The four business models transforming digital commerce

14th Jun 2017

Retailers and consumer goods companies are going through the biggest change their industries have encountered in the last 50 years. For consumers, it is a golden age. They are accelerating the shift to spending online, demanding new products and services, finding a far broader range of options for how they shop, and rapidly moving to brand experiences that align with their personal values.

The challenge is that they are often not getting these experiences from industry incumbents. The most interesting growth in consumer industries is not coming from the traditional High Street incumbents that we grew up with, but from smaller consumer goods companies and retailers offering experiences that often blend technology and human interaction in compelling ways. And the gap between those who ‘get it’ and those who don’t is getting bigger.

While some may say this trend has been around for a while, the reality is that in the last five years it has truly become serious. Amazon continues to add products to its site at a rapid rate, and as people move to using Alexa’s home control and home ordering features, it has the potential to transform the number of products bought with “low mindshare” in the kitchen.  

The other interesting trend is around privacy. Consumers are becoming increasingly adept at understanding and agreeing to trade knowledge about themselves for more tailored and relevant digital services. Likewise, they are willing to trust technology to make or shape decisions on their behalf. 

Recent research has found a stunningly high number of UK consumers would consider using innovative new services – despite the fact that some are not in existence today. For instance, 34% of UK consumers are already open to allowing intelligent devices to ‘think for them’ and make purchasing decisions on their behalf.

39% would allow companies to collect their personal data via intelligent devices in return for a better experience or financial reward. Furthermore, nearly a quarter (24%) would use sensor-based digital services that pre-emptively address their needs without any type of human intervention.

The growing sophistication of consumer demands will challenge these industries to evolve and innovate, driving huge growth in digital commerce. To thrive, organisations must aggressively pursue innovation and be willing to disrupt themselves. But many are unsure about where to start.

Accenture Strategy’s analysis for the World Economic Forum found that retailers and consumer goods companies could unlock enormous value over the next decade by accelerating digital transformation. The key to success will be the adoption of new, digitally-driven business models that will enable companies to offer consumers the shopping experiences they crave. 

The following four transformative business models have the strongest potential to transform digital commerce, and are already being welcomed by UK consumers:  

  1. Sharing economy – This is essentially the next-generation rental market where consumers use a product as needed rather than actually owning it. For instance, 36% of UK consumers said they would rent a fashion item for an occasion and then return it, instead of purchasing it outright. ThredUp is a US player which allows consumers to send clothing they want to sell in a sealable bag. They then run those items through an algorithm and are ultimately able to resell 50% of the items with the rest going to charity. For those who worry this will reduce demand for new products, it appears these models enhance ‘closet velocity’ in houses who embrace them.
  2. Personalisation economy – Think of this as ‘surprise me subscriptions’, where experts curate products tailored to an individual and automatically deliver it to their door. 29% of UK consumers said they’d use this subscription for clothing, where an expert selects items on their behalf based on previous shopping preferences and purchases. Companies like Stitchfix use a mix of highly developed analytics and style consultants to create very specific recommendations to their consumers. Their return rates are falling by the day. All these innovations are likely to become widespread in the UK in the next few years.
  3. Replenishment economy – Automatic replenishment is when smart sensors detect when a consumer goods product is running low and automatically reorders and delivers it to your door. Over half (52%) of UK consumers would be interested in subscribing to services that replenish items like laundry detergent. Another 46% might use it to reorder fresh food items. These services are giving consumers the convenience they crave while removing the mundanity out of household shopping.
  4. Services economy – Also known as ‘do it for me’ services. This is when consumers outsource the heavy lifting of household chores to others. 37% of UK consumers would consider this sort of service for their laundry – getting someone else to do the ironing and folding. One of the most fascinating examples is Vigo, a concept created by Danish convenience retailer REMA 1000 where thousands of consumers are now shopping for those who live close to them. Why has it become so popular? Because people want to connect to their neighbours and are happy to make a little extra money at times when they have flexibility in their day.    

What’s clear is that we are going to see a transformation in both the High Street and the “last mile” space – between the High Street and the home – creating opportunities for vibrant local communities with ever broader ranges of goods and services.

For companies who harness technology and consumer experience it could be a golden age for them too. In this world, the success of retailers and consumer goods companies to unlock value will be dependent on their ability to gain a deep understanding of consumers, embrace disruptive technologies and adopt innovative business models.

With growing UK consumer appetite for new purchasing experiences and enormous market value at stake, that might very well be the motivation that many organisations need to get going.

Oliver Wright is managing director & global consumer goods lead, at Accenture Strategy.



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By StephenGiderson
18th Oct 2017 06:03

You'd think that with technology and the internet being around for what seems like so long, that a lot of these problems like storage and security would have caught up to the demands of the using public. It just seems like everything needs a bit of refinement so that it matches up and finds an equilibrium. And in the meantime, there are bad people who are trying to exploit those holes and cause problems when it comes to privacy and security and those other issues you're talking about!

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