The Internet of “Bring!”: Where does the Fridge Order Its Milk?


The Internet of “Bring!”: Where does the Fridge Order Its Milk?

Before the advent of refrigerators, the milkman delivered fresh milk to homes. Today, refrigerators are getting smart and are ordering milk on their own. SIX may orchestrate the platform for that in the background.

Shoes, clothing, washing machines: consumers are buying more and more products over the Internet. E-commerce is rapidly growing, particularly in the areas of home electronics devices and fashion apparel. Experts predict that only two years from now, the average Swiss household will be making one-fifth of its total purchases over the Internet. There is still greater reluctance toward online shopping for groceries, but smart kitchen appliances may soon change that. A smart refrigerator, for instance, not only keeps food fresh, but also replenishes it. Using an Internet connection and its own sensors, it can order milk when it has run out or can order the ingredients called for in a recipe.

A Win-Win-Win Situation

US market research firm Gartner projects that 20.4 billion networked appliances worldwide – being part of the Internet of Things – will be in our homes by the year 2020. Already today there are hardly any televisions left that are not internet-ready. “Digitalization will radically change our everyday lives, including our shopping behavior,” says Urs Gubser, Senior Strategic Project Manager E-Commerce at SIX. He’s in charge of thingsby7, a new internal startup at SIX that has to do with more than just secure payment transactions: It’s about building a complete infrastructure for ecommerce over the Internet of Things.

SIX, in collaboration with partners, wants to combine three different elements – ordering, supply, and delivery – together (see diagram). The order is placed via the smart kitchen appliance, either automatically or manually. For example: When milk runs out, the refrigerator can order more on its own, or can first notify the consumer. thingsby7 then directs the order to the retailer of choice and dispatches an available delivery courier. Orders based on criteria such as price, regionality, or organic quality would also be conceivable. thingsby7 would transmit the order to an appropriate retailer using a fair distribution formula. The adaptive system from SIX could continually integrate additional criteria.

 

E-commerce over the Internet of Things: A kitchen appliance (e. g. refrigerator) orders a product (e. g. milk). The system from SIX establishes the connection with the retailer and simultaneously dispatches an available delivery courier.

E-commerce over the Internet of Things: A kitchen appliance (e. g. refrigerator) orders a product (e. g. milk). The system from SIX establishes the connection with the retailer and simultaneously dispatches an available delivery courier.

As an intermediary, SIX would act neutrally and would even include small retailers that lack the resources to set up their own infrastructure. “It’s a win-win-win situation,” Gubser says. A new, secure platform would come into being. “The consumer wins because it’s more convenient. The retailer wins because it gets a new sales channel. And the delivery courier wins because its transport capacity is better utilized.”

By engaging in thingsby7, SIX is investing in the future. Digitalization is coming, and it will also revolutionize the fresh groceries market. Swiss consumers currently order only around 2% of their groceries online – they particularly want to see and touch fresh fruit and vegetables before buying. But that has changed in the USA, where around one in four households already orders at least some of its groceries over the Internet today. It’s practical not to be constrained by store hours.

Variety Instead of Monopolies

This trend will further intensify when new platforms become intuitive to use, Gubser is convinced: “Success in e-commerce always hinges on convenience and security.” SIX won’t bring its system onto the market until it functions flawlessly, he says. Its first trial run as a minimum viable product will start in the summer of 2018, when a small group of users will test the system and help optimize its processes. Manufacturers capable of supplying smart refrigerators as an interface already exist, Gubser says. Retailers and delivery couriers are also expressing interest.

“We’re at the start – not the end – of digital evolution. So we have to invest today,” Gubser asserts. Digital companies in the USA have recognized the trend: Amazon took over the Whole Foods organic supermarket chain in 2017, and shortly thereafter Google started a partnership with grocery behemoth Walmart. Investments by grocery retailers in Europe thus far haven’t been profitable, at least not yet. The market can change rapidly, though, as evidenced by Facebook, the world’s largest social network. Facebook didn’t even exist 15 years ago, but today it has more than 2 billion members worldwide. thingsby7 is aimed at helping to ensure variety in a digital market that is increasingly dividing itself into monopolies. A smart refrigerator can be a first step toward that vision.

From Prototype to Product

With thingsby7, SIX is already sending its third internal startup into the F10 FinTech Incubator & Accelerator. Its forerunners were xChain, a community for corporate actions, and DealPool, a platform which is aimed at automating the bond issuance process. Each year, 30 startups from around the world, split into two batches, get a chance to participate in the F10 accelerator program. With the support of in- house coaches and external mentors, they work for six months on a minimum viable product (MVP). An MVP, in contrast to a prototype, is a product or service that already offers enough functionality to provide added value for prospective customers. The time spent in F10 enables the founders of internal startups at SIX to bring their ideas to fruition away from day-to-day business exigencies. SIX is the originator, co-founder and main sponsor of F10.