H.I.I. bought two software companies in 2015 for a combined $950 million, while Intel also bought two companies for their assisted driving software and autonomous machines divisions (VB 2016).

Also, alpha tech players such as Apple and Google, who have previously partnered with car manufacturers to implement infotainment systems that would integrate with their operating softwares and technologies (i.e. Apple and Volvo working close to integrate CarPlay), are also stocking up on talent before bracing for going the opposite route and investing in hardware (see Apple’s recent interest in acquiring British car brand McLaren)

Meanwhile, traditional car manufacturers are also losing ground and influence on ride-sharing platforms and operators such as Uber, Didi and Lyft who have essentially turned the globally established car brands in their hardware suppliers. Uber acquired self-driving truck startup Otto in the same year the startup was founded “allegedly to gain access to the pool of former Google, Apple and Tesla staff that Otto had hired” (VB 2016).

The future of the industry is unclear: the only thing that’s clear is that it will be radically different from the current landscape and that software and autonomous technology will decide its direction. Companies who were once in different stages of the supply chain are now all competing against each other in this race, and acquiring startups is the fastest way to set themselves apart from the competition. What is also not clear is who will get there first: it will be interesting to see who will come out as a winner at the finish line.

Who do you think is best poised to succeed? Do you think it’s more a matter of core competencies or acquired resources and expertise?

References:

http://venturebeat.com/2016/10/09/auto-industry-heads-into-fierce-software-race/

http://www.computerweekly.com/news/450400020/How-software-is-reshaping-the-car-industry

http://www.topspeed.com/cars/car-news/volvo-partners-with-autoliv-to-develop-autonomous-driving-software-ar174384.html

https://techcrunch.com/2016/04/05/intel-acquires-italys-yogitech-to-improve-functional-safety-of-autonomous-cars-iot-systems/

http://www.topspeed.com/cars/car-news/volvo-partners-with-autoliv-to-develop-autonomous-driving-software-ar174384.html

https://techcrunch.com/2015/01/22/harman-buys-symphony-teleca-for-up-to-780m-and-red-bend-for-170m/

http://fortune.com/2016/03/10/toyota-jaybridge-robotics/

http://fortune.com/2016/03/11/gm-buying-self-driving-tech-startup-for-more-than-1-billion/

https://www.theguardian.com/business/2016/sep/21/apple-talks-buy-mclaren-formula-one-supercar

http://www.mercurynews.com/2016/09/30/volvo-to-open-silicon-valley-research-center/

http://fortune.com/2015/12/08/volvo-apple-carplay/

http://www.autoblog.com/2016/10/06/panel-startups-jump-starting-the-auto-industry-upshift-2016/