A Market Study in E-Commerce Food Packaging with Dylan Spruit
June 11,2024
Category: E-Commerce
Episode Summary:
The traditional brick-and-mortar retail landscape has shifted in recent years to cater to brand owners and consumers more focused on convenience and e-commerce functionality. E-commerce business is tailored to the needs of consumers who want a simplified shopping experience from anywhere. In the food & beverage industry, the elements of e-commerce packaging need to account for various types of products and their distribution chain, as well as packaging material. In episode three of our Unpacking Excellence podcast, we speak with Dylan Spruit, a master’s student at Michigan State University (MSU), about a market study on the comparison of packaging materials and types, causes for failure and an outlook on what current brand owners think the future is for e-commerce food packaging.
In this episode, we cover:
About Our Guest
Dylan Spruit
Senior Packaging Engineer, Tropicana Brands Group
Dylan Spruit is a Michigan State University alumn with a master’s degree in packaging science. Throughout his career, he’s specialized in packaging material research and development and even helped the J.M. Smucker Company in the downsizing of the Crisco Olive Oil case and met an accelerated timeline that prevented the brand from being removed from client stores. He’s held numerous titles with different well-acclaimed brands, such as Sun-Maid and Clorox, and he is now a senior packaging engineer for Tropicana.
*At the time of recording, Dylan was a packaging design student at Michigan State University.
Listen to the Episode
00:00 - Intro
Powered by Adept Group, this is the Unpacking Excellence podcast, bringing together top packaging professionals to share insights and knowledge on all things packaging, Now, introducing Adept Group.
00:16 - Adept Group
Thank you, Dylan, for hopping on with us today. Really looking forward to this conversation. I think what you're doing is really interesting here.
00:20 - Dylan
Thanks for having me on.
00:23 - Adept Group
Yeah, so give everyone a little bit of background of about yourself and what you are doing. You're currently a student at Michigan State, correct?
00:30 - Dylan
Yeah, yes, I'm currently a graduate student, getting my master's at MSU in packaging science, and then my main research, which we'll go over today, is e-commerce. So all my research is doing e-commerce food. So, food packaging within the e-grocery would be my research as my graduate studies.
00:48 - Adept Group
Perfect, and what led you to specializing in specifically commerce and food within that?
00:54 - Dylan
So, prior to doing my grad work, I did some internships at the JM Smucker Corporation, so that got me interested in food packaging. And then, after doing my internships, I did some undergraduate research, researching active packaging under Dr Almanar, and with Dr Almanar's help, I did research into forest materials and modified humidity packaging. And then, I was also introduced into e-commerce through her. So that's how I pretty much got into e-commerce.
01:22 - Adept Group
Yeah, perfect. No, I think, certainly, as we look at the industry and the trends, obviously more and more are moving towards that, and to me at least, food is that next step. It's not quite there, but certainly a fast-growing category and a lot more challenges, I think, in the food category versus some of the legacy of CPG and standard-type products.
01:39 - Dylan
Oh, yeah, yeah. Looking at, like, during my lit review, looking at past studies, past just news articles and all that, it looks like food is having a lot of trouble, especially cold chains, in the e-commerce environment.
01:50 - Adept Group
Absolutely. So yeah, let's dive into the study that you put together and have been starting to present. So, overall, what were the goals of the study that you put together?
01:58 - Dylan
So, we had three main goals in the study. We had to summarize and categorize package materials currently used to sell products in the traditional supply chain, in the e-commerce supply chain. And by summarizing and categorizing, I mean we're comparing packaging materials, packaging types, and I can go over a little bit later what exactly, what type of packaging materials and what type of packaging types we did compare in the results section. And then, we also quantified specific problems and failures because we found there are a lot more problems and failures in e-commerce. And lastly, the last goal we had was to try to see what current packaging engineers and brand owners think is going to happen in the future for e-commerce since this is a growing industry, and it is such a small portion of the market right now, but it's growing much faster than the traditional supply chain.
