QUANTUM COMMERCE TOMORROW - Is your business ready to take the leap? - Accenture
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DIGITAL COMMERCE TODAY. QUANTUM COMMERCE TOMORROW. Is your business ready to take the leap?
INTRODUCTION
The Asia-Pacific (APAC) digital commerce market is on the cusp of a quantum leap. Globally,
digital commerce sales are surging but those in APAC are growing faster. In fact, by 2022, APAC
is expected to account for 42 per cent of total retail sales globally, and a whopping 70 per cent of
digital commerce sales.1
Digital commerce today: Crucially, this quantum Developing a road map for change: We found that
growth is being driven by changing consumer tapping into quantum commerce’s opportunities
expectations. Today’s digitally savvy consumers will require many enterprises to transform their
are involved at every stage of the value chain digital commerce capabilities so that they can offer
and increasingly, they will accept nothing less than the digital services that consumers increasingly
a fully integrated, omni-channel experience. expect. Those that don’t transform may risk being
left behind.
Quantum commerce tomorrow: The growth
opportunities for retail and consumer packaged Accenture has conducted in-depth research into
goods (CPG) companies are huge. APAC digital digital commerce to help APAC businesses
commerce sales will reach US$6.5 trillion by 2025, understand the likely impact of this quantum leap.
representing a compound annual growth rate Our research includes work by Accenture
(CAGR) of 20.1 per cent. That’s more than three Research’s Economic Modelling Centre of
times the CAGR of total APAC retail sales Excellence to provide forecasts for important
(see Figure 1). economic trends in the sector.
Figure 1: Digital commerce in APAC is expected to reach US$6.5 trillion by 2025
+5.9% 14.6
13.2 13.9
11.8 12.4
10.5 11.1
9.8
Total Retail
(2018 - 2025)
in US$ T,
APAC
2018 2019 2020 2021 2022 2023 2024 2025
Total
Digital +20.1% 6.5
Commerce 5.8
5.0
Retail 4.2
3.5
2.9
(2018 - 2025) 1.8
2.3
in US$ T,
APAC
2018 2019 2020 2021 2022 2023 2024 2025
TRANSFORMING THE FRONT OFFICE TO GENERATE PROFITABLE GROWTH
Our ongoing work with leading companies in
the region has allowed us to develop a powerful Accenture Front Office Transformation Model
approach in front office transformation to help
firms drive growth and develop their core digital Modern Traditional Digital Digital
commerce capabilities. More specifically, we Trade Trade Commerce Marketing
help companies transform their operating
model, opening the business to a broader
ecosystem of partners and nextgeneration
capabilities. We also help companies extend
their relationship with consumers by enhancing Data & Analytics
the brand experience and delivering a more
compelling consumer proposition, built around
game-changing new products and business Portfolio Strategy Channel / Market
models that drive new sources of revenue.
2
CHINA’S DIGITAL COMMERCE MARKET
IS SETTING THE BENCHMARK
China is undoubtedly APAC’s digital powerhouse and the global leader in digital commerce.
We predict it will maintain its lead, with retail digital commerce reaching US$6 trillion in 2025
(see Figure 2).
The reason for China’s market leadership is clear: The evolution of these and many other Chinese
it’s a sophisticated, mobile-first commerce market digital businesses have resulted in a complex
with 788 million mobile users – 98 per cent of the digital commerce ecosystem. In broad terms, this
country’s total Internet users, according to Statista.2 can be divided into four categories:
Digital commerce is the norm – eMarketer estimates
that most (79.4 per cent) of China’s smartphone 1. Popular commerce and marketplace platforms
users made payments with mobile apps in 2018.3 such as JD.com and Alibaba’s Tmall
With widespread adoption of smartphones and 2. All-encompassing social platforms such as
mobile payment apps, digital commerce has Tencent’s WeChat
reached the point where China’s retail companies
are now the global benchmark. The country’s retail 3. Popular payment services such as Alibaba’s
giants offer advanced services such as Alipay and Tencent’s WeChat Pay
online-to-offline integration, enabling them to
provide ubiquitous, seamless retail services. 4. A variety of logistics services for direct-to-
consumer shipping and business-to-business trade
For example, Alibaba has numerous operations in China’s ‘bonded zones’
and investments in commerce, marketing, data
management, cloud computing, logistics, financial This unique ecosystem will also drive further digital
services, loyalty programs, retail and online search commerce growth. For example, China’s digital
services, as well as social and other types of marketplaces are forecast to collectively record
media, lifestyle and entertainment services. 18.3 per cent CAGR from 2018 to 2022.4
Figure 2: China is the single largest market in APAC for digital commerce
8.2
+6.6% 7.7
7.3
6.8
6.4
6.0
5.6
5.2
Total Retail
(2018 - 2025)
in US$ T,
China
2018 2019 2020 2021 2022 2023 2024 2025
6.0
5.3
+21.6% 4.6
Total
3.8
Digital
3.1
Commerce 2.5
Retail 2.0
(2018 - 2025) 1.8
in US$ T,
China
2018 2019 2020 2021 2022 2023 2024 2025
3APAC IS POISED FOR A QUANTUM LEAP
IN DIGITAL COMMERCE
Research shows that the retail and CPG industries in the digital commerce in ASEAN will reach US$67.4 billion in
rest of APAC look set to follow China’s digital commerce sales, representing a CAGR of 16.3 per cent. That’s three
lead, ushering in a quantum leap in growth for the sector times the growth of total retail sales in the region
across the region. Indeed, Accenture predicts that (see Figure 3).
