Monetizing the Internet of Things. Internet of Things (IoT) has been a buzzword for the past few years, but the connected devices trend is finally reaching a point where they will make our lives appreciably better. By 2020, it is expected that 75 billion objects will be connected to the Internet. These connected devices are transforming from being mere curiosities into products that will automatically perform actions, such as making purchases based on our personal preferences and usage. This fascinating and lucrative side of IoT, referred to as the “Commerce of Things”, will herald a new era for how people buy and consume goods and services, and how companies monetize them. Smart refrigerators will alert their owners when food has gone bad and automatically reorder items. Running shoes that have been worn past their prime will automatically order a replacement. While these advances in commerce are exciting, they are already disrupting the standard business and monetization models used by brands today. Manufacturers need to prepare themselves for this contextual ecommerce experience to provide an optimal level of service to their customers. James Gagliardi shares how the Commerce of Things is changing how companies: Interact with consumers through connected devices; Effectively monetize their products and services; Manage their ecommerce and supply chain infrastructures to align with a large volume of singular transactions; and Prepare for increasingly complex regulatory considerations where micro transactions will dominate global ecommerce.

1. COMMERCE OF THINGS
Monetization of Internet of Things

2. Seat belts
required in all
vehicles
1968
First state
introduces
Seat belt law
1985
Airbag law goes
into effect1998
NHTSA requires
backup cameras2018

3. SMART TRANSPORTATION
estimated
reduction in
accidents and
traffic deaths
50%

4. SMART CITIES
70%
cost reduction
in city utilities

5. SMART CITIES
Array of Things
• air temperature
• surface temperature
• sky color
• cloud cover
• barometric pressure
• carbon monoxide
• nitrogen dioxide
• sulfur dioxide
• ambient sound
• vehicle traffic
• foot traffic
• standing water

6. reduction in city
trash costs
40%
SMARTER WASTE MANAGEMENT

7. agriculture consumption
of the world’s fresh
water supply
70%
SMART AG

8. 50%
prescribed medicines are
not taken as directed
SMART HEALTCARE

9. SMART PACKAGING
Every product will have
its own digital identity

11. SMART ONESIES

12. SMART SPORTS

13. SMART PILLOW

14. 14
SMART LAUNDRY

15. SMART LAUNDRY

16. PICTURES
Creativity is the key to success in the future,
and primary education.
SMART FORK

17. FRIDGE SELFIES

18. 18
SMART TOAST

19. ABANDONMENT
OF THINGS
WITHOUT MONETIZATION STRATEGIES
IoT PRODUCTS WILL FAIL

20. Digital River is a leading global provider of
commerce, payments and marketing solutions.
22+ years of experience
200+ payment methods
1100+ commerce experts
22 offices around the world
More than 240 countries and
territories where we do business

21. INTERNET OF THINGS
ISN’T A THING
IT’S A SERVICE.

22. + + +
Wi-Fi, Bluetooth, ZigBee,
Z-Wave, Cellular, NFC
Connected Device
Provide value-added
services/subscriptions
Services
Data Storage,
Data Analysis
Data Aggregation
Enable, Test, and Optimize
Business Models
Commerce
INTERNET OF THINGS

23. One-Time
Individual Purchases
Fixed
Scheduled Purchases
Adaptive
Rules-Based Purchases
Autonomous
Context-Driven Purchases
COMMERCE OF THINGS

24. BUSINESS MODELS
Usage-Based
Billing
Professional
Services
Micro-Transactions
& Add-ons
Freemium Subscriptions Ad-Hoc
Purchases

25. CUSTOMERS PRODUCTS

26. FREEMIUM
Freemium
• Free subscription
• Subset of
capabilities
Challenges:
• Offer enough value
for free
• Determining
premium service
• 5% rule

27. FREEMIUM
Freemium is a
means to an end...

28. Limited access to
the full experience
Eliminate the risk of trying something new
FREE TRIAL

29. PRE-PAID SUBSCRIPTIONS
Pre-Paid Subs
• Low barrier to entry
Considerations:
• Payment frequency
• Promotions
• Ongoing price
Challenges:
• Higher transaction
costs
• Payment failures
• Renewal rate is key
to profitability

30. PRE-PAID SUBSCRIPTIONS

31. TRANSACTIONSSUBSCRIBERS

32. TERM-BASED BILLING
Term-Based
• Billing cycle
separate from
commitment term
• Smoother revenue
streams
Challenges:
• Lower AOV
• Higher transaction
costs
• Reluctance to
commit

33. HARDWARE-AS-A-SERVICE

34. SCHEDULE & SUBSCRIBE

35. AD-HOC PURCHASE OPPORTUNITY

36. AD-HOC PURCHASE OPPORTUNITY

37. VALUE COST

38. USAGE-BASED BILLING
Usage-Based Billing
• Bill in arrears
• Pay for what you
use
Challenges
• Ongoing tracking
• Accounting disputes
• Bad debt,
collections

39. MEMBER-BASED USAGE BILLING

40. MEMBERS CUSTOMERS

41. ADD-ONS & MICRO-TRANSACTIONS

42. PROFESSIONAL SERVICES

43. RELATIONSHIP TRANSACTIONS

44. Customer
Success
Logistics IT &
Infrastructure
Payments &
Financial
Product
Development
Systems &
Operations
Culture Marketing
CHALLENGES

45. CUSTOMER
SUCCESS
CUSTOMER
SERVICE

46. STRATEGY
Acquisition
Members vs. Customers
Customer Success vs. Service
Retention Monetization
Customers vs. Products
Subscribers vs. Customers
Relationship vs. Transaction
Value vs. Cost

47. COMMERCE OF THINGS
Monetization of Internet of Things