02:41 - Adept Group
Yeah, perfect. So I know you broke out some of the defect categories that were analyzed in both the conditional and e-commerce supply chain. What were those?
02:49 - Dylan
Those defect categories were leaks, odor changes, punctures, scratching and deformation.
02:55 - Adept Group
Okay, perfect. So, do you want to talk about some of the results that you saw during the study?
02:58 - Dylan
For some of the results for the study, we got demographics as well. We did ask the participants around five demographic questions. This wasn't a consumer study, it was a business study. So the demographics were more business-oriented.
So we did employee titles, and we found that the majority of the employees were either directors or engineers. We also did a time and company involved in e-commerce. So, the company itself, and most companies, a little bit over 50%, were only involved in e-commerce for three to five years, the same thing with employee time with the company. So, most of these employees were with the company itself for less than three years. As for the experience with e-commerce, the companies don't have much. And then as for location, this did have a little bit of bias towards Midwest and Northeast. Those were the companies who participated in the survey. They were located within the Midwest and Northeast of America, and the company sales also had some bias. This was a little bit of a limitation to our study since we were emailing and surveying packaging engineers. Most packaging engineers are at larger companies, so you didn't have many small companies participate in the survey. Most of it was above a billion dollars in annual sales.
04:07 - Adept Group
Yeah, it's really interesting that this part of the study that, as you look, and certainly e-commerce has been around for quite a while, when you see that these companies, less than five years, a bulk of that experience, and then certainly the engineers doing the work, less than three, it's really not a lot of time from the customer side experiencing the food through the e-commerce channel, as well as having the expertise within the company as well.
04:27 - Dylan
Oh yeah, and in some of the later questions, we just had a comment slide, and a lot of the companies posted how they're just getting started in e-commerce, just opening up e-commerce teams, as well as for the comments they had at the end of the survey.
04:39 - Adept Group
And then within the food, did you break that down into further categories, into the different segments?
04:44 - Dylan
Oh, yes. So, for categories of food, we broke it down based on the FAO category system. Since these are anonymous surveys, we can't release the actual brand foods that were surveyed. So the FAO category system is nomenclature used by the United Nations to categorize food products, and so there are 16 types of categories.
We added two categories, “undetermined,” because there was one brand product we couldn't determine as to the category to put it in. And also, we added something called “pet food” because we did have pet food as one of the answers to the survey, and then, that was category 17. But for the most part, we had fats and oils, soups and sauces, beverages, dairy products, sweeteners and nutritional drinks, like protein drinks. The most popular of these categories that we did have were beverages, nutritional drinks and soups and sauces. As for the differences between supply chains for food categories, when we surveyed the participants, we saw e-commerce had fewer beverages and soups and sauce products than traditional supply chains, but e-commerce did contain more, actually, dairy products and pet food products.
05:49 - Adept Group
That's interesting. Did you guys figure out anything from that? Is it, due to the weight or cost of shipping, or any idea why that is?
05:57 - Dylan (Guest)
We didn't ask the participants why it was that. It was interesting to find, and again, the way we asked the question, each participant answered for three of their top products in each category, so you had your top products in e-commerce and top products in the traditional supply chain. So, this was based on sales. It must be that they're just selling pet food more and dairy products more in e-commerce, according to the participants at least.
06:26 - Adept Group
Yeah, so in terms of the different packaging formats, obviously, I'm assuming that all those different types of products are in different types of packaging. Do you guys see any trends, or how did the different types of packaging formats break out?
