Selling the Internet of Things: Why are Retail Solutions a Challenge?

1. #bettersales @MarketSourceInc Selling the Internet of Things: Why are Retail Solutions a Challenge?

2. #bettersales @MarketSourceInc What Exactly is the Internet of Things? British entrepreneur Kevin Ashton first coined the term in 1999 The Internet of Things (IoT) is the network of physical objects or “things” embedded with electronics, software, sensors, and network connectivity, which enables these objects to collect and exchange data. Source: Wikipedia (2015)

3. #bettersales @MarketSourceInc In 6 months there were 1.4M mentions of IoT.  1,039,064 mentions on Twitter  27,988 mentions on blogs  421,689 mentions in the news Overall Sentiment is 95% favorable  51% positive  44% neutral  5% negative Blogs  Age groups 21-35 represent 67% of blog mentions Social Media Mentions - IoT (6m)

4. #bettersales @MarketSourceInc Social Media Mentions - IoT (6m) Top Words Associated w/ IoT*: • Technology (34%) • Data (31%) • Devices (29%) • Business (28%) *According to our social media tool; Sysomos

5. #bettersales @MarketSourceInc IoT is an Ecosystem Things - Consumer Home Security Smart Locks Home Appliances Smart Bed Smart Lights Gardening Watering Trackers Smart Pet Fitness Health Smart Watches Smart Fashion Home Automation Connected Car • HomeBoy • Canary • Dropcam • Piper • August • Lockitron • Ring • Kwikset • Goji • Nest • Tado • Whirlpool • Smart • ThinQ • Aros • Samsung • cinder • LUNA • Beddit • Select • Comfort • SLEEPIQ • LIFX • Belkin • GE link • Cree • hue • EDYN • NIWA • Droplet • Lono • grove • Tile • TrackR • BeLuvv • Bikn • hereO • Whstle • CleverPet • FISHBIT • Petnet • CATFi • FitBark • Withings • Fitbit • Athos • Garman • Misfit • Apple • Moto 360 • Android • Wear • Pebble • LG Watch • Alcatel • Smart- • watch 3 • Ringly • CUFF • Ring • Mota • Swarovski • Tory Burch • for Fitbit • SmartThings • Alarm.com • Control 4 • Vera • Vivint • iControl • Navdy • Metromile • Dash • Jasper • Android auto • Apple CarPlay • Tesla • Honda Link • Vinli • BMW • Ford Things - Enterprise Smart Logistics Smart Factory Smart Agriculture Smart Cities Smart Grid Smart Retail IoT Security Smart Healthcare • WEFT • Keep Truckin • Scania • Maruti3PL • Cisco • DHL • Maersk Line • Sala • Intel • GE • Rockwell • SAP • Siemens • Cisco • John Deere • PrecisionHawk • Farmobile • AgSmart • Granular • OnFarm • Observant • Medria • Semios • Enevo • Grid Waste • ParkHelp • WM • IM • Bigbelly • Kiunsys • OPOWER • TenDril • Itron • Actility • Schneider • Electric • Silver • Spring • Percolata • Euclid • Scanalytics • Egburt • Kontakt.io • Bastille • Sansa • Offspark • ARM • CoroNet • Proteus • OrthoSensor • Soundhawk • AdhereTech • CareTRX • MedMinder • Vitalconnect • Vitality • AliveCor Things - Infrastructure Hardware Platforms Board/ Chipsets Software Platforms Analytics, Data Storage • Particle • Tessel • Electric imp • ARM mbed • Pinoccio • Helium • Beaglebone • ODROID • ARM • AMTEL • QualComm • Intel Edison • Broadcom • Marvell • Resin.io • Xively • TempoIQ • Temboo • PubNub • ThingWorx • Waygum • Jasper • Ayla • Senseiot • Sas • Tellient • SensorCloud • Platfora • ParStream • Microsoft • splunk This map is not 100% comprehensive, there may be companies missing. • There are currently more devices connected to the internet than humans and the trend is that in 2020, 26 billion “things” will be connected. • The IoT is still in its early stages. On the consumer side it is mainly for hobbyists, and on the enterprise side it’s still for early adopters. • The full IoT ecosystem is huge and very complex; you could have an ecosystem map for every submarket listed above. Source: Medium.com, “A Map of the Internet of Things” written by Chris McCann, July 28, 2015.

