Digital Success In The Consumer Products Industry – And Beyond

Carol Mackenzie

Technology is becoming more vital to your business every day, and the digital explosion is expected to continue in all sectors. By 2020, it’s predicted that there will be 6.1 billion smartphones in use and 50 billion smart things connected to the Internet, according to a SAP whitepaper titled The Consumer-Driven Digital Economy. With this many future connections at your disposal, just think of the possibilities for your own products and services.

More and more business leaders are realizing that they need to transform in order to be successful in today’s digital economy. According to the latest IBM Global C-suite Study of more than 5,000 executives worldwide, 81% expect to incorporate more digital or virtual interaction with customers, as opposed to only eight percent expecting more face-to-face customer interaction.

Consumer products setting the digital standard

One of the most visible industries setting the standard for digital innovation is the consumer products (CP) industry. Leading CP companies are using digital technology to deliver seamless, “in the moment” brand experiences by responding to customer needs in real-time.

Consumer product companies are teaming up with new partners in digital ecosystems that enable them to expand in ways that were previously unattainable as a single entity. According to the paper, IBM and SAP in the Consumer Products Industry, 70% of consumer product companies plan to partner with technology firms to create new value and fill resource gaps. This is creating endless opportunities for digital capabilities in consumer products.

In addition to things that have quickly become commonplace, like wearable technology and smart cars, there are also continuous digital advancements in the consumer products field. These days, washing machines can automatically order laundry supplies, printers can automatically order ink cartridges, and water filters can monitor usage and automatically order new filters when needed. A growing number of CP companies also use Amazon’s Dash Replenishment Services (DRS), which enables companies and users to reorder supplies with the click of a button.

Disruptive competition

According to the IBM and SAP paper, at the same time as this continuous progress, consumer product manufacturers and distributors face increasing threats from new competitors that target vulnerabilities in traditional route-to-market value chains. These pressures, along with changing consumer behavior, brand exposure, and supply instability, are forcing some consumer products companies to explore new business models, such as vertical integration and direct-to-consumer models.

Some examples of disruptive business models currently being developed include:

  • Online retailers that are expected to disrupt the grocery business with a major rollout of online grocery stores.
  • Online specialty providers that are predicted to disrupt the CP sector with monthly subscription fees for household items and personal care products.

The ripple effect of consumer products digital success

The digital transformation of the CP sector is setting an example for other industries. Digital transformation is gradually turning shoppers into subscribers in many sectors, as companies reinvent their business models to incorporate digital technology. This can be seen in multiple areas, from digital supply networks that could disrupt your industry, to traditional manufacturers that create new revenue streams with as-a-service business models. In fact, the report states that 64% of executives believe new business models will impact their industries more profoundly than ever before.

Setting yourself up for digital success

To be successful in today’s digital economy, the IBM and SAP paper states that companies should have agile digital capabilities right across their operations, from sales, to finance, and the supply chain. The report says digital technology can present extraordinary opportunities if businesses focus on the following areas:

  1. Cognitive computing. A new digital core can harness the power of cognitive computing, which thinks and learns as market conditions change and continuously adapts to keep pace with trends and performance indicators.
  1. Industry convergence. Previously entrenched industry boundaries are collapsing, allowing cross-sector competitors to capitalize on new business opportunities and redefine industry classifications. Industry convergence is top-of-mind for all CxOs in the IBM Global C-suite Study.
  1. The customer experience. Digital consumers are demanding more from the companies they deal with, so businesses must rethink the entire customer experience and focus on delivering outcomes instead of products.

In order to address these areas and take action to succeed in today’s digital economy, it’s crucial to have a digital strategy in place. Learn how technology firms like IBM and SAP can show companies the path to digital.

Read the SAP whitepaper, “The Consumer-Driven Digital Economy,” and learn more about IBM and SAP in the Consumer Products Industry.

Download the IBM Global C-suite Study to learn more about digital insights from CxOs worldwide.

To learn more, please also visit Consumer Products: Reimagined for the New Economy, or join the Consumer Products LinkedIn Group for ongoing information on the consumer products industry.

For an in-depth look at how the digital era is affecting business, download the SAP eBook, “The Digital Economy: Reinventing the Business World.”

Discover the driving forces behind digital transformation. Download the SAP eBook, “Digital Disruption: How Digital Technology is Transforming Our World.”


Carol Mackenzie

About Carol Mackenzie

Carol Mackenzie is Vice President of Business Development for Consumer Goods Industry Solutions at SAP. In this role, she works with consumer products firms, partners, and industry thought leaders globally on driving innovation into their operations utilizing the SAP Consumer Products solution portfolio.