How IoT drives the coffee business – a business case
For professional coffee machine operators, cellular IoT connectivity and digital tools are the keys to running a productive and competitive business. Providing insights ranging from consumer wants to operational aspects, and means to respond to these accordingly. Managed cellular IoT connectivity also allows professional coffee machine manufacturers to scale digital service offerings for their enterprise customers, adding further value to their products.
With this in mind, Ericsson worked with WMF Group, a leading manufacturer of commercial coffee machines; and Swisscom, a major communications service provider, to create a business case for connected coffee makers. In our report, “Connected Coffee Machines – A business case demonstrated by WMF group”, we explore why the connected coffee machine segment is projected to show the highest growth within the commercial connected appliances IoT market, through 2024.
Digital Services in a B2B context
There’s no question that these high-tech assets will benefit from condition monitoring and asset management capabilities. Monitoring supplies and automating supply management allows managers to eliminate lost revenues. It makes sense from a business perspective, too. By reducing supply shortages, improving revenue management and monetizing digital screens, profits can be increased considerably. And for customers, managed cellular IoT connectivity enables contactless ordering, along with features such as the option to control the machine remotely via smartphone when ordering an espresso, or to pay with mobile wallets.
Imagine a gas station operator with two machines in his coffee corner, selling 230 cups per day and generating an annual revenue of 300.000 EUR. Leveraging connected appliances IoT with digital coffee machine solutions allows this small enterprise to increase their annual revenue by more than 3,4%, generating an additional 10.000 EUR of annual revenue.
Let’s think bigger: Imagine a facility management company operating 2.900 professional coffee machines, generating an annual revenue of 3,5 M EUR from leasing these coffee machines to enterprises and operating them. Here, the annual revenue potential increase could be in the range of more than 8,7%, translating into 300.000 EUR per year, if this company uses digital services via connected appliances IoT.
Where is this additional revenue coming from?
As ever, it’s all about knowing your customer. Digital solutions allow for the collection and analysis of consumption data, creating invaluable insights around which coffee drinks and specialties are sold the most, where and when, and at what price. They allow professional coffee machine operators to test new offerings, find the right price tag and introduce dynamic pricing models, such as happy-hour pricing. They can use portals or APIs to monitor customer preferences and purchasing behavior. The large, programmable coffee machine displays also facilitate product campaigns and trigger cross-selling opportunities; for example, by advertising the snack that tastes best with your selected coffee. Managing the display even allows facility managers to create additional revenue based on professional coffee machines, such as selling signage services to enterprises or advertisement space for restaurants close to an office.
WMF’s digital solutions are not only enabling efficient asset management, they also allow WMF’s customers to increase their commercial success – which is what B2B business is all about. This includes new, digitally enabled business and monetization models, such as pay-per-cup or equipment as a service (EaaS), which could answer the challenge that the pandemic has decimated investment budgets.
Better revenue management and advanced screens allow gas stations to cross-sell other products. In facility management, coffee machines and other services are often part of a bundled package for enterprise customers. And, if the facility provides resupply services, they will benefit from less downtime and increased consumption.
Managed IoT connectivity and the scale game
The best B2B value proposition in the world won’t help the WMF Group to be successful, if it cannot be scaled efficiently across the world. This is where global, uniform, managed IoT connectivity services come into play. Leveraging the Ericsson IoT Accelerator platform, Swisscom provides global, managed IoT-connectivity services to WMF based on one contract, one portal and one set of APIs. This way, WMF can stay in full control of their connected coffee machine fleet and deliver against the availability expectations for their digital services, regardless of where in the world the machines are operated. This also applies for markets with restrictive data handling, where electronic SIM (eUICC) management and localization, Swisscom – in partnership with local operators – enable WMF to comply with local regulations, allowing WMF to comply with local regulation.
The outlook beyond coffee
Professional coffee machines and their related digital solutions can be truly innovative. However, similar, IoT-based value propositions for B2B businesses also apply for other professional kitchen equipment and for vending machines, as professional coffee machines are essentially a combination of both. Think about smart refrigerators, intelligent wine aerators, connected ovens, smart plates or even automated mini-greenhouses for herbs and vegetables. All of these devices exist today, and all of them depend on reliable cellular IoT connectivity. There are vending machines for cold beverages, the growing segment of non-food vending and the increasing number of fully automated micro-markets (both accelerating due to the pandemic). Finally, consider the emerging segment of fully automated, customizable coffee bars. There’s a substantial market out there for connected appliances IoT, waiting to be addressed with business-oriented IoT value propositions.
Grab a cup and open up
Connected Coffee Machines - A business case demonstrated by WMF group illustrates the additional gains WMF realizes through its technology approach, including a greater competitive advantage. However, their learnings are applicable industry-wide, to any organization wanting to draw data from their machines that they can convert into greater opportunity.
So, grab a cup and open up to connected appliances and IoT. Download the report now and learn why coffee makers, like so many other device manufacturers, can build their business with connected appliances and IoT, powered by 5G cellular connectivity.
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Calculate the value of cellular IoT for your business
Explore the benefits and added business value by implementing IoT connectivity and asset management to your vending machine fleet. Ericsson IoT Accelerator makes it possible to decrease downtime and enable dynamic pricing in order to maximize profits. It ensures your vending machines are loaded with the right products that are in high demand. Calculate your potential savings and increased sales with our interactive value calculator.
