Ambient Commerce: Driving expenditure on IoT technology

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Ambient commerce is an important use case for the Internet of Things (IoT) and promises to be a game changing retail technology, according to GlobalData, a data and analytics company.

The company’s latest report from its thematic research team says that ambient Commerce, which combines technology with the physical space associated with retail stores, will offer a whole new way to shop.

Ed Thomas, principal analyst for technology thematic research at GlobalData, says, “The worlds of online and offline retail are merging, and ambient commerce sits in the middle. This is why Amazon and Alibaba, the world’s dominant online retailers, have both invested billions in acquiring stakes in physical retailers. Having gained a physical foothold on the high street, these retailers are now heightening the retail experience by experimenting with ambient commerce in stores.”

Ambient commerce describes a new form of shopping which makes use of sensors, coupled with artificial intelligence (AI), to help customers select and pay for their goods, without the need for keyboards or cash registers.

Two main models are emerging in the ambient commerce value chain: the Amazon Go version of ambient commerce, where computer vision, sensors and machine learning technologies enable customers to ‘grab and go’; and the Chinese version of ambient commerce – popularised by Alibaba, Tencent and JD.com – which uses less in-store IoT infrastructure, but is likely to take off faster because it is based on existing smartphone technology, coupled with QR codes.

GlobalData says its research has found that ambient commerce will drive expenditure on IoT connected devices and on IoT software and services in the retail sector. With the company estimating that the retail sector will spend $5.3 billion on IoT software and services, up from $2.7 billion in 2018 by 2020. Over the next two years, the retail sector will emerge as the fifth largest spender on IoT software and services after the government, transportation, utilities and manufacturing sectors.

Thomas adds, “We can expect many more strategic alliances and M&A deals as old-world companies seek to join the new ambient world, and the insurgents broaden their bases and round out their tech infrastructures.”