6. #bettersales @MarketSourceInc What Are Consumer’s Excited About?

7. #bettersales @MarketSourceInc IoT: The Smart Home Home Automation Home Monitoring Home Security Home Control Connected Devices Home Entertainment Examples: • Closing Blinds • Adjusting Lights • Make Coffee Mechanical Tasks Examples: • Tablet • PC / Printer • Mobile Phones • Storage Devices • Medical Monitor Share Everything Examples: • Theater • TV • Distributed audio Listen and Watch Examples: • Thermostat • Irrigation • Lighting Automate Activity Examples: • Door locks • Cameras • Alarms/Alerts Secure Your Home Examples: • Deliveries • Latch Key Kids • Pets While I’m Away Many of These Devices Cross Categories to Create Lifestyle Scenes Connected Home

8. #bettersales @MarketSourceInc Learning from the Past: Evolving Ecosystems 9.6Kbps 144Kbps 384Kbps up to 42Mbps 150Mbps 1Gbps 20162010200620031993 Mobility Data Rates Low Medium High Digital Analogue Wireless Communications

9. #bettersales @MarketSourceInc The Challenges were Very Similar Learning from the Past: Evolving Ecosystems Transformation Relied on: • Content Developers • Broadcasters / Providers • Telecom Infrastructure and Technology • Manufacturers • Retail Transformation • Consumer Understanding and Adoption • Analog to Digital • Tube to Flat Panel to OLED/Micro-Dot to … • Over Air to Streaming • Low Resolution to High Resolution to Ultra Res… • Single Device to Multi- device content sharing Television Ecosystem:

10. #bettersales @MarketSourceInc Complex Environment • Unaware of Technology • Unaware of benefits • Unfamiliar w/ brands in this category • Confused about where to buy • Waiting for alignment • Trying to establish themselves in IoT category • Products cross categories • Categorization of products vary from retailer to retailer • More complex sale • Requires training across categories Consumer • Establishing a new category • Crossing into unfamiliar categories/retailers • Unsure of Consumer’s buying pattern • Difficult to maximize marketing spend Slow Category Growth Brand Awareness Brand Loyalty Consumer Loyalty Brand Identity Category Leadership Market Share Diversification How Do You Connect To Your Customer? How Do You Connect To Your Customer? Manufacturer Retailer How Do I Get the Retailer to Bring my Brand and Products to Life on the Floor?

11. #bettersales @MarketSourceInc Added Challenge: Consumer Purchase Patterns Omni channel • “Showrooming” • “Webrooming” • Social Purchasing Infographic by http://www.magnetic.com/ Consumers are now in control of where and how they purchase. Varies by Segmentation • Baby Boomers = Retail / Showrooming • X Generation = Showrooming/Webrooming • Y Generation = Webrooming • Millennials = Webrooming / Social Purchasing • Connected Generation = ?

12. #bettersales @MarketSourceInc Added Challenge: Consumer Purchase Patterns Examining the shopping journey of those above the age of 45 Would like more assistance with the setup of their Smart Home device compared to their younger counterpart Say they are likely to spend less than $500 to upgrade their home to Smart Home Prefer to shop for Smart Home products at a Security Company or a Cable/Telecommunication company Examining the shopping journey of those ages 45 and younger More likely to prefer DIY compared to their older counterpart Say they are likely to spend between $2,000 - $3,000 to upgrade their home to a Smart Home Prefer to shop for Smart Home products at a Security Company, Technology Company or a Home Repair Store SMART HOME - Intent to Purchase

13. #bettersales @MarketSourceInc 1,964 971Total number of establishments (in thousands) Revenue per establishment (in thousands) $1,489 $2,148 800 55 $342 $710 Non-web stores Web stores % change +102% -52% -31% +1,354% Source: US Census; National Retail Federation, Forrester Research estimates % change 20142002 Added Challenge: Consumer Purchase Patterns

