The Hindu Business Line : On a sound footing with silent commerce

The world where objects communicate and commerce happens sans human interaction is not far off. S-commerce vows to dramatically change the dynamics of the market place, though it comes with a disquieting thought — that every move could be tracked.

AFTER e-commerce (Electronic Commerce), c-commerce (Collaborative Commerce) and m-commerce (Mobile Commerce), it is now the turn of s-commerce (Silent Commerce). New technologies allow companies to make ordinary objects intelligent and interactive. By using advanced tagging and sensor technologies, along with wireless mobile communications, Silent Commerce can give companies an unheralded level of insight into consumer behaviour. This type of commerce is "silent" because objects communicate and commerce takes place without human interaction.

The basic device that is driving the new revolution is RFID (Radio Frequency Identification Device), using which companies will now be able to track consumer interaction at the point of decision besides only the point of transaction. It would also allow companies to turn their products, inventory or any other physical assets into items that can sense and disclose their environment, their location and other pertinent information about the product. This revolutionary technology promises to turn anyone or anything into an information generator.

E-Ink is another emerging technology that is likely to revolutionise products by making their packing interactive. (See Box for the details of RFID and E-Ink.) Another part of Silent Commerce revolution will be the "Object Internet", whereby objects (microwaves, refrigerators or any object), not just computers, will be inter-networked and can be accessed and addressed from anywhere in the world. Once individual objects can be identified, companies then can add temperature, motion, radiation and other sensors, as well as miniature microphones or video cameras. Then, not only will these objects be able to identify themselves to computers, they will be able to provide information about their status and condition. That data can be stored online to create a digital representation of the physical world — a virtual double of the real world.

Combining RFID tags and other sensing devices with Web services and wireless communications will deliver a spectacular array of information that can be sliced any way a company needs it. Objects will be able to tell us about themselves. Shelves will be able to send wireless instant messages to store clerks when they need to be replenished. Bearings on industrial machines will alert maintenance that they will soon need to be replaced. Sensors in food packaging will warn retailers that meat has been contaminated. These scenarios may sound futuristic, but they are beginning to appear in the marketplace. RFID tags also are beginning to be placed on items of clothing. If the dry cleaner has an RFID reader, the task of entering items on to an order book can be done in a few seconds. Police could make sure items are returned to their proper owner by checking the RFID tags on recovered stolen property, instead of letting the goods sit unclaimed.

ExxonMobil, for example, employed RFID to delight customers for several years. In 1996, Mobil introduced Speedpass, an RFID-based system for payments. Customers who subscribe to Speedpass receive a small transponder attached to a key ring. When the customer swipes the transponder in front of the gas pump, it authorizes the pump to release gasoline and charges the customer's credit card. Speedpass brings both greater reliability than credit cards (where damage to the stripe slows customers) and greater convenience. Gasoline purchases take about 15 per cent less time than credit card purchases, and Speedpass also allows easier checkout at participating gas station convenience stores. Retailers of the future will succeed because of exceptional levels of customer insight. Consumers will expect that retailers understand their individual price and product selection preferences. Product and price differentiation will enable retailers to ubiquitously customise consumer experiences. The controlled testing that is easily manageable on the Web will become manageable for retailers. Changing signage or placement of products affect customer response, and silent commerce will allow for those changes to be captured and analysed, and then manipulated real-time for individual consumers — customising the retail experience.

Interactive Products — RFID and E-Ink — will allow packages to interact with consumers. The RFID chip will provide a means to communicate with the package, while E-Ink will allow a package to change its appearance on demand. For consumers on special diets, for example, interactive products will help them understand if a product falls within their dietary needs. Rather than having to scrutinise a number of labels, consumers could focus on a small area of E-Ink that would act as a dynamic billboard. Based on who is using them, interactive products can change the information presented to the consumer. Products could even change their prices dynamically from one person to the next or change the price based on recent shelf activity or product features, like expiration dates.

One of the most visible applications of silent commerce is telematics. Telematics refers to wireless, two-way communications between a vehicle (or a piece of equipment) and its environment. It enables manufacturers and third parties to interact with customers in new ways and provide them personalised, value-added services. The field of telematics has been steadily growing over the past decade and all signs now point to a rapid take-off. In sum, these new technologies enable manufacturers to track their product from cradle to the grave. This data can provide valuable insights about customers' usage patterns and help companies custom-build products based on individual requirements. Retailers stand to benefit a great deal through interactive products and shelf monitoring devices. Retailers can track how their customers browse products in the store; dynamically change signage near the product to suit individual customer needs; change prices automatically and can monitor products and inventory remotely. The concept of one-to-one marketing will be made possible on a massive scale.

Supply chains will get a facelift in most of the companies, with the advent of s-commerce. For example, a cooking-gas distribution company can track its cylinders from filling to distribution and return back to the filling station. Hospitals can monitor their medicines for expiry dates, supplies like blood for storage temperature and other parameters and equipment for usage and possible failures in a much better way. Supply chain shrinkages, a fashionable word for theft, can be controlled a great deal with the use of silent commerce. However, there is also a price to pay for this new convenience. It is scary to imagine a scenario where everything that you buy can be tracked and monitored. This raises the disquieting possibility of being tracked though our personal possessions. The retail store can link your sweater's RFID tag with the credit card you used to buy it and recognise you by name when you return. Grocery stores can flash ads on wall-sized screens based on your spending patterns. At the same time police can gain a trendy method of constant, cradle-to-grave surveillance.

It is reported that the European central bank is considering embedding RFID tags into banknotes by 2005. The implications are far-reaching and formidable. In theory, an RFID tag's ability to read and write information to a bank note could make it very difficult, say, for kidnappers to ask for "unmarked" bills. Further, a tag would give governments and law enforcement agencies a means to literally "follow the money" in illegal transactions. S-commerce is most likely to bring about a silent revolution.

The science behind it...

RFID: First used during World War II, Radio Frequency Identification has been updated to include a silicon chip and an antenna. These devices are attached to, or embedded into a package, providing a unique ID that can be read using radio waves rather than physical contact or line of sight.

A reader can interrogate the chip and read information from it and write information to it. Depending on the application, RFID chips can store a little or a large amount of data. The most frequent configuration is a minimum of 96 bits, which provides more than 30 trillion, trillion unique items.

Chips can be embedded in a product or packaging, even into the substrate of cardboard. RFID tags that used to cost $1 to $4 now cost less than 50 cents (some cost as little as 20 cents). Prices are projected to decline to 5 cents within the next two to three years. In combination with cheaper chips, the Internet makes it considerably easier to connect RFID readers around the world.

E-Ink: E-Ink refers to a flexible, paper-like electronic display technology. It can display both text and graphics, and can be rewritten and modified, both in power-on and power-off modes. Electronic ink displays text and pictures by using polarised ink that can change colour when an electric charge is applied. The basic premise is that the ink itself contains thousands of microscopic balls that are sensitive to an electric field. When an electric charge is introduced to the ink, the balls will respond by displaying either a light or dark colour.

At 600 dots per inch, E-Ink can replicate the detail of an old inkjet printer. Changing the individual sphere from one colour to another can create text and pictures. At its most basic level, E-Ink will allow manufacturers to change the letters on their packages in real time, much as electronic billboards or jumbo scoreboards at sports stadiums do today.

(The author is Senior Professor, Institute of Financial Management & Research, Chennai. Feedback can be sent to bleditor@thehindu.co.in)

Article E-Mail :: Comment :: Syndication

Stories in this Section
The Gillette edge gets sharper

Of weirdos and geeks

Global goes local

On a wing, with a prayer

The brand in a war

On a sound footing with silent commerce