Building out the future of retail Internet of Things (IoT) is complicated work, according to Mastercard SVP of Internet of Things Partnerships Stephane Wyper, because the options for IoT are evolving by the day with new devices and use cases springing up all over the horizon. It can be hard to know what path to pursue, Wyper told PYMNTS in a recent interview, when the paths ahead keep forking in novel ways.
It’s not a trend that seems likely to slow any time soon. In fact, according to the data PYMNTS IoT Tracker, it’s not only likely to continue, but likely to continue to pick up. There will be an estimated 18 billion IoT-connected devices on the market by 2018, with retail applications from groceries to yoga pants, to beer and beyond.
That presents a huge opportunity for retailers of all sizes and stripes, Wyper noted, because consumers are increasingly primed and enthusiastic about these kinds of experiences. In various expansions and trials, Mastercard ran with retail partners around the country. One of the pleasant surprises it encountered was how quickly and consistently consumers took to various connected-device offerings when they were offered.
It also presents a challenge of choice — there are a lot of options out there for retail IoT — and a lot of ways to tap into increasing the connected consumers. That means retailers aren’t just able to think about the great potential experiences for which they can use the technology, but how those experiences play into their larger strategic vision for their firms
“I think, in the recent past, what we saw a lot in the earliest phases of this was a sort of focus on the single device — single experience. The change that we are seeing now is that it’s no longer enough to just test those kinds of one-offs, even if they are great experiences. Great experiences really matter, but now it is also about scale and what it means to make those experiences workable for a mass of customers,” Wyper said.
And while there is no single checklist, he noted, there are best practices, and some things that remain consistent whenever commerce is expanding.
Reimagining The Real-World Commerce
The physical store takes a lot of flak these days, Wyper said, but if one takes a calmer look at the data, physical commerce is unlikely to go the way of the typewriter or horse-drawn carriage.
He added, “We have really kept our sights on the simple importance of the physical store because we believe that brick-and-mortar retail will continue to be central to how commerce happens in this country. What we’ve really been centered on is what that next chapter of brick-and-mortar is going to look like.”
Just given the speed of advances, IoT will clearly be part of that equation. The question retailers must ask themselves, he noted, is where IoT technology can be plugged in to really enhance that experience. There is no uniform answer to that question, because every retailer is different in so many ways. The strategy is dictated by the specifics of the retailer — what do they sell, to whom do they sell, what level of technological sophistication and complexity are they capable of taking on a scale.
Late last year, Mastercard worked with Marie Claire magazine in Manhattan's SoHo neighborhood, which brought a variety of IoT solutions together for customers to experience and enjoy. This included allowing consumers to use an app to tap an item on display in an exterior window and buy it — or (for the less adventurous shoppers) to do a similar tap-and-go trick using the dressing room mirror inside the store.
In a recently announced partnership agreement with Refinery29, Mastercard will be doing similar work to bring the IoT-commerce capacity to the 29Rooms event as its official payment technology partner. 29Rooms will be a pop-up experience hosted in San Francisco, Chicago, New York and Los Angeles that, according to Refinery29, is designed to “unlock visitors’ imaginations, spark dialogue, and fuel self-expression” through an exhibition of “29 unique spaces that showcase a range of creative disciplines, from poetry to painting to responsive technology.”
Wyper noted that the collaboration was natural because Refinery29 and Mastercard share a joint focus on the importance of real-world experience and on finding ways to insert commerce into them that feels natural and unintrusive to the consumer while they are enjoying those experiences.
“Experiences really matter,” he said, “and delivery and really finding a way to embed commerce features into the IoT components is a lot of the work we are doing at Mastercard these days. Because we think this really is the future of physical retail: designing the right experience for the customer and then using the IoT technology to [help] you achieve that.”
The Connected Future
The old IoT conversation, Wyper said, was a lot about the single IoT device offering a consumer a single experience: the smart mirror that lets customers pay for the outfit they were trying on or order it online in a different size, the portable POS systems that make it possible for customers to pay from any place within the store. The next evolution will be about the collection of the IoT experience made possible by a group of devices — and making those devices work in concert to deliver a more fully IoT-enhanced experience.
Those experiments with one-offs, and the things retailers learned about customers' preferences, were very important, Wyper noted. But the time for those merely experimental forays is over, and the time to talk about what commercial implementation looks like is beginning.
“The conversation to have now is what would this innovation look like if it were scaled to 30 percent, or 40 percent or 50 percent of an organization," he said. “What would be the costs? What would be the contribution to overall sales?”
It is something for which retailers themselves are ready and raring. When talking to Mastercard's partners, Wyper noted, merchants are long past the point where they need to be convinced about the power and potential importance of building the IoT in their organization. Quite the contrary, he said — they are really interested in having the conversations about what wide implementation looks like.
And though all paths are different, he added, there are two main guiding lights that every expansion of IoT and commerce has in common if they are to have any chance of success. The first and most obvious, Wyper noted, is security. As transactions are becoming more automated, and are literally happening machine-to-machine in an IoT environment (often with low, or even no, human intermediary), the integrity of the payments themselves need to be air-tight.
“That payments have to be secure is just a foundation,” Wyper said, noting that payments have to work effectively and be trustworthy. Biometrics, he noted, and finding ways to add them seamlessly to the IoT commerce process is an area with lots of potential — as it has the ability to build more sophisticated customer profiles so that fraud is more apparent.
Data itself, he noted, is the other key offering that retail IoT tie-ins need to offer to retailers, because that insight into customers is invaluable in building their total strategy. Consumers are looking for better and fuller retail experiences, and the IoT, leveraged correctly and strategically, can offer that.
“We know right now, today, there is an appetite from the consumer — the market is ready, the retailers are ready," he said. “Which means it all comes down to value proposition and offering something that is both beneficial and [balanced]. The fundamental question for retailers going forward is, 'How do I make it simple, safe and broadly workable?'”