Figure 3: ASEAN digital commerce is expected to grow at 3 times of the overall retail growth
+5.5% 1,279.6
1,145.6 1,209.9
1,034.6 1,082.9
932.3 984.5
880.2
Total Retail
(2018 - 2025)
in US$ B,
ASEAN
2018 2019 2020 2021 2022 2023 2024 2025
Total
Digital
Commerce
+16.3% 67.4
Retail 58.9
(2018 - 2025) 44.3 51.3
33.1 38.5
in US$ B, 23.5 28.1
ASEAN
2018 2019 2020 2021 2022 2023 2024 2025
The critical factors fuelling such a leap include a growing consumer base, among other aspects (see Figure 4):
• The region’s home to an increasingly connected, At the same time, governments in the region are seizing
expanding urban middle class. While ASEAN remains highly the opportunity to contribute to the spread of
diverse, the number of middle-class households is forecast digitalization through a range of initiatives. The Singapore
to more than quadruple to 161 million by 2030.5 Government, for example, has launched numerous digital
initiatives under its Smart Nation programme – including
• At the same time, hundreds of millions of digitally savvy PayNow, its new real-time payment platform, which is
millennials are now coming into their prime spending already being used by 1.4 million residents.9 The
years. By one estimate, half of APAC’s population will be Indonesian Government also has a number of
aged between 18 and 35 by 2020.6 programmes, including one to create 1,000 high-tech
startups by 2020.10
• APAC’s consumers are also becoming more connected.
The region is already home to 55.8 per cent of the world’s Businesses in APAC are also investing heavily in digital
Internet users, according to eMarketer. That’s more than services, a trend that’s set to make a profound impact.
2 billion connected consumers, a figure that is expected International Data Corporation (“IDC”) predicts that by
to jump to nearly 2.5 billion by 2022.7 2021, digital products and services will account for 60
per cent of APAC’s gross domestic product – a tenfold
• Smartphones are the device of choice for APAC increase from 2017.11
consumers, accounting for 61 per cent of the region’s
Internet connections. The GSMA expects that figure to
surge to 91 per cent by 2025, when the region will have
3.9 billion smartphones.8
Figure 4: APAC emerges strongly as the new growth frontier
POPULATION
CONSUMER URBAN
GDP EXPENDITURE POPULATION WITH
INCOME
>US$150K
Shift from The rise of the “self” Home to 17 megacities, Regions High Net Worth
“export driven” to and “spend” - 3 of which are the world’s largest Individuals (HNWI)
“consumption driven” centered consumer (Tokyo, Delhi and Shanghai). wealth would be
22 megacities by 2030 >US$42 trillion by 2025
Rest of the world Asia Pacific Note: Inner chart: 2016; Outer chart: 2030
4THE RETAIL AND CPG CHALLENGE:
PREPARE OR PERISH
Digital commerce in the CPG sector, in particular, To win in this environment, traditional retail and CPG
is seeing rapid growth, with overall APAC numbers enterprises that are ill-equipped for the digital world
increasingly representative of China’s growth need to adapt to the digitalization of commerce –
(see Figure 5). and fast.
Figure 5: China will drive digital commerce growth in APAC
1,081.4 935.3
+22.4%
764.1
898.0
624.3
+19.9% 510.0
416.7
340.4
746.4 278.1
227.2
620.8
516.8 2018 2019 2020 2021 2022 2023 2024 2025
431.5 Total CPG digital commerce (2018 - 2025) in US$ B, China
361.1
304.4
20.1
+17.1%
17.4
15.0
12.8
10.9
9.2
6.7 7.8
2018 2019 2020 2021 2022 2023 2024 2025 2018 2019 2020 2021 2022 2023 2024 2025
Total CPG digital commerce (2018 - 2025) in US$ B, APAC Total CPG digital commerce (2018 - 2025) in US$ B, ASEAN
The opportunity is huge. Accenture forecasts that by beverage sales in 2017 – up from 1.7 per cent in 2013.
