The life sciences industry is finally waking up to the fact that, to survive and thrive in today’s competitive landscape, they need to adopt e-business models to meet changing customer demands and drive the top-line growth they aspire to.
In response to changed market conditions and evolving customer behavior, life science companies are rapidly shifting toward creating and expanding ecommerce platforms to grow online sales.
Customer expectations have changed for good
In the mid-1990s, Amazon introduced the world to a revolutionary way of doing business. As B2C ecommerce grew over the following years, with the likes of Walmart, Apple, Dell, Etsy, and eBay leading the way, consumers took advantage of cheaper online offerings, a wider choice of suppliers, and goods delivered directly to their homes. Accelerated by the rise of smart phones and tablets, customers became used to a whole new flexible shopping experience.
Driven by these every day, quality online interactions, buyers started to demand a similar consumer-like experience in their business dealings. B2B organizations who were forward-looking enough to spot the opportunity, and deliver a first-class online offering, saw their customer base and revenues rocket.
In recent times, even the most conservative of markets—banking and financial services—has seen online disruptors grab significant market share from their traditional brick-and-mortar competitors.
It’s time for life sciences to join the eCommerce revolution
While most industries have adopted an omnichannel approach to business, life sciences has historically lagged behind, with little adoption of eCommerce business models and tools. Recent times, however, have seen a change—with business leaders realizing that those who fail to make the move are at risk of being left behind.
As with the consumer market and other B2B industries, a third of life science providers now expect their suppliers to offer eCommerce, at least as an option, and almost 10 percent of providers expect all of their purchasing to be done via eCommerce in the next three years (according to a recent KPMG survey).
Almost 80 percent of customers purchasing from medical suppliers and distributors do some level of purchasing online, with 50 percent of customers doing over half their business via eCommerce.
Over the next three years, that number is expected to grow to 60 percent, and those suppliers who have already embraced ecommerce are reaping the benefits.
In the medical supplier and distributor industry,
about 40 percent of revenue (on average) now comes from eCommerce channels.
This trend shows no sign of slowing down—more than two thirds of companies surveyed have increased investments in eCommerce over the past year and expect to continue increasing their investment in the next two years.
What is driving the eCommerce shift within life sciences
An increasingly competitive landscape and the need to increase operational efficiencies are large factors in the move to eCommerce for within life sciences; by far the biggest drivers, however, are to enable top-line growth and meet the changing demands of their customers.
It has become apparent that future success relies upon delivering what their customers expect. Indeed, for almost half of companies surveyed, their sales teams are embracing eCommerce to enhance their customers’ experiences.
The time is now
Those life science companies who have already shifted to eCommerce have seen large increases in operational efficiency and significant cost reductions. As customers’ expectations evolve further in their everyday lives, the need to meet and exceed those demands will be ever greater.
Life science businesses who provide the flexible, online experience their customers expect will reap the rewards; those who fail to keep pace will be left in their shadow.
To win and succeed in this digital economy, KPMG believes you must operate across the four customer-centric pillars of what we call “the future of commerce.”
Elevating your business model
In today’s hyper-competitive environment, where customer loyalty lasts only as long as the current interaction, businesses must find new ways to engage customers and drive profitable growth. Successful organizations are already responding to this challenge by developing commerce-powered business models to expand into new markets.
Keys to building a successful business model include:
- Leverage digital channels to generate new revenue over time
- Identify and incorporate existing strengths to differentiate from competitors
- Use the voice of the customer to design your new business model
- Think beyond your current portfolio of products and services
- Invest in analytics, artificial intelligence (AI), and machine learning to augment decision-making
- Identify any potential tax impacts and opportunities on the company value chain
- Consider acquisitions and partnerships to challenge legacy mindsets and capabilities.
Curating edgeless experiences
Commerce-powered business models must be built around an understanding of what your customer values most—product, price, convenience, experience, or discovery.
In the future, any company who intends on competing in the digital economy will have to enable its customers to shop, buy, and be serviced when, where, and how they want. This means paths to purchase will be inspired by and for the individual customers they serve, offering frictionless data collection, service access, and transactions.
Keys to curating edgeless experiences include:
- Invest in data capture, data mining, and real-time synthesis of data insights
- Eliminate siloed working that causes breaks in the customer experience
- Study customer interactions across channels to identify and remove pain points
- Use predictive AI to power personalized experiences
- Protect customer data to cultivate trust in edgeless commerce
- Design and build your customer experiences across the different “zones” of their lives.
Operating at scale
Few businesses know how to move from envisioning to enabling a digital future—how to ride the fundamental inflection point from start-up and growth to scale and profitability. It is clear that edgeless experiences will need to be featured in any commerce-powered business model, and most leaders understand intuitively that some combination of customer-centricity, data, and mobile commerce will be critical to success in the digital economy.
Keys to operating at scale:
- Coordinate your functions with a commerce operations team
- Prepare your pipeline of data scientists, software engineers, and technical architects
- Align your employee and customer experiences to deliver on your brand promise
- Deploy flexible technology to reduce technical debt
- Use a real-time, scenario-based approach to manage changing talent needs
- Share single-source data across digital platforms to scale edgeless experiences
- Regularly review your tax calculation platforms to keep up with changing tariffs
- Employ intelligent logistics to mitigate waste in your supply chain.
Enabling digital business platforms
New business models, evolving edgeless experience expectations, and the need to operate digitally at scale are driving the need for new and expanded platform capabilities. Companies that are willing to make investments in the technologies, operating models, and resources required to bring these digital platform capabilities to market will emerge as the new leaders. Experimentation and innovation management will be key to ensuring that platform investments are effectively aligned with your new business objectives.
Keys to enabling successful digital business platforms include:
- Expand beyond traditional interactions with interaction model platforms
- Power predictive customer experiences with flexible customer experience platforms
- Inform headless commerce with advanced analytics and machine learning
- Integrate capabilities using API and cloud/microservice-driven architecture
- Accelerate time-to-serve with process automation platforms
- Protect your customer data with enhanced security and privacy platforms.
Do you have a plan to get your fair share of the digital economy?