Digitalization was already spreading unstoppably throughout the business world. Once COVID-19 hit, this process accelerated beyond anyone’s wildest predictions. According to a survey by McKinsey, companies have condensed a digitalization process that would normally have taken three to four years into just a few months.
Certain industries, like consumer packaged goods (CPG) and fast-moving consumer goods (FMCG), as well as eCommerce generally, have felt the pace of this digital acceleration more than others. The eCommerce share of total global retail trade grew from 14% in 2019 to 17% in 2020, with the pandemic forcing many brick-and-mortar stores to close and keeping consumers house-bound for long periods.
However, the digital eCommerce boom cannot be attributed solely to COVID-19. Consumer attitudes to online shopping have been shifting for some time and the creation of new digital technologies has made it easier and more affordable for businesses to offer products and services online. With organizations ramping up their digital offerings, new trends and consumer demands are emerging that will reshape the playing field once again. For the majority of businesses, particularly those in the FMCG space, digitalization remains an ongoing process - one that will continue to have a profound impact on retail for the foreseeable future.
Digital evolution
It’s important that brands do not view “digitalization” as some single, distinct concept that can be completed by setting up an online store. In reality, it is a constantly evolving process, one that is shaped by changing technological and consumer trends.
In the FMCG space, a digitalization surge has been accompanied by a host of innovative new products, services, and business models. App-based shopping, blockchain traceable supply chains, and direct-to-consumer (D2C) offerings are just some of the ways that FMCG brands have been reinventing their operations to cater to a digital-first world.
Evidently, each individual business has a unique customer base, its own technological and financial capabilities, and is at its own stage of maturity. As a result, digitalization can take many forms, from a slight prioritization of online marketing to a fully-fledged headless shopping experience. Each brand will need to manage its own pace along the digitalization journey.
A future-first approach
Of course, any successful approach to digitalization must look to get its technology right first. Open-source platforms provide an excellent way for eCommerce firms, whether in the FMCG space or not, to ensure they are adaptable. Open-source technologies are, by their very nature, flexible, which is essential given the pace of digital transformation and the unpredictability of the future (the last twelve months is surely evidence of that).
Along with open-source technologies, an open mind is another necessity. Consumers ultimately dictate FMCG trends - and so brands must be willing to follow their lead. Today, sustainability, health-focused foods, and personalized menus are among the most exciting trends driving the FMCG sector forward. Businesses that stubbornly stick to the same old products (and business models) will soon find themselves obsolete.
This reactive approach must also be extended to new business models that come in and shake up the eCommerce industry. In recent times, the D2C model has grown significantly, enabling FMCG brands to improve their customer relationships and boost profits by removing retail partners as transactional middlemen.
Making more extensive use of big data has also become more commonplace for eCommerce brands, allowing them to offer customers a more personalized shopping experience. And alternative payment methods, from buy-now-pay-later (BNPL) services to bitcoin, are likely to grow in prominence.
In addition to these recent developments, there will undoubtedly emerge many unforeseen innovations that reshape the eCommerce market in unpredictable ways. If businesses cannot reliably foresee what the future holds for eCommerce, they must at least make sure that they are adaptable enough to manage these changes when they emerge.
Digitalization is here to stay; make sure your brand is too.
