The future of digital commerce in the consumer packaged goods industry

This evolution presents CPG companies with a unique opportunity to redefine their roles in the market.

By embracing digital-first strategies and adapting their operations to the changing landscape, businesses can capitalise on this shift, unlocking new avenues for growth and long-term success in an increasingly competitive space.

The new era of commerce

The traditional distinction between 'online' and 'offline' no longer aligns with modern consumer behaviour.

Today, individuals effortlessly move between digital and physical channels, whether for grocery shopping, healthcare, or beyond.

As a result, CPG customers now expect the same seamless experiences in their professional interactions. This includes a smooth web or app interface, easy engagement with brands and products, access to product ratings, and a variety of payment and delivery or pick-up options.

According to research by Accenture, 87% of CPG customers consider B2B commerce solutions that mirror B2C experiences to be essential. This highlights the growing need for CPG companies to offer integrated, consumer-centric interactions across all channels.

The future of digital commerce

Digital commerce channels are flourishing at a staggering rate. Globally, the B2B digital commerce market is booming at 18.3% CAGR. More and more channels are being created to meet consumer and customer needs.

As new channels emerge, existing channels evolve. Driving profitable growth in this environment requires CPGs to navigate the complexity of operating in near real-time across numerous channels while effectively managing the growing costs of participation and delivering a consistent, omni-channel experience.

To master the digital commerce landscape, CPGs must build the right capabilities and capacity to seamlessly orchestrate activities within and across channels.

What does this mean for the C-Suite?

The evolution of CPG commerce demands decisive action and cross-functional collaboration among leaders to navigate change effectively. Key focus areas include:

• CEOs / COOs: Prioritise capabilities for profitable growth, including attracting and retaining the right talent and adopting data-driven, agile operations.
  
• CMOs / CDOs: Redesign the customer journey by analysing online behaviour, social media trends, and creating an operating model to bolster the brand's digital presence.
  
• CSOs: Optimise channel strategies, digitise informal markets for efficiency, and implement robust Revenue Growth Management (RGM) frameworks.
  
• CIOs / CTOs: Build scalable commerce architectures for B2C, B2B, D2C, and B2B2C models, leveraging internal and external resources to align with growth objectives.

Collaboration and innovation are essential to address these shifts and ensure success in the rapidly transforming CPG landscape.

But is South Africa ready for this shift?

Our study surveyed 1,300 global C-suite leaders across 12 industries and 16 countries to understand their perspectives on digital commerce.

About 75 of these companies were based in South Africa (SA), and the survey showed that 95% of these leaders (vs. 83% globally) thought that commerce was growing faster than they could adapt. This shared feeling of falling behind affirms how difficult it is to keep up with the pace of change. An example of this fear was the looming entry of Amazon into SA earlier this year.

The tech giant is renowned for strategically entering high-growth markets, excelling at offering convenience, an extensive selection, and one-day delivery, while identifying its target and outpacing competitors with superior execution.

Another key consideration is the complexity of South Africa’s route-to-market. While the formal market is largely saturated, with the technologies and processes in place to facilitate relatively straightforward interactions, there remains a significant opportunity to drive more profitable commerce operations.

On the other hand, the informal market is the next frontier, largely untapped and boasting an estimated potential value of R178bn, with few players effectively serving this segment.

The opportunities in the informal space are ripe for the taking. However, CPGs will need to innovate, collaborate, and align their strategies with the needs of traders and consumers.

This includes addressing logistics for more convenient delivery, expanding payment options (with cash still dominant but digital alternatives growing), and offering product assortments tailored to local preferences (such as mixed cases).

Additionally, the growing digital population in South Africa – up 75% from 2013 to 2023 – provides further momentum for expanding commerce in the region.

What leaders do differently

The high costs of selling through digital channels and managing brands across many platforms mean CPGs are spending more to sell the same amount of products. They can either remain just product makers or rethink their roles and relationships to reshape the future of commerce.

This means improving customer engagement and finding ways to monetise their customer base, such as offering retail media and data services to boost profits.

Achieving this begins with transforming into a digital business – becoming fully digitally enabled and changing the way the company operates. Consider the following enablers for this transformation:

Own the brand experience in commerce: With commerce being an increasingly critical consumer engagement channel in CPG, the brand experience should be consistent. The core messages, visual identity, tone, values, and core images should show up consistently across every relevant channel, every time. This drives trust and recognition with customers and differentiates from competitors.

Build better for the business of commerce: CPGs can make change happen by building the technology foundation to be more data-driven and integrating processes to be more agile. This is critical in establishing a more direct relationship with customers (and the broader eco-system) to derive insights for better decision-making, as well as optimising operations.

Become digital on the outside – and the inside: It is key for CPGs to join up marketing, sales and commerce, and the rest of the organisation to operate with true agility. Only investing in the digitalisation of a commerce front-end while forgetting about your back-office, will result in a disconnected business, unable to integrate capabilities and derive cross-functional synergies and insights.

To succeed in digital commerce, CPGs can either ride the wave of change or take control by crafting a strategy that addresses the fundamentals.
In South Africa, where the informal market remains untapped and mobile accessibility is on the rise, the time is ideal for CPG leaders to embrace these shifts, lead the next wave of innovation, and leapfrog toward global scale and excellence.