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Globalisation has given rise to a competitive business environment. Every day, technologies improve to meet the needs of global users. The internet provides access to information through different devices (Cortés et al., 2015) and internet of things (IoT) improves access to distinctive services, as well as enhances opportunities to communicate and exchange data. IoT can be defined as “a global infrastructure for the information society, enabling advanced services by interconnecting (physical and virtual) things based on existing and evolving interoperable information and communication technologies” (ITU, 2012, p. 2). Inevitably, the devices in IoT capture large amounts of diverse data, which facilitates new forms of communication between people and smart objects or between objects (Cortés et al., 2015).
The incorporation of IoT technologies in e-commerce is an innovative driver for e-commerce retail (Bayer et al., 2021). IoT reduces natural gaps between the virtual and physical worlds. For example, IoT can facilitate more efficient inventory management through radio-frequency identification (RFID). These smart tags or smart shelves help firms optimise inventory levels and avoid out-of-stock products. Firms can also apply IoT to streamline the supply chain management by tracking and controlling the delivery of products. Furthermore, this technological innovation can improve customers’ e-commerce experience.
Amazon Dash allows customers to remotely reorder products with the press of a button. Overall, it changes the way customers buy online (Farah & Ramadan, 2017). Tesco subway stores in South Korea integrate IoT with e-commerce. Tesco (or Homeplus in South Korea) allows customers to shop as they wait for their subway train (Ju & Li, 2011). With a mobile app, customers can scan the product barcode, add the product to the digital shopping cart, and pay for it via the app. Products are then delivered to their home (Ju & Li, 2011). Another example is the smart mirror, which allows customers to virtually try on an outfit before ordering it online. Other examples include wearables, beacons, sensors, and smart speakers like Amazon Alexa. Overall, these IoT applications change consumer behaviour. Bayer et al. (2021) proposed a set of opportunities that IoT may offer to e-commerce customers, including “context-aware services, natural interaction, and automated customer processes” (p. 1).
The integration of IoT into e-commerce has several positive effects on customers and retail organisations. Still, there is a trade-off between convenience and privacy. Privacy concerns are higher in the IoT context when compared to traditional e-commerce settings. For example, IoT includes a set of technologies that capture and store diverse types of personal and activity data. Amazon acknowledged that its workers hear what is told to Alexa and Echo records Alexa’s homeowners (Day et al., 2019). Those recordings are sometimes listened to and transcribed by Amazon employees (Day et al., 2019). Then, the data are used to enhance Alexa’s intelligence and accuracy in recognising human speech (Day et al., 2019). More importantly, as speech data are being recorded and stored, they could be used to perform data mining to influence user behaviour.
According to research, users and potential users have concerns about the invasion of privacy in the home environment. Thus, it demonstrates resistance toward its adoption (Lee, 2020). In the context of IoT, data confidentiality, privacy, and trust are more critical than in traditional e-commerce.
There are several studies about the adoption of IoT technologies (Miorandi et al., 2012; Yu et al., 2015). However, few studies focus on the use of IoT in e-commerce. Although e-commerce is not new, it has adapted several technological advancements into the business model. In fact, e-commerce can leverage IoT technologies to create a stronger value proposition and experience for users. By connecting objects, devices, and people, IoT technologies can improve and innovate e-commerce business models (Yao et al., 2015). Additionally, it is important to understand the effect that the use of IoT may have on consumers’ lives (Bayer et al., 2021).