Consumer packaged goods (CPG) companies must fully embrace digital commerce or risk losing out to newer industry players in the battle for an estimated $340 billion of market growth in the Asia Pacific (APAC).
A new Accenture report – “The future is now: understanding the new Asian consumer” – sees Accenture estimate that the consumer goods and services industry will grow by as much as $700 billion globally by 2020, with nearly 50 per cent, or $340 billion, of this growth coming from Asia—specifically China, Indonesia, India, Singapore and Thailand.
China alone is expected to account for approximately $200 billion, or 60 per cent, of the growth in Asia.
“If CPG companies don’t take action now, they risk losing out on the new generation of consumers. These companies must couple traditional models with new ones where consumer engagement is digital and one to one, social influence is perceived to be the trustworthy source and shopping is one click away,” said Fabio Vacirca, senior managing director in Accenture’s Products operating group in Asia Pacific.
Vacirca observed that the sales and marketing ecosystem was adapting to the emergence of a new generation of consumers and pervasive digital technologies, The change is noticeably faster in the Asian markets, leading them to bypass the traditional business models used by CPG firms.
Asia Pacific’s booming consumer markets are on course to touch $10 trillion mark by 2018, with approximately 25 per cent of it originating from digital commerce. Accenture maintains that despite the heavy influence of e-commerce retailers and online marketplaces, APAC’s digital commerce market remain under-penetrated for CPG companies, particularly in the grocery-product category.
With their knowledge of consumer preferences and evolving demands, e-commerce players like Alibaba have been adapting by reinventing and tailoring offerings to redefine the value chain, with consumers as their focal point.
In order to capitalise on growth opportunities and counter the threat of the new players, Accenture is maintaining a strategic of partnership with e-commerce platforms, investing in brand development, online-to-offline (O2O) initiatives and mobile-first initiatives.
In addition, CPG firms need to explore the integration of e-commerce initiatives with social platforms to engage consumers and build trust. The firms need to investigate opportunities for product testing and product development through crowd-sourcing while leveraging insights from Big Data to tailor customer experience across multiple touchpoints.
With Accenture’s research suggesting that most customers are unsatisfied by with their purchase journeys, it predicts a convergence towards a”…a single platform where they can enjoy unique experiences that delights and enables their impulse decisions, receive tailored product recommendations that meet their desires immediately and where they are always connected to their favourite brands.”
In essence, a stronger focus on digital commerce can bridge existing gaps in the consumers’ purchase journeys, as well as provide the seamless shopping experiences they’re looking for.
Elaborating, Vacirca said, “Technology will continue to evolve and influence how consumers shop in the future. By better using digital technologies, CPG companies can engage with consumers on a real-time basis, allowing the companies to provide the maximum value within the minimum time. This will, in turn, create opportunities for CPG companies to control the consumer buying experience of tomorrow.”
“The next generation of digital commerce is here, and consumer empowerment enabled by smarter technologies will change how we shop and make purchases,” said Vacirca, who added, “From the virtual reality room to its next-generation experience space, the Accenture IoT Centre of Excellence in Singapore helps businesses take advantage of the unprecedented opportunities that exist in the rapidly evolving digital marketplace.”
Currently, Accenture is envisioning the city-state as its commerce development centre for Asia, due to a number of factors – a highly developed and deep logistics network and international connectivity, combined with a cosmopolitan population that is the most digitally engaged in the region is cited as major factors in this move.
In addition, numerous regional and international e-commerce players are also present in Singapore.
With Asia projected to see the emergence of 2.7 billion middle class customers by 2030, and an estimated 50 per cent of incremental revenue origination from the Asia Pacific, with a projected capitalisation of $340 billion by 2019, Accenture is increasingly focused on a specific factor of the customer experience – micro-moments.
A part of the purchase path of customers, Accenture see’s the emergence of micro-moments as a phenomenon necessary for CPG firms to differentiate themselves from their competitors.
With partnerships, a seamless O2O experience, hyper localisation, a mobile-first approach, subscription models and the Internet of Things (IoT) emerging as major components of the digital commerce landscape, e-commerce players and CPG firms face will have to significantly adapt their business models and channels over the coming years.