Examining the effects of the Internet of Things (IoT) on E-Commerce: Alibaba Case Study

Abstract

The Internet of Things (IoT) connects billions of things far beyond our imaginations. These internet-connected objects communicate with each other and share information, thereby nurturing business model innovation in various industries, notably including e-commerce. The IoT links objects that are offline in the current e-commerce business model, and generates an unprecedented amount of data on their status, product performance, and consumer behavior and preferences. Centralized IoT platforms hosted by e-commerce firms are continuously transforming this data into knowledge, generating a huge impact on e-commerce. In this paper, we review the conception of the IoT, the e-commerce road map, and the key elements of the e-commerce business model. We then study the case of Chinese e-commerce giant Alibaba’s IoT initiatives, and finally discuss how the IoT will transform e-commerce. We conclude that the IoT will not only create new value and catalyze innovation, but also transform e-commerce firms into information-flow intermediaries and knowledge generators. We also conclude that the IoT ecosystem will achieve economies of scale in industries other than e-commerce, and that the IoT will create new cross-industry market opportunities and competitive advantage.