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How the Corporate Tax Bill will Fund Digital Transformation

digital transformation fundingThere might be an unexpected outcome of the GOP’s tax plan: Investment in digital transformation.

How so? You might ask.

Well, PepsiCo recently announced that it plans to invest some of the millions of dollars it’s going to save in 2018 from the new tax plan (commonly referred to as the TCJ Act) into ecommerce and other digital efforts in order to gain a competitive edge. The Q4 earnings and 2018 financial outlook report reads:

The provisions of recently enacted tax legislation are expected to result in lower income taxes in 2018 for our operations in the United States, our largest market. We expect the benefits of the TCJ Act will enable us to further strengthen our business by enhancing the skills of our front line associates to ready them for the future; adding new digital and ecommerce capabilities to become more competitive.

According to Business Insider, ecommerce already accounts for about $1 billion of Pepsi’s annual retail sales. And with this number only expected to rise, analysts believe soda giants like Pepsi and Coca Cola haven’t braced for the impact of ecommerce.

Why’s that? According to Forbes:

Retail stores, supermarkets, and vending machines at mall food courts are important distribution channels for Coca-Cola, and as consumers move away from shopping at brick and mortar stores, preferring the convenience of online shopping, these channels are being impacted adversely.

Which could be why PepsiCo is taking its tax savings and investing it in digital strategies. Not to mention the desire to avoid the fate of other retail companies whose failure to embrace digital transformation has led to their downfall.

As Forbes concludes their article:

The shifting consumer preferences towards...the convenience of e-commerce have impacted Coca-Cola negatively, and those trends show no signs of slowing down anytime soon. The company needs to adapt to the changing retail landscape, and innovate in terms of both product and distribution channels to drive sales in the long term.

So what does all this mean for the future of digital transformation as a whole?

What This Means for Digital Transformation

Seeing this huge investment in digital strategy could mean we’re on the precipice of a widespread funding round due to these large, billion-dollar companies seeing a little more cash added to their bottom line.

If more companies follow Pepsi's lead, more will invest in solutions that advance their digital strategies, which may have initially been hard to fund. The solutions in which they invest could consist of:

Ecommerce

Did you know that sales generated from B2B ecommerce sites currently account for twice the sales volume as leading B2C properties? In fact, Forrester forecasts that by 2020 more than $1.13 trillion in revenue will be flowing through US B2B ecommerce properties.

To learn more about the importance of B2B ecommerce, check out these related posts:

CPQ

CPQ can help companies automate and streamline processes, enable complex configuration, upskill employees, and scale transaction volume. And it does this across industry verticals, offering omnichannel enablement, comprehensive workflow and automation, advanced pricing, bundling, and discounting, guided buying and selling, and more.

To learn more about how CPQ is such a powerful digital solution, read the following:

Conclusion

In short, these beverage giants are feeling the pressure to invest in digital transformation, and they're starting to take advantage of any opportunity that allows them to do so.

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Jake Brown
ABOUT:

Jake Brown

Jake is Digital Marketing Manager at FPX and works to establish FPX as a thought leader and enabler of experience-driven business strategies for B2B organizations.


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