2022, APAC will be the number one market for CPG That upward trajectory will continue, with Accenture
digital commerce – and almost twice the size of the forecasting digital commerce penetration of China’s
next biggest region, North America. CAGR will CPG market to surge from 24.3 per cent in 2018 to
average 19.9 per cent from 2018 to 2025, when APAC 57.5 per cent in 2025.
CPG digital commerce sales will reach more than
US$1 trillion. This shift is not just a problem for traditional
bricks-and-mortar retailers. It’s a challenge for every
In China, digitalization of the CPG sector is already business in the value chain as they adapt to changing
well advanced (see Figure 6). For example, digital consumer behaviours and the new dynamics
commerce accounted for 6 per cent of food and between consumers and businesses.
Figure 6: Core CPG categories are increasingly shifting to digital channels in China
% Share of Digital commerce share in % of total sales (including sales tax),
Total Sales historical and forecast, in China (2006 - 2022)
50
Pet Care
Video Games Hardware
Consumer Electronics
40 Consumer Appliances
Apparel and Footwear
Beauty and Personal Care
30
Traditional Toys and Games
Consumer Health
20
Home Care
Homewares and Home Furnishings
10
Personal Accessories and Eyewear
Food & Drinks
Home Improvement
and Gardening
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
5UNDERSTANDING THE
DIGITAL-FIRST CONSUMER
The new breed of digital-first consumers has are transforming marketing and after-sales support.
unprecedented choice and flexibility in how, when Consumers also have far greater influence over
and where they shop. Where once businesses each other, and they receive rapid responses to
would dictate their product development, their aftersales issues. Clever new social media
marketing, distribution and pricing, that power is campaigns allow consumers to participate in tasks
now being transferred to consumers. traditionally performed by staff – such as naming
new products.
Digital consumers can easily compare prices and
access reviews of products from anywhere in the Consumers also have greater power over how
world. If they find a better-value option or have a products are delivered, through disruptive new
bad consumer experience, they can simply move to services such as food delivery apps. They are even
another brand or supplier. actively participating in product development
through crowdsourcing and crowdfunding.
In addition, consumers are now more involved in all Coca-Cola, for example, recently used a crowd-
aspects of the value chain (see Figure 7). Social funding platform to gauge consumer demand for
media and intelligent new tools such as chatbots the premium water brand Valser.
Figure 7: Consumers are now integrated into all parts of the value chain
Creyate UberRUSH
MyFit BrewSmith
Flipkart
OPEN INNOVATION, The DIY Secrets LAST MILE
PERSONALIZATION MAKE @ HOME PARTNERS
CONSUMER INSIGHTS
R&D and Marketing Store
Innovation Marketing Manufacturing Distribution
Financing & Sales Execution
Coca-Cola Meetup Etsy Field Agent
CROWDSOURCING, CONTENT, CONSUMER
PinkPi
CROWDFUNDING COMMUNITY INTIMACY,
SOCIAL CONSUMER
COMMERCE AS EMPLOYEE
Operations in Singapore
6IDENTIFYING THE
UPSIDE OF DISRUPTION
All this change is having a huge disruptive effect on traditional businesses. However, the upside for
businesses is that this change can greatly accelerate their responsiveness to market changes.
By tracking social networks, for example, businesses through personalization, such as sending
can receive immediate feedback on a new product customised offers. This can even extend to
or service, including competitive offerings. bricks-and-mortar stores, using beacon technology.
These tiny devices provide location services for
Product development can traditionally take years, indoor navigation and other cloud and mobile apps,
requiring extensive research and development, and greatly enhancing the physical shopping experience.
numerous focus groups. By comparison, Coca-Cola’s
Valser crowdfunding campaign took a month. Crucially, the rise of digital commerce doesn’t mean
the end of bricks-and-mortar retailing. However, it
Digital platforms along with data analytics allow could spell the end for companies that remain
businesses to better engage with consumer bogged down with the old ways of doing business.
A DIGITAL ROADMAP
FOR CHANGE
Clearly, traditional businesses need to transform – starting with fundamental changes to their business
values and models. Businesses need to shift from their traditional supply-led model to a consumer-led
one – where consumers are engaged throughout the value chain. Only by making this conscious shift
will businesses be able to make the other necessary changes, which include:
• Undergoing a comprehensive digital • Understanding and, where suitable, adopting
transformation across the business – from product powerful new digital tools, such as chatbots,
development to marketing and after-sales support artificial intelligence and beacon technology
• Engaging with consumers across the value chain • Regularly assessing their value offering in
through digital channels and by offering comparison with competitors, and improving that
personalised experiences offering through pricing changes, new services or
other value-adds
• Investing heavily in mobile technology – the most
vital digital channel in APAC • Leveraging the selling power of third-party digital
marketplaces, such as Alibaba, JD.com and Amazon.
