Blogthng

Author Niall Murphy
Published

Overstock and out-of-stocks are a growing problem in the retail industry, together accounting for more than seven percent in lost revenue for the average retailer. That’s $1.1 trillion globally, or $252.9 billion each year in North America alone, according to IHL Group.

Due to a lack of visibility beyond the retail location—and because brands need to ensure that products are available to meet demand—there is a widely accepted cost associated with safety stocking at point of purchase. Research shows that overstocking is equivalent to approximately three percent of revenue, while out-of-stock represents four percent.

As the answer to this costly challenge, real-time inventory information helps brands optimize inventory levels and placement in all channels, increasing revenue by driving down the risk of out-of-stock events and lowering costs by avoiding the need for excess safety stocking.

Data Disconnect and the Retail Veil
Over $222.7 billion worth of overstock and out-of-stock problems transpire annually due to data disconnect. This means that retailers are not systematically measuring the impact of overstocks and out-of-stocks and are failing to share tracking information across the enterprise, usually because their systems are outdated and not able to talk to each other.

When demand forecasts are made, they are typically done so with incomplete information from inventory systems, and thus often under-estimate demand. Instead of taking advantage of technology on the demand side and looking at stores and shoppers with enough granularity to understand seasonal changes and market varieties, many retailers put a mix of intuition and historical data behind buy quantities—often resulting in overstocks.

And the issues don’t end there. Greatly adding to the inventory management problem is the lack of visibility brands have once their products get through the doors of retailers, meaning that they have no insight into where an product is, or who’s looking to purchase it.

Stock Optimization Through Product Digitization
While the advent of the use of RFID in the retail industry has brought increased attention to shelf out-of-stocks, most RFID technology is limited to tags on pallets and cases, and—due to technological and financial reasons—has not descended to the individual item level. RFID is therefore limited in the ability of the technology to address inventory management.

To reduce shelf out-of-stocks, a brand or retailer needs to understand what inventory exists in the backroom and to locate it. Giving individual products unique digital identities—managed by an intelligent cloud platform offering access to real-time data across the entire enterprise—solves this persistent problem. This Internet of Things solution creates a “digital twin” for all physical products, which generates real-time data about an item’s location (and other valuable information) and allowing retail brands to track and trace items throughout the supply chain. Such smart product technology enables brands to better understand consumer demand trends and to drive stock optimization, thus reducing lost revenue and increasing sales.

Just imagine this scenario: A consumer is looking for a dress in her size at a retailer’s 5th Avenue location, but the item is out of stock. At the same time, the retailer’s SoHo location happens to have too much of the dress in stock, forcing heavy discounts. In that situation, the retailers is hit with a double-whammy of the ramifications of out-of-stock and overstock. This can easily be avoided with enough visibility and item-level data for brands and retailers to bring agility to inventory management, intelligently diverting products based on demand.

By connecting every physical consumer product to the Web, we can create a bridge between what happens in the supply chain and what happens at the point of sale, helping to pierce the retail veil and giving brands and retailers the data to be smart about stock optimization.

Author Andy Hobsbawm
Published

Some of the world’s biggest department stores are facing branch closures in what reports are referring to as “the retail apocalypse.” Yet amidst this darkness is a new dawn: the rise of Internet of Things-enabled smart products, helping brands and retailers better compete.

Shopocalypse Now
According to Bloomberg, more than 3,500 stores are expected to close in the coming year, with many of the outlets belonging to huge household names like JCPenney, Macy’s, Sears and Kmart, along with smaller chains such as Crocs, Abercrombie & Fitch and Guess.

When you consider the performance of retail stocks over the past few years it’s hardly surprising. Stocktwits reports that Macy’s is not only trading at its lowest levels since just after the financial crisis in 2010 with a loss of 50 percent, but is shutting down 100 stores (nearly 15 percent of its store base) as it battles plummeting sales and foot traffic. Analysts suggest that the retailer needs to close even more locations to revive business.

What’s more, the crisis doesn’t just lay with certain retail brands; it’s industry-wide. According to Mark Cohen, director of retail studies at Columbia Business School, the slowdown in retail is “creating a slow-rolling crisis” that “creates a cascade of economic challenges.” Then there’s asset management company Cohen & Steers that says this isn’t just a phase or a temporary trend. A few months ago, it described the industry’s decline as a “new normal.”