14. #bettersales @MarketSourceInc TheChallenge: Finding Information Difficulty finding a solution to meet their lifestyle challenge Scarce Resources in Store Consumers are often more informed than associates in the store Hesitant to Commit Consumers are waiting for a unified operating language and fear early obsolescence Consumer Train and Educate Train anyone that engages the IoT customer so they can give consumers details they need to make a purchase decision. Ecosystem Focused Make sure reps understand the entire ecosystem of products and services and how the ecosystem is evolving Lifestyle Based Focus product info/display on problems solved and benefits to consumer based on lifestyle scenes TheSolution: The Challenge for the Consumer

15. #bettersales @MarketSourceInc 85% of consumers prefer to shop at physical stores, and 90% are more likely to buy when helped by a knowledgeable associate. - State of Retail 2015, TimeTrade If you could book an appointment with a sales associate before going to the store, would you use it for your next visit? 59% Say “yes” 41% say “no” Retailer The Challenge for the Retailer 7% 38% 26% 92% Other I don't like waiting for items to ship I like to get advice on what product to buy I like to 'touch and feel' products before I decide… Why do you prefer shopping in the store? (Respondents Ages 35 – 44)

16. #bettersales @MarketSourceInc Retailer The Challenge for the Retailer The Challenge: The Solution:

17. #bettersales @MarketSourceInc TheChallenge: Needs Identification Difficult to identify the needs and wants of a diverse customer base Focusing Marketing Spend Consumer buying patterns are erratic and diluted in this category Speed to Market Barriers to entry are low and new brands and products are entering the category confusing the consumer, slowing growth Get Focused on Your Consumer Identify your current customer (early adopters), but plan for your emerging customer and how to meet them where they buy. (GIS) Partner for Success Create “lifestyle scenes” with benefits to the consumer by partnering with other companies in your ecosystem Gather Information Capture and respond to the voice of your customer (retailer and consumer) at the point of sale, and post-sale TheSolution: The Challenge for the ManufacturerManufacturer

18. #bettersales @MarketSourceInc Solution Nexus Information shared with me is relevant to my personal taste, style, age group or location My retail experience is consistent across digital devices no matter where I am - on my desktop, tablet or smartphone Information shared with me is relevant to what I am currently interested in or looking to buy My retail experience is consistent across digital and in-store My online experience is easy: I can find what I am looking for, see product reviews and recommendations, and buy when and how I want WHAT DO YOU FIND MOST CRITICAL DURING YOUR RETAIL EXERIENCES? (RESULTS REFLECT CONSUMER RESPONDENTS WHO RANKED THE FOLLOWING “IMPORTANT” AND “CRITICAL”) TWEET THIS “One of the fastest ways to occupy the part of the consumer’s brain that retailers want to occupy most… — where brand and emotion become associative and inseparable — …is to establish human connection.” - Brian Kilcourse and Steve Rowen, - Commerce Convergence: Closing the Gap Between Online and In-Store, Retail Systems Research

19. #bettersales @MarketSourceInc Solution Nexus Consumer How Do You Connect To Your Customer? How Do You Connect To Your Customer? Manufacturer Retailer How Do I Get the Retailer to Bring my Brand and Products to Life on the Floor? Manufacturers Should Consider a Direct to Consumer (D2C)Strategy, both in person and on-line Retail Should Consider Specialized Staff and Aligning to Consumer Shopping Demands

20. #bettersales @MarketSourceInc Key Take-a-Ways :How to drive Category Leadership in IoT At this stage, most IoT Products are sold, not bought Enliven the “lifestyle scene” for the consumer throughout the buyers journey Providing an elevated consumer experience requires elevated capabilities and elevated training Provide a consistent experience for the consumer at all touch points Purchase patterns vary by segmentation. Lock on to your highest opportunity demographics and align your marketing strategy accordingly. Drive your sales by aligning to the retailer’s scorecard and incentives Choose a field sales & marketing partner that has experience in the IoT category, and works across multiple consumer touchpoints, to maximize your marketing investments

21. Find out more about Retail in the Internet of Things - subscribe to MarketSource’s blog: www.marketsource.com/blog

Selling the Internet of Things: Why are Retail Solutions a Challenge?

Selling the Internet of Things: Why are Retail Solutions a Challenge?

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Selling the Internet of Things: Why are Retail Solutions a Challenge?