06:37 - Dylan
For packaging formats, we looked at rigid packaging and flexible packaging, and we put those two down. Asking them about rigid packaging and flexible packaging, the majority of all products, 90%, were closely split between e-commerce and the traditional supply chain. Just rigid packaging was dominant for liquid, but as for flexible, most of 83% of the flexible packaging was sold through e-commerce. So we did have more flexible packaging in e-commerce. And, after looking at the formats, we did look at package types. So, looking at bottles, cartons, jugs, cans, cups and pouches, as I said, we mostly had rigid, and of the rigid, most of it was either bottles or cans, especially bottles. Fifty percent were the bottle type of packages. Looking at the flexibles that were the majority in e-commerce, the majority of flexibles, actually all the flexibles, were pouch types. There are much more pouches in e-commerce than in the traditional supply chain.
07:35 - Adept Group
And then in the materials?
07:37 - Dylan
For package materials, there are five types of package materials. We looked at glass, metal, paper, paperboard and plastic. Most of the materials were plastic of what we found, which makes sense, looking at bottles being the most popular and also pouches being popular. And so, about 64% were plastic type, but there wasn't really too much of a difference among traditional and e-commerce supply chains. However, there is when looking at flexible plastics versus rigid plastics, combining the package type and package material, there was a significant difference that there are more flexible plastics in e-commerce than in the traditional supply chain being used currently.
08:16 - Adept Group
From what I can tell, it doesn't look like your study focused anything on the sustainability side, but is there anything you guys saw, or did you guys look at all in terms of sustainability or recyclability of any of these plastics?
08:26 - Dylan
Oh, this was before sustainability became such a hot topic since this was about two years ago now, but we didn't focus too much on sustainability. We did have one question asking about sustainability, but we only had one answer, so we couldn't really draw any conclusions from that answer.
08:50 - Adept Group
Yeah, no, I think that, certainly, as we look at future trends in e-commerce, as you said, it's getting more and more mainstream and less of a niche. It’s just a standard part of business. So, it’ll be interesting as this progresses and matures in the industry, do we see more of a sustainable push and how that leads to different action types and formats.
09:02 - Dylan
Yeah, now, in looking at some of the literature I've read on it, a bunch of consumers are having issues with how to deal with the trash from e-commerce because they're seeing a lot more corrugated board boxes. They're seeing a lot more damage than they are used to seeing, so they do perceive a lot of unsustainable practices in e-commerce.
09:22 - Adept Group
Yeah, it's interesting. So, we do a lot on the corrugated side, and some analysis around there, and part of that increase in board costs has been, there's just less board coming back into the system. A Walmart, a Target, they're really good at recycling corrugated goods. When you get a shipment to your house, people aren't as good as the big corporations.
09:42 - Dylan
Yeah, yeah, that is funny. And then I wonder, are we using more corrugated in e-commerce, or is it just that consumers are perceiving more corrugated use?
09:50 - Adept Group
I think it's a little bit of both. I think, when it's, in retail, people don't see anything beyond the primary package. It just shows up on shelves. It shows up undamaged. They don't see any of that. So, I think it's a little bit of both. Consumers are seeing it firsthand and then having to deal with it, and then, there's more currently, but obviously, there are a lot of shifts of, especially Amazon, pushing the chips to their own container and trying to eliminate some of it as well.
Lots of challenges on the e-commerce side. So, one of the things I know you looked at, and I also think is interesting, is, certainly, the defect rates. I think that's also a big difference from e-commerce, and when you go to the store shelf, there's quality control as they put it on the shelf and as you see it, but when it comes to your house, it needs to be in usable shape.
10:33 - Dylan
Right, yep. So, looking at defect rates, this is where we had some interesting results, and some were a little bit puzzling as well. So, we split our defect rates into low defect and high defect, and this is just based on percentages of defects, and they're all very low percentages because you wouldn't be having a lot of very high percentage defects when you're selling products or you're having some issues. But as for low defect rate, this is from zero to 1.5%, and we had lower defect rates when it came to leaks in e-commerce and a little bit more order changes in e-commerce, but we had more punctures in the traditional supply chain. They're about even on scratches, and there are actually more deformations among the low defect rate in traditional supply chains as well. As for the high defect rate, there were more leaks in traditional, there were more punctures in e-commerce, more scratches in traditional and more deformations in e-commerce. However, since the numbers were so close to each other, the median values were so close, that we couldn't really claim any significant difference among supply chains, except for low deformations.
