M2M in Retail - a View from One Marketplace

As I sat at the airport two weeks ago, waiting for my flight, I received a notice on my phone that my plane had been delayed by an hour. So I decided to go on a scavenger hunt of sorts. What better place than the airport to see M2M in action?

The airport terminal has become a virtual shopping mall, lined with book stores, clothiers, kiosks, bars, vending machines, ATM machines, jewelry stores, food courts, all using M2M. I then thought of ways retail M2M is happening outside the terminal, but still on airport property. Payment systems for parking services and taxi and limo services are almost an economy unto themselves.

It’s clear to see why growth of M2M in retail is surging – the reasons for proliferation become perfectly clear. Everyone wins.

Traditional retailers and services organizations are winning through the use of M2M connectivity and mobile payment technology while consumers get the flexibility to purchase using their preferred method, often times a credit or debit card, while merchants receive immediate payment for services with little potential for theft or fraud. Employees don’t have to worry about handling large sums of cash, merchants don’t have to worry about revenue leakage from employee theft of cash, and opex from cash handling and distribution are greatly reduced or eliminated for the merchants.

For the retailer, additional benefits of M2M include lower transaction costs (real-time transactions incur a much smaller processing fee than transactions that occur if a system is offline), improved uptime and availability, near real-time reporting on status and inventory levels, minimal deployment costs (as compared with a hardline data connection), integration with other back end office systems, and faster deployment times when adding new solutions or replacing existing PoS solutions.

It just so happened that I was able to see the importance of M2M in retail first hand at the airport recently. The corridors of the airport were packed with travelers experiencing flight delays. Many decided to shop. I noticed one airport store with virtually no customers. I then noticed a handwritten sign on the door that said “Cash Only, our credit card machine is down. Thank you.”

Lost opportunity costs are as real a factor as actual revenue to a retail store. Ensuring the connectivity of PoS systems is critical. Merchants need solutions that will keep the cash registers ringing during a network outage. Many of the more forward looking retailers are requiring that their wired solutions have built-in wireless capability so that if the main Internet connection goes down, the backup system senses the problem and fails over automatically to ensure continuous transmission of PoS data. And since today’s wireless networks provide always-on connectivity, selecting a solution with failover capability has become as important to retailers as staffing correctly.

But I noticed that a competing retailer had taken just the opposite approach. Its store was packed, and while the checkout area was packed, the store had multiple sales people assisting customers on the sales floor with tablets connected wirelessly to its PoS system. By using a tablet-based, cloud-connected PoS system, the store was able to take the device to customers and process sales more efficiently and not have customers have to wait in a checkout line. This allowed it to scale the number of employees handling transactions beyond the amount of fixed infrastructure. Brilliant (News - Alert).

  

The next example of M2M in retail that I noticed was around idea of self-service. And at the airport, multiple electronics manufacturers and one prominent big-box retailer have taken a page from their soft drink and junk food brethren with vending solutions and have moved to self-service kiosks using M2M.

Why kiosks? M2M-enabled ATMs and kiosks can be placed anywhere a power outlet exists. Through the use of ubiquitous wireless (cellular) connectivity, what was once a hard-wired fixed asset becomes an always-on portable wireless device. Moves, adds, and changes become easier and less costly, allowing the merchant to be more flexible in placement. Additionally, staffing expenses are virtually eliminated.

Like traditional vending machines, kiosk operators have more control of wirelessly-enabled machines. They have visibility of connectivity (is the machine there and is it working), control of inventory levels, lighting, on-screen advertising, bill changers, transaction terminals, energy settings and other environmental controls. They can even optimize replenishing service delivery routes according to projected and historical usage patterns.

  

James Brehm is technology evangelist and founder of James Brehm & Associates LLC (james@jbrehm.com).