Digital Beats Traditional
So why is this happening? The most succinct answer is from billionaire investor Warren Buffett, who at Berkshire Hathaway’s annual meeting simply noted that: “the department store is now online.” As we’ve already seen in media, transportation, telecommunications and travel, the retail industry as we know it is being reinvented for a digital world.

The digitally native companies of the new age, the best example of which is probably online retail giant Amazon, have the massive advantage of no pre-existing legacies to overcome or assets to reconfigure. And by building their business on cloud platforms, they can innovate using access a wealth of data as a competitive advantage.

When it comes to retail, Amazon is transforming the machine. More than half of products searched online (55 percent, according to BloomReach) start there, making it the Google of online shopping. In fact, it could be said that what Uber did to the taxi industry, Amazon is doing (and will continue to do) to retail. By creating a giant commerce machine (online and now physical with the Whole Foods acquisition) that chews up everything in its path. The digital behemoth has already redefined cloud computing to better serve itself (the AWS business unit now has $12 billion in sales and $3 billion in annual profits) and will do the same with shipping and logistics.

This operational excellence supports aggressive price cutting (“Your margin is my opportunity,” Amazon CEO Jeff Bezos famously says), and because it has more credit cards on file than any other company on earth and vast data insights from purchase patterns, it can also take note of exactly what people are buying and use that to launch its own brands. For example, Amazon will overtake Macy’s to become the largest apparel retailer in the US this year. And just look at its Prime offering, a retail service innovation model that has bankrolled the company.

Retailers Strike Back
The major assets manufacturer retail brands have to play with are their brand, their network of brick-and-mortar stores and the sheer volume of products they put into the market (either in their own stores or via third party retailers). Internet of Things smart product technology is the key to leveraging these three things and competing effectively with Amazon. They must start by digitally transforming the central pillar of their business: the products they make and sell. We’re at a tipping point for the smart products revolution, with Apple and Android/Chrome integrating NFC and native scanning of barcodes and QR codes, plus Apple opening up iOS11 to NFC, as well as platform players from Facebook, Snapchat, WeChat, Kik, Spotify and Shazam educating the market by promoting consumer-product digital interaction via codes on packaging.

This means that brands and retailers can turn their physical products into smart, digital assets that are connected to the Web and that generate valuable, real-time data throughout their lifecycle, from point of manufacture, through the supply chain, to point of sale, consumer use and responsible disposal. This solves valuable business problems like product traceability, real-time inventory management and direct-to-consumer experiences.

As a smart, digital asset, each individual consumer product is in a constant state of sharing data, being able to tell end-users throughout the product lifecycle where it is, where it’s been, what it’s made from and who’s using it. This means, for example, that a smart product can enable mobile self-checkout for consumers and at the same time inform the distribution center which items needs to be re-stocked. A smart product can verify its sustainability credentials and tell customers how to recycle it. A smart product can become a media channel that interfaces directly with consumers and offers personalized content or exclusive offers to drive upsells, cross-sells and brand loyalty. A smart product can behavioral data from consumer interactions back to the brand to drive insights and further personalization.

Combined with sensors, cameras and interactive experiences in-stores, a smart product strategy can digitally renew the retailer’s brand by adapting the digital content and service that accompanies the product to its context of use, and provide a consistent, personalized brand experience at key stages in the omnichannel shopping journey, from browsing to buying, owning, evangelizing and re-purchasing.

As McKinsey recently observed: “By creating a customer-centric, unified value proposition that extends beyond what end users could previously obtain (or, at least, could obtain almost instantly from one interface), digital pioneers are bridging the openings along the value chain, reducing customers’ costs, providing them with new experiences, and whetting their appetites for more.”

In other words, by leveraging Internet of Things smart products technology, retail brands can fight the retail apocalypse on two important fronts: catching up to Amazon by creating a real-time, fully instrumented supply chain, and then delivering better, more personalized service experiences to shoppers, who value touching products and seeing them in person before they buy. Beyond simply using technology for greater convenience, this puts the “experience” back in “retail experience.”

