I have been in touch with around fifteen IoT companies in US, to help market their products through our platform. So I digged in to understand their constraints in making and delivering their products, and also in scaling their market.
While many have figured out the making and validation part, none of them have an appealing strategy to scale their business. They are stuck, getting plateaued. Because Amazon, Bestbuy and other mass-markets doesn’t really care about niche products. So their primary strategy to scale is now retail distribution.
This is really sad, that Internet of things is not able to scale through Internet. The main essence of IoT is Internet, which is not getting powered by Internet itself. Now think about it… For IoT to be successful, internet has to be a bigger success than it is today.
And there seem to be a real problem, innovators are facing in selling and scaling IoT as a product, which in turn hijacks IoT as a revolution.
Let me ask some simple questions:
Who are the potential customers of IoT?
Who do you think have bought google home or echo?
Who are the believers?
What are their buying patterns?
How often do they visit an online store vs retail store?
The one who buy IoT definitely has access to Internet almost 24*7(vice-versa may not be true). They are the most frequent internet users. They are the people who are hanging out in different platforms, forums, social media all the time.
Here is a statistics, according to a study by Nielsen company released in 2016, an average American internet user spends 10 hours and 39 minutes using face time media channels, through smartphones, tablets, TV, radio, computers and video games. Out of this they spend around 2 hours(116 minutes) on Social media platforms. This is an average user.
How many times do you think they visit a retail store to buy something? Once in a week possibly. Now which is easier? To target them through internet or offline retails? If you are selling fashion, food, utilities, decors, accessories etc(non-IoT), there is 80% chance of selling offline as compared to 20% online.
But for IoT, it is a very different game. First we have to understand, that ‘Internet of things’ is still in early adoption’ unlike other sectors. The ‘early adopters’ of IoT are also high believers of internet and e-commerce. They are more likely to visit an online store than an offline store.
Offline distribution of IoT is a traditional move, not a strategic once.
Even offline partners have online presence in their local and hyper local market. Which means companies are trying to reach these local markets with distributorship. It works, but the discovery of such products mostly happen online first. Even if they discover it offline, they are still going to compare it online for price and specification. Once they are online, they may choose to buy it from Amazon or the local online-marketplace or from the company itself.
So the problem boils down to discovery and awareness.
In fact too many distribution channels creates channel conflict.
At the same time, online marketing with a single product is really not cost effective. Either the product cost goes too high, like alexa, echo, google home(brands have the leverage) or you are not able to sell enough.
So what is the sweet spot here?
The crowd funding platforms really works for products in early adoption. Many companies have strategic collaboration even after getting crowdfunded successfully, with these platforms like kickstarter, indiegogo, etc to sell more and more of it. But for how long? IoT companies are hopping from one crowd funding platform to another repeatedly to acquire more and more customers. I do not think, this is scaling. This is to get enough to stay in business.
My take here would be a dedicated platform for IoT consumer goods. It would help startups get crowd funded and scale through the life cycle process of Internet of Things. It would also be easy for consumers to discover their choices. More over it would help people educate, spread awareness and develop a community around the space.
A dedicated IoT platform is needed for Innovators to thrive and consumers to trust the IoT revolution.