How IoT is driving the coffee business – a business case
For professional coffee machine operators, cellular IoT connectivity and digital tools are the keys to a productive and competitive business. Provide information ranging from consumer desires to operational aspects, and ways to respond to them accordingly. Managed cellular IoT connectivity also enables professional coffee machine makers to evolve digital service offerings for their business customers, thereby adding additional value to their products.
With this in mind, Ericsson worked with WMF Group, one of the leading manufacturers of commercial coffee machines; and Swisscom, a leading communications services provider, to create a business case for smart coffee makers. In our ‘Connected Coffee Machines – A Business Case Demonstrated by the WMF Group’ report, we explore why the connected coffee machines segment is expected to exhibit the highest growth in the commercial connected devices IoT market, up to ‘in 2024.
Digital services in a B2B context
There is no doubt that these high tech assets will benefit from condition monitoring and asset management capabilities. Monitoring supplies and automating supply management enables managers to eliminate lost revenue. It also makes sense from a business perspective. By reducing supply shortages, improving revenue management, and monetizing digital displays, profits can be dramatically increased. And for customers, managed cellular IoT connectivity enables contactless ordering, as well as features like the ability to control the machine remotely via a smartphone when ordering an espresso, or pay with mobile wallets.
Imagine a gas station operator with two machines in his coffee corner, selling 230 cups a day and generating an annual income of EUR 300,000. Leveraging IoT connected devices with digital coffee machine solutions allows this small business to increase its annual turnover by more than 3.4%, generating an additional annual turnover of 10,000 EUR.
Let’s think bigger: imagine a facility management company operating 2,900 professional coffee machines, generating an annual turnover of 3.5 M EUR by renting these coffee machines to companies and operating them. Here, the potential increase in annual revenue could be in the order of over 8.7%, translating to EUR 300,000 per year, if this company uses digital services through IoT connected devices.
Where does this additional income come from?
As always, it’s about knowing your customer. Digital solutions enable the collection and analysis of consumption data, creating valuable information about the best-selling beverages and specialty coffees, where, when and at what price. They allow professional coffee machine operators to test new offerings, find the right price, and introduce dynamic pricing models, such as happy hour pricing. They can use portals or APIs to monitor customer preferences and purchasing behavior. Large programmable screens on coffee machines also facilitate product campaigns and trigger cross-selling opportunities; for example, by advertising the snack that best matches the coffee you have selected. Display management even allows facility managers to create additional income based on professional coffee machines, such as selling signage services to businesses or advertising space for restaurants near an office. .
WMF’s digital solutions not only enable efficient asset management, they also enable WMF customers to increase their business success – this is the raison d’être of B2B business. This includes new digitally-enabled business and monetization models, such as pay-per-cup or equipment as a service (EaaS), which could address the challenge that the pandemic has decimated capital budgets.
Better revenue management and advanced screens allow gas stations to sell other products. In facility management, coffee machines and other services are often part of a bundle package for corporate clients. And, if the facility provides replenishment services, they will benefit from less downtime and increased consumption.
Managed IoT connectivity and scale set
The best B2B value proposition in the world will not help the WMF Group to be successful, if it cannot be effectively deployed across the world. This is where global, uniform and managed IoT connectivity services come in. Based on the Ericsson IoT Accelerator platform, Swisscom provides WMF with managed and global IoT connectivity services on the basis of a contract, portal and set of APIs. In this way, WMF can maintain full control of its fleet of connected coffee machines and meet the availability expectations of its digital services, no matter where in the world the machines are operated. This also applies to markets where data processing is restrictive, where the management and localization of the electronic SIM (eUICC), Swisscom – in partnership with local operators – allows WMF to comply with local regulations, allowing WMF to comply with local regulations.
Perspectives beyond coffee
Professional coffee machines and their associated digital solutions can be truly innovative. However, similar IoT-based value propositions for B2B businesses also apply to other professional kitchen equipment and vending machines, as professional coffee machines are essentially a combination of the two. Think of smart refrigerators, smart wine aerators, connected ovens, smart plates or even automated mini-greenhouses for herbs and vegetables. All of these devices exist today and all depend on reliable cellular IoT connectivity. There are cold drink vending machines, the growing segment of non-food sales, and the growing number of fully automated micro-markets (both accelerating due to the pandemic). Finally, consider the emerging segment of fully automated and customizable coffee bars. There is a substantial market for IoT connected devices, waiting to be addressed with business-oriented IoT value propositions.
Take a cup and open
Connected Coffee Machines – A business case presented by the WMF Group illustrates the additional gains WMF has made from its technological approach, including increased competitive advantage. However, their learnings are applicable to the entire industry, to any organization that wants to pull data from their machines that they can turn into a greater opportunity.
So grab a cup and open up to connected devices and IoT. Download the report now and find out why coffee makers, like so many other device makers, can grow their business with connected devices and IoT, powered by 5G cellular connectivity.
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Calculate the value of cellular IoT for your business
Explore the benefits and business value added by implementing IoT connectivity and asset management in your vending machine fleet. Ericsson IoT Accelerator helps reduce downtime and enable dynamic pricing to maximize profits. It ensures that 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.