E-commerce and IoT: Logistics, Warehouse and Anti-counterfeiting

E-commerce and IoT are two of the most popular trends in this period: being able to make purchases not only from commonly used devices such as computers and smartphones, but from almost any smart object, now appears to be a virtually inevitable development in the sector, especially in a world in which consumer habits are increasingly evolving towards on-line shopping.

In this sense, the use of Internet of Things technology can support the entire process of a product’s life cycle, with a specific impact on the company’s supply chain and the customer experience of the purchaser.

Even in the retail sector, where major digital transformations have been on the agenda for at least ten years, there is a clear need to forge ahead towards launching omnichannel-oriented retail strategies.

This phenomenon is even relevant after the Covid19 pandemic, which has changed consumer purchasing methods and habits, with a strong shift towards on-line sales (the Multichannel Observatory of the Polytechnic of Milan found that 88% of Italians in 2021 over the age of fourteen have used the Internet at least at one point in making a purchase).

The essential element in this omnichannel transformation is the integration between e-commerce and the physical store, which allows customers to enjoy a seamless experience that supports and accompanies their customer journey from the first approach to the purchase.

This process is guided and supported by the most innovative technology and by IoT technology in particular: the flow of the data collected through smart objects is revolutionising the entire sector, which affect both consumers, who see an improvement in their customer experience, and companies, which can optimise all the supply chain processes through innovative technology.

The IoT revolution in the fashion industry

Of all the industrial sectors affected by the digital transformations which have taken place over the last ten years, fashion, which has always been very sensitive towards its customer’s needs, is undoubtedly the one that has undergone the most radical change due to the advent of new technology.

Even before the pandemic, the new global challenges laid down by the advent of e-commerce, social media or fast fashion, for example, had dictated the need for a digital evolution of the players in the fashion world throughout the supply chain, from production to the customer experience, to usher in the era of fashion 4.0.

The Covid 19 pandemic simply accelerated this process. In 2020, according to the McKinsey Global Fashion Index, the fashion industry suffered a 93% loss in profits compared to the previous year.

This made the fashion industries face up to an inescapable reality, namely the need to use the digital world not just to optimise production times and costs, to intensify brand extension strategies or bolster sales infrastructures, but also to implement a radical transformation of its business models.

So, this is where real IoT revolution in the fashion industry lies. After the experience gained during the pandemic crisis, fashion brands are now looking increasingly to adopt innovative technologies, recognising in the Internet of Things, the basis for a fashion evolution, in synergy with Artificial Intelligence, blockchain technology and virtual/augmented reality.

The IoT is, in fact, at the centre of all the transformations which are inundating the fashion industry: from the data-driven approach (which, for example, provides forecasts about upcoming market trends) to the customer experience (e.g. IoT forms the basis of all the innovations implemented in physical stores in terms of personalising the purchasing experience), to  IoT solutions for sustainable fashion and more responsible production.

Below, we will also take a look at the revolution brought about by the application of IoT technology in the entire supply chain and on the topic of anti-counterfeiting measures.

Image source: Baciocchi Associati x LA PERLA

IoT applied to fashion e-commerce

On-line fashion is one of the most dynamic and fast-moving sectors in e-commerce. The pandemic has further reinforced the growth of digital purchasing platforms, triggering a change in consumer habits that is unlikely to be reversed.

In Italy too, as highlighted by the B2c eCommerce Observatory and Digital Retail Innovation of the Polytechnic of Milan, in 2020, the e-commerce clothing market grew by 22%, compared to the previous year, to 3.9 billion Euros, representing the third highest commodity sector for e-commerce purchases after food & grocery and IT and consumer electronics.

Fashion companies in Italy, which experienced a fluctuating trend in 2021, therefore, have intensified the activation of on-line purchasing platforms. As revealed by a survey of the Italian Fashion Federation-Confcommercio, whereas 14.4% of the companies in the sample had already added e-commerce to traditional sales in 2019, this number rose to 51.2% in 2021.

The purchase of luxury fashion and high fashion products, therefore, represents one of the three purchasing categories behind the development of clothing e-commerce, along with mass market products and sports clothing and accessories.

The use of IoT technologies applied to fashion e-commerce consequently becomes a corner stone in guaranteeing that companies in the fashion sector are able to dominate a dynamic and constantly changing market, characterised by an increasingly connected and demanding customer base.

The benefits, that the Internet of Things can guarantee fashion e-commerce, include more efficient procurement, inventory and logistics processes, a more profiled customer experience and a highly efficient order tracking system (thanks also to RFID tags on smart objects).

The benefits of IoT technology in managing logistics and warehousing

The problem of combating counterfeiting and IoT solutions

Combating counterfeiting is a huge problem that has consequences for everyone involved, from the consumers who pay for a product which they believe to be authentic to the brands that suffer from lost sales, as well as wholesalers and the workers in the supply chain (both the authorised supply chain and that the so-called 'grey market', that often relies on undocumented labour).

Combating counterfeiting has a major impact on the Made in Italy brand, the latest estimate was published in 2018 by the OECD in the report ‘The trade in counterfeit goods and the Italian economy’ reveals truly alarming data.

The report highlighted how the global trade in counterfeit goods that violate Italian registered trademarks is worth over 30 billion Euros, i.e. 3.6% of the total domestic and export sales of the Italian manufacturing sector.

It is, therefore, clear that effectively combating counterfeiting is extremely important for companies which have turned to innovative technology, such as IoT and blockchain for assistance.

A truly effective anti-counterfeiting system, must now guarantee twofold protection, i.e. demonstrate the originality of the product and ensure its traceability (and retraceability).

One of the most effective technologies in the fight against counterfeiting is the RFID system, a radio wave technology that makes it possible to automatically identify a product thanks to an alphanumeric identification code placed on a chip.

This code, which is unique anywhere in the world and can only be changed by the company that produced it, guarantees the authenticity and originality of the product.