There was actually a significant difference between e-commerce and traditional. So, there were more deformations in traditional, and this could be attributed to either the packaging engineers not fully understanding their damage rates for e-commerce and traditional supply chain products, especially since a lot of them are just starting in e-commerce. So, we did actually go further in defect rates, looking at package formats as well, seeing if there were any differences among package formats defect rates, and we did see that there were more in median defects for leaks among rigid than flexible and also deformations in e-commerce. There's a higher median defect rate for rigid as well in e-commerce. And just so everyone knows, we did median rates rather than mean rates. This is just because our data set was non-normal, and there were some outliers, and so, in order to present values more accurately, we used median values rather than mean values.
12:37 - Adept Group
Okay, and what about odor changes?
12:38 - Dylan
Odor changes, so aroma, to give an example, would be, I had a colleague who did just a little bit of a test, not really a full experiment, where they ordered cereal and, let's say, lavender detergent, and they ordered this online. They then brought the package to their house, and they opened up the package, and, actually, the cereal itself started smelling like and even having a flavor of lavender. So, that would be an example of an odor change.
13:05 - Adept Group
Okay, yeah, it's interesting, especially as you look, from like an Amazon, you don't necessarily know, as the brand owner, what's going to go in the box with yours. But, I don't know how many people are actually thinking about that, beyond obviously, leaks. I think leaks are more important in e-commerce. Same thing, you could have a box with 10 different things in it, and your detergent leaked. Not only do you have a detergent issue, but you potentially ruin things in the box with it as well.
13:29 - Dylan
Yeah, it doesn't seem like, at least when the study was first started, that many package engineers had much knowledge on e-commerce. We also asked package engineers the rationale, so why leaks were happening, why odor changes were happening, why punctures and scratches were happening, and we actually found that the reason for leaks among e-commerce and the traditional supply chain, the majority of them was for the cap and broken seals, so like around 30% in e-commerce and traditional supply chain. As for the location of the leak, it was cap and seal. And then, we also looked at the rationale for odor changes, and we found that there were a lot more odor changes that were related to e-commerce than in traditional supply chains.
This was mostly package material, so surrounding package foods were the reason for odor changes, just like the example I gave. And then, there was a reason for punctures. Most of it actually, for punctures, packaging engineers in both supply chains were relatively unknown why their packages were being punctured, around 30% for both supply chains. As for the reason for scratches, most of it was interactions with identical packages, but there are a lot more scratches with the traditional supply chain among identical scratches than in e-commerce. And then, for deformations, for shock, e-commerce was mostly shock deformations, while traditional supply chains had static load, vibration and impact deformations.
14:51 - Adept Group
All right, great. So yeah, when we talk about the results of this and the future of e-commerce for food packaging, what do you guys see? What do you see as the next steps and trends in this?
15:00 - Dylan
So, we asked some of the consumers about what they're looking at for food products with increased presence and what type of e-grocery products do they think are going to win out in e-commerce. And they were saying meats and fruits and vegetables will increase in presence. We also asked them whether they believe their company is looking at packaging changes for e-commerce. All of the respondents did say that there is some change necessary for e-commerce. As for what type of changes, 60% claimed that flexible plastics will have the best performance in e-commerce, and then, they had varying reasons. We did ask them an open-ended question, so just some of the reasons they did give weren’t really calculated or anything, but some of them said lighter weight and more robust packaging.
A lot of them are trying to consolidate as well, like omnichannel, making one package for both supply chains, but they're unsure if that will work or not. After we asked them some questions about actual packaging, we did ask them questions when it came to penalizations and margins, and e-commerce, unsurprisingly, has had a lower margin than traditional supply chains. Seventy-five percent of them say they sell products with lower margins in e-commerce. And then for penalizations, when a product is damaged, 80% of the companies are penalized when the package fails to protect the product greatly. And, in terms of recommendations, format, type and material selection, this is just based on the study, so, only taking into consideration the results of the study, we did have e-commerce and traditional flexible formats prove to be better.