Want to learn more about how smart products can help retailers survive the retail apocalypse? Get in touch.

Author Andy Hobsbawm
Published

The phrase “data is the new oil” sums it up perfectly. Raw materials like railway steel, motorway concrete, labor and oil were the critical raw materials for the economy in the last century, and data is the equivalent input for the 21st century. Any company expecting to thrive (or even survive) in our new connected economy must learn how to generate, capture and leverage data to create digital analytics and applications that can digitally evolve their businesses. And this includes label companies.

Of course labels are still very much physical things and still need traditional printing expertise, equipment and processes to create value. However, they now also exist in a world dominated by software and real-time data rather than hardware, and label companies must adapt. As today’s leading companies—from Amazon, Apple, Facebook and Google to Uber, Netflix and Airbnb—know: survival requires developing new business models based on real-time data driving logistical excellence, detailed knowledge of their customers and the layering of digital services around physical products.

Many major consumer brands have figured this out and are transforming themselves accordingly. An apparel brand like Under Armour, for example, has realized that consumers are increasingly demanding fitness apps, information about their health and branded experiences, metamorphosing the physical product into a platform for connected data, content and services.

Labels and packaging: the digital bridge between product and cloud

At EVRYTHNG, we believe that the label and packaging industry is a critical piece of this transformation. Labels and packaging are the digital bridge between the physical product and a cloud-powered universe of real-time data and software applications—a “jumping off point” for services in the supply chain through to retail, consumers and beyond. If label companies don’t figure out how to answer the call and transform their labels into smart, digital assets, then they’ll be out-maneuvered and out-competed by those who do.

So do label printers need to become programmers?

Not when they can subscribe to a Platform-as-a-Service like EVRYTHNG—just like a company might buy in cloud software capabilities like Salesfoce.com for CRM. This does all the heavy-lifting for you and hides the complexity of the technology in a service that makes it easy to turn ordinary labels into “smart labels.” You don’t need data centers or developers; you just need web programmers who can use software APIs (Application Programming Interfaces, organized processes for drawing down on 3rd party cloud capabilities, for example enabling people to use their Facebook IDs to login to your site) to build apps for their product labels as easily as they would build mobile web pages. And this is exactly why companies like EVRYTHNG exist: to make leveraging this technology simple so label companies and consumer product manufacturers can rapidly and easily digitize their physical assets and reap the business benefits.

A third of the firms listed in the Fortune 500 in 1970 had been acquired, merged or broken up by 1983. Countless companies have learned the hard way what happens when you miss dramatic shifts in your industry and don’t react to change. It’s time for label companies to pivot their business models—and seize the opportunities of the smart products revolution.

 

This piece was originally published by FINAT. Andy spoke at the FINAT European Label Forum on June 8, 2017. 

Author Dominique Guinard
Published

Remember 2011? We do (vividly), because that is the very year we started this EVRYTHNG adventure. Back then, AWS, Google and Microsoft didn’t know what MQTT was, HTTP was a no-go for most device manufacturers, TLS communication with IoT devices was still seen as a nice-to-have and digital identities were only for humans.

I might not be totally objective, but I think it is fair to say that EVRYTHNG has been pushing innovation in the IoT since then. We built a platform on an architecture that has become a de-facto standard. With a handful of other researchers, we created and promoted the Web of Things principles (today an official W3C standard stream). And we were the world’s first to give billions of apparel and CPG items a digital identity.

Thanks to all of this, being the CTO of EVRYTHNG has been (and still is!) quite a ride! As the organization grew, we felt it was important to maintain our ability to innovate. Don’t get me wrong: innovation is at the heart of everything we do. However, as the company started to mature, innovation became more focused on iterative learnings with our customers and improving the product step by step, meaning there was a little less space to explore risky and ground breaking projects (like the Web of Things was back in the day). Hence, I am thrilled to announce the launch of a new team within EVRYTHNG. We call it the innovation team.

The team is composed of research engineers. They are not quite developers, not quite researchers, but somewhere in between. The goal of this new team is to identify key technologies that might influence the markets EVRYTHNG operates in. In particular, the innovation team builds what we call minimum viable prototypes as well as technical marketing assets and intellectual property around these ideas.