That’s a lot of change. To achieve it, businesses will need to undertake a challenging journey that’s virtually
impossible to complete without a trusted partner with broad and deep digitalization experience and expertise.
7THE WAY FORWARD:
YOUR TRUSTED
PARTNER FOR
QUANTUM COMMERCE
Accenture has that experience and
expertise. Specifically, Accenture has a
centre of excellence for quantum
commerce that can help businesses take
the leap into digital commerce and
transform their capabilities to thrive and
grow.
We can also help your business apply
Accenture’s Digital Commerce Control
Tower, a comprehensive approach for all
digital commerce needs, ranging from
supply chain and operations to digital
marketing.
8ACCENTURE
DIGITAL COMMERCE
CONTROL TOWER
Digital Digital Digital Digital Digital Digital Digital
Commerce Commerce Commerce Commerce Commerce Commerce Commerce
Value Supply Demand Operations Technology Consumer Analytics
Assessment Chain Generation Enablers Experience
9REFERENCES
1
eMarketer. Forecasts: eMarketer estimates and historical data; Accenture Research.
2
Forbes (2018, 23 August). China Now Boasts More Than 800 Million Internet Users And 98% Of Them Are Mobile.
https://www.forbes.com/sites/niallmccarthy/2018/08/23/
china-now-boasts-more-than-800-million-internet-users-and-98-of-them-are-mobileinfographic/#2ac183c47092
3
eMarketer (2018, 17 December). Global Proximity Mobile Payment Users.
https://www.emarketer.com/content/global-proximity-mobile-payment-users
4
PlanetRetail (2018, Jan 30). Future Retail Disruption: China STEIP 2018.
5
The Economist Intelligence Unit (2018). ASEAN cities – Stirring the melting pot.
6
Asia House (2017, 6 July). Asian Millennials leading new APAC trends.
https://asiahouse.org/millennials-asia-panel/
7
eMarketer (2018, July).
8
GSMA (2018). The Mobile Economy Asia Pacific 2018.
https://www.gsma.com/mobileeconomy/asiapacific/
9
Monetary Authority of Singapore (2018, 20 June). E-Payments for Everyone - keynote speech by Mr Ong Ye Kung, Minister for
Education and MAS’ Board Member.
http://www.mas.gov.sg/News-and-Publications/Speeches-and-Monetary-Policy-Statements/Speeches/2018/EPayments-
for-Everyone.aspx
10
The Jakarta Post (2016, 11 November). Indonesia wants to lead the region in e-commerce.
https://www.thejakartapost.com/news/2016/11/11/indonesia-
wants-to-lead-the-region-in-e-commerce.html
11
Microsoft and IDC (2018, 21 February). Unlocking the Economic Impact of Digital Transformation in Asia Pacific.
https://news.microsoft.com/apac/features/digital-transformation/ABOUT ACCENTURE AUTHORS Accenture is a leading global professional Fabio Vacirca services company, providing a broad range of Senior Managing Director, services and solutions in strategy, consulting, Products Operating Group, digital, technology and operations. Combining Asia-Pacific, Africa, Middle East and Turkey unmatched experience and specialized skills fabio.vacirca@accenture.com across more than 40 industries and all business functions—underpinned by the world’s largest Mohammed Sirajuddeen delivery network—Accenture works at the Managing Director, intersection of business and technology to help Digital Commerce Lead, clients improve their performance and create Products Operating Group, ASEAN sustainable value for their stakeholders. With mohammed.sirajuddeen@accenture.com 477,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com. ABOUT ACCENTURE RESEARCH Our extensive research into digital commerce included work by Accenture Research’s Economic Modelling Centre of Excellence, a specialised unit focusing on economic modelling, statistical and econometric analysis and forecasting. For this paper, the Economic Modelling Centre of Excellence provided retail and digital commerce forecasts to 2025 for APAC and selected countries. The forecasts were made using Autoregressive Distributed Lag models and estimates for digital commerce evolution based on the Diffusion of Innovation Model. Accenture’s research included analysis of data from third parties, including eMarketer, Euromonitor International, PlanetRetail and Statista.
Copyright © 2019 Accenture All rights reserved. Accenture, its logo, and New Applied Now are trademarks of Accenture. Any third-party names or trademarks contained in this document are the property of their respective owners. No sponsorship, endorsement or approval of this content by the owners of such names or trademarks is intended, expressed or implied.
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