The respondents did say that they're looking towards flexible options, so increasing flexible formats, increasing pouch use and flexible packages strictly in the e-commerce environment did look like that would be better as for damage rates. 16:49 - Adept Group Great, and then, like I said, in terms of defects, it would seem to be two big areas. Seal, I think, is always a big thing around those leakages. 16:58 - Dylan Yeah. So one thing, looking at just how the seals are poor in both supply chains, well, in e-commerce, reducing those leaks and reducing the leaks from the seals would be ideal for e-commerce. Also, reducing the use of cans and bottles, since we did also look at deformations in cans and bottles, and in e-commerce, cans and bottles did have more deformation than other types of package formats.
17:22 - Adept Group
Yeah, that makes sense. So what are you going to see in the next steps? Certainly, as you mentioned, e-commerce is obviously growing. It's only going to get a bigger category and more and more products. You mentioned meat, which I'm not there yet, but that'll be interesting as we get more and more comfortable with the food market. What do you see as the next steps?
17:40 - Dylan
As for next steps, what we're doing currently, as for MSU, is we're conducting studies on meal kits. So, we’re looking at fresh meats and fresh perishables because that is a growing trend in e-commerce, so, conducting shelf life studies, doing ISTA 6 testing with those and then also conducting further research for market studies. Since this was fairly limited in scope, since it was only liquid food products, and also the response rate was a little bit lower than we would have liked, we couldn't make too many strong claims in the study. It would be nice to do a study with a larger scope and a larger sample size to get a more powerful reading on what's actually happening in e-commerce.
18:19 - Adept Group
Yeah, no, that's great. Thank you again. I think this is really interesting work that you guys are doing over there and getting ahead of this. Certainly, I think it's going to drive the future in packaging formats and the packing process. So, what's the best way for people to get in contact with you? Or, if people are interested or want to help, what's the best way for people to reach you?
18:36 - Dylan
Yeah, if you'd like to learn more, you can contact me at spruitdy@msu.edu. Or, you can contact my professor, Dr. Eva Almanar, at ealmanar@msu.edu. And also, you could contact the sponsor of the research, UBE America. So, they sponsored this research. They also have the report public, so it's s.salva@ube.com. That's Sergei. He's the nylon development manager at UBE America. He is the main contact that we have for this research.
19:13 - Adept Group
Yeah, that's great, Dylan. Thank you. I really appreciate it. I want to thank you again for hopping on here with us, and we'll talk to you soon.
19:19 - Dylan
Okay, thanks.
19:20 - Outro
Thank you for listening to Unpacking Excellence with Adept Group. For more resources and information on all things packaging, head to our website, adeptpackaging.com. Don't forget to subscribe, and thanks again for listening.
About Adept Group
Adept Group is a premier packaging partner for some of the most iconic brands in the food & beverage, CPG, pharmaceutical, medical device and industrial industries. Our team has expertise in over 60 specialized areas of focus and is the go-to for packaging needs, from cost optimization to regulatory compliance to design and engineering services. We work with clients to help them maximize the value of their packaging with personalized strategies specific to their industry and goals. Throughout the years, we’ve helped clients save hundreds of millions of dollars through cost-saving approaches to packaging that also coincide with sustainability efforts, helping build trust and credibility with consumers. If you have a packaging challenge, we’re up for it. Get in touch with our team of packaging engineering experts today to get started.
The traditional brick-and-mortar retail landscape has shifted in recent years to cater to brand owners and consumers more focused on convenience and e-commerce functionality. E-commerce business is tailored to the needs of consumers who want a simplified shopping experience from anywhere. In the food & beverage industry, the elements of e-commerce packaging need to account for various types of products and their distribution chain, as well as packaging material. In episode three of our Unpacking Excellence podcast, we speak with Dylan Spruit, a master’s student at Michigan State University (MSU), about a market study on the comparison of packaging materials and types, causes for failure and an outlook on what current brand owners think the future is for e-commerce food packaging.
In this episode, we cover:
- Traditional and e-commerce supply chains for food packaging
- Packaging types and materials for both supply chains
- Business-oriented studies and results
About Our Guest
Dylan Spruit
Senior Packaging Engineer, Tropicana Brands Group
Dylan Spruit is a Michigan State University alumn with a master’s degree in packaging science. Throughout his career, he’s specialized in packaging material research and development and even helped the J.M. Smucker Company in the downsizing of the Crisco Olive Oil case and met an accelerated timeline that prevented the brand from being removed from client stores. He’s held numerous titles with different well-acclaimed brands, such as Sun-Maid and Clorox, and he is now a senior packaging engineer for Tropicana.
*At the time of recording, Dylan was a packaging design student at Michigan State University.
Listen to the Episode
00:00 - Intro
Powered by Adept Group, this is the Unpacking Excellence podcast, bringing together top packaging professionals to share insights and knowledge on all things packaging, Now, introducing Adept Group.
00:16 - Adept Group
Thank you, Dylan, for hopping on with us today. Really looking forward to this conversation. I think what you're doing is really interesting here.
00:20 - Dylan
Thanks for having me on.
00:23 - Adept Group
Yeah, so give everyone a little bit of background of about yourself and what you are doing. You're currently a student at Michigan State, correct?
00:30 - Dylan
Yeah, yes, I'm currently a graduate student, getting my master's at MSU in packaging science, and then my main research, which we'll go over today, is e-commerce. So all my research is doing e-commerce food. So, food packaging within the e-grocery would be my research as my graduate studies.
00:48 - Adept Group
Perfect, and what led you to specializing in specifically commerce and food within that?
00:54 - Dylan
So, prior to doing my grad work, I did some internships at the JM Smucker Corporation, so that got me interested in food packaging. And then, after doing my internships, I did some undergraduate research, researching active packaging under Dr Almanar, and with Dr Almanar's help, I did research into forest materials and modified humidity packaging. And then, I was also introduced into e-commerce through her. So that's how I pretty much got into e-commerce.
01:22 - Adept Group
Yeah, perfect. No, I think, certainly, as we look at the industry and the trends, obviously more and more are moving towards that, and to me at least, food is that next step. It's not quite there, but certainly a fast-growing category and a lot more challenges, I think, in the food category versus some of the legacy of CPG and standard-type products.
01:39 - Dylan
Oh, yeah, yeah. Looking at, like, during my lit review, looking at past studies, past just news articles and all that, it looks like food is having a lot of trouble, especially cold chains, in the e-commerce environment.
01:50 - Adept Group
Absolutely. So yeah, let's dive into the study that you put together and have been starting to present. So, overall, what were the goals of the study that you put together?
01:58 - Dylan
So, we had three main goals in the study. We had to summarize and categorize package materials currently used to sell products in the traditional supply chain, in the e-commerce supply chain. And by summarizing and categorizing, I mean we're comparing packaging materials, packaging types, and I can go over a little bit later what exactly, what type of packaging materials and what type of packaging types we did compare in the results section. And then, we also quantified specific problems and failures because we found there are a lot more problems and failures in e-commerce. And lastly, the last goal we had was to try to see what current packaging engineers and brand owners think is going to happen in the future for e-commerce since this is a growing industry, and it is such a small portion of the market right now, but it's growing much faster than the traditional supply chain.
02:41 - Adept Group
Yeah, perfect. So I know you broke out some of the defect categories that were analyzed in both the conditional and e-commerce supply chain. What were those?
02:49 - Dylan
Those defect categories were leaks, odor changes, punctures, scratching and deformation.
02