Recently the team identified the rise of Low-Power Wide Area Networks (LPWAN), which we believe will be a game-changing technology in obvious domains such as metering, but also less obvious ones such as the supply chain. In this space, the team built bridges with a number of key LPWAN players (Sigfox, LoRa and Things Connected) and is finalizing support for TheThingsNetwork, while simultaneously turning the EVRYTHNG platform into the ideal IoT platform for LPWAN projects.

It is also the team responsible for our study of the potential and risks of blockchains in domains such as product provenance, supply chain and IoT more generally. This work led to the building of a first integration with the Bitcoin blockchain there is much more to come. Just like we want to play nice with all the major LPWAN players, we want to play nice with a number of blockchains that could add value to the use cases of the brands we work with.

Finally, the team is taking part in a large-scale research project. After working on the Compose EU project leading to the first official W3C submission for Web enabling Things (Web Thing Model), we are now working on a new exciting EU-funded project called TagItSmart. TagItSmart is looking at disrupting the packaging industry by transforming packages into sensors using special inks, variable QR codes and smart printed NFC tags.

The team did not stop there, and we are actively working on the next big things for IoT and for EVRYTHNG. So watch this space for some more innovation!

Author Niall Murphy
Published

GS1 Standards are used by more than one million companies on a daily basis around the world to identify consumer products for point of sale and supply chain applications, and to describe information about consumer products—a bedrock of the supply chain process. So we’re thrilled to announce our certification as a Solution Partner by GS1 US and the integration of EVRYTHNG’s Active Digital Identities™ with GS1 Standards. The integration means that any product using a GS1 identifier can now connect with a corresponding Active Digital Identity™ in the cloud. In addition, we’re announcing support for GS1 SmartSearch to boost the semantics of data EVRYTHNG manages about products as well as GS1 EPCIS vocabulary to allow interoperability of the supply chain actions recorded in the EVRYTHNG platform. For consumer brands around the world, the billions of existing GS1 identifiers deployed on consumer goods can now be used to web-enable their products, drive new digital applications and easily share product data between multiple applications and across organizations working with products during their lifecycle.

This first-ever implementation of GS1 identifiers, SmartSearch and EPCIS in a Web of Things framework reflects an important commitment to standards in EVRYTHNG’s technology strategy. As a member of the World Wide Web Consortium (W3C), we have been working in collaboration with a number of other organizations, including Mozilla, to bring standardization to how physical things are able to share data and drive applications via the World Wide Web using the Web of Things model our company was founded on. Now we’re joining the standards of the Web with the standards of physical product identity with GS1 Standards. Put together, product brands can now rapidly implement end-to-end digital lifecycle management for products, making supply chains smarter with insight and visibility, and establishing the capability to drive customer connections directly from products, direct-to-consumer experiences, product provenance and authentication.

Through our established partnerships with global packaging service providers, including Avery Dennison RBIS, Crown and WestRock, among others, EVRYTHNG is able to deploy digital identities at massive scale with billions of consumer products as they’re manufactured. The integration of Active Digital Identities™ and GS1 Standards makes this opportunity even more accessible to brands, providing the ability to integrate products across multiple production channels with a consistent means of identification on-product and a common data model and data management methodology in the cloud.

EVRYTHNG and Avery Dennison RBIS are applying this technology standardization to the Avery Dennison Janela™ solution, powered by the EVRYTHNG Smart Products Platform, which assigns unique identities to apparel and footwear products. The new, joined up capability for an RFID tag with a standard Electronic Product Code (EPC) to communicate with the Active Digital Identity™ in the cloud enables a wide range of consumer in-store applications. This allows for self-checkout, better product availability and omnichannel experiences across the consumer shopping journey to drive store traffic and unlock consumer analytics.

We’re already working with a number of the world’s leading consumer brands to apply these technologies in large scale supply chain and direct-to-consumer applications. It’s great to be at the forefront, and it’s exciting to see the potential and opportunity for digital transformation being realized.


EVRYTHNG will be demonstrating GS1 identifiers connecting with the Internet of Things at GS1 Connect 2017 (Booth #50) at the Cosmopolitan Hotel in Las Vegas, June 20-22.

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