what is it and why does it matter?

The benefits of ambient trading for retailers and consumers

There is commerce, then there is e-commerce, and now quickly comes ambient commerce. The word “ambient” means “surroundings on all sides.” Technology has become “enveloping,” enabling, shaping and driving the new ambient trading order.

There’s much more at stake than just smartphone apps and mobile internet. Computers get sense organs. They surround us as they are increasingly numerous in our homes, cars, stores, shopping malls, entertainment venues and public places.

They are armed with sensors that see us, hear us, and measure key variables in our environment. These sensors feed their real-world data in real time 24/7 to analytics engines and machine learning algorithms in public clouds, especially Amazon, Microsoft, Google, IBM and Alibaba, to gain insight into our intentions, priorities , desires, needs, behaviors and lifestyle. They are constantly learning and making more and more accurate predictions about what we will do, what we will want, and where we will be.

There are over a trillion sensors in the world and this number is constantly growing. Sensors give “big data” a completely new dimension and scale. They represent what the influential Santa Fe Institute economist Brian Arthur calls the “third transformation.” The result is ambient trading.

It involves closing deals exactly where and when demand occurs, assuming that the seller has understood and even anticipated the buyer’s needs and desires, idiosyncrasies, biases and environment.

This always-on and seamless service is delivered based on continuous alerts, conversations and feedback between parties across all devices, platforms and environments – appearing online and offline to create an integrated consumer-retailer experience.

Ambient commerce can be classified as one of the many use cases of the Internet of Things (IoT), where tens of billions of progressively equipped, intelligent and aware end devices are changing the way people and companies will live and function. Nowhere will its impact and scope be felt more clearly and needed more obviously than in the crisis-hit world of high street retail.

We have just witnessed the once mighty Sears file for bankruptcy in the US and the CEO of M&S in the UK talk about “sitting on a burning platform”. According to struggling retailers around the world, the main culprit is the growing growth of online shopping. But this is a questionable explanation.

Even in China, by far the most advanced e-commerce society in the world, less than 20% of final retail purchases are made online, and according to the U.S. Department of Commerce, the figure is below 10%. The fact is that most consumers switch between online and offline to make purchases, and if the experience was better, they would do even more offline.

The story continues

The real problem is that too often legacy high street retailers have become complacent and lacked the imagination to deliver a rich and seamless in-store experience, particularly when it comes to checkout. And they are behind in technology.

Example: the world’s largest retailer Walmart. Having been mercilessly pummeled by Amazon, it has now turned to Microsoft with a five-year, $500 million contract to help it digitize stores, become more attuned to and knowledgeable about customers, and generally improve the shopping experience at Walmart.

If we briefly look at the “three A’s”: Apple, Amazon and Alibaba, the largest retailers in the world, we can see the broad direction of development of offline and ambient retail.

Apple, Amazon and Alibaba and the future of ambient retail

Apple operates the world’s most successful retail chain. Its sales are almost twice that of its closest rival, Tiffany, per square foot at a price of more than $5,000 a year. It helps that stores sell branded products that millions of people miss. But there’s more to it. Under the supervision of Apple design legend Sir Jony Ive and former Burberry star Angela Arendts, Apple Stores were designed to be true cathedrals of the brand and very pleasant, almost sensual places. Apple even took lessons from the Ritz Carlton on how to woo your hosts. An object lesson in branded retail.

Amazon, a true leader in “seamless” and “personalized” retail outside China, opened its first takeout store in Seattle in January. In addition to the three ambient technologies of computer vision, sensor fusion, and deep learning, “Go” stores allow customers to literally “grab and go.” Amazon’s push into offline retail has only just begun. It has the technology, capital, R&D resources and company culture to reset high street retail across the spectrum and bring it back to the forefront. This is the elephant in many boardrooms.

Alibaba, the global champion of e-commerce and a tollbooth for middle-class consumers in China, has decisively entered the ambient commerce market with its “New Retail” project. It aims to integrate online and offline shopping and create new ecologies related to the “smart brain” in Hangzhou, under which it is developing a “smart shopping mall” in Hangzhou. She opened a chain of fresh food stores “New Retail” under the Hema brand. Like Amazon in the U.S., it will be a major driver of the retail recovery in China, where unmanned, walkable mini-kiosks are also gaining popularity.

Here are some examples from the vanguard of urban retail trends in a world where we “never stop shopping” and where the world’s 250 largest retailers generate revenues of more than $4.5 trillion annually. However, there are inevitably dark sides to ambient commerce in general and retail in general.

The more data-driven and connected the world is, the more vulnerable it is to cybercrime and “big brother” political and corporate abuses. The spread of ambient commerce will only serve to expand the attack surface for cybercriminals and saboteurs. Retail is the most vulnerable sector to attacks, more so than insurance or finance, because it is an easy way to steal identification and credit card information.

The lack of cybersecurity will get worse before it gets better with the implementation of AI-based cybersecurity systems and improved corporate cyber hygiene, but in the meantime it will probably not be enough to slow the momentum of the spread of ambient commerce, given the convenience and convenience that will be offer.

Ambient commerce is a perfect example of how the new distributed sensor-based technology stack is taking the world by storm.

“Ambient commerce: what is it and why does it matter?” was originally created and published by Retail Insight Network, a brand of GlobalData.

The information contained on this website is provided in good faith and for informational purposes only. It is not intended to constitute advice on which reliance should be placed and we make no representations, warranties or guarantees, express or implied, as to its accuracy or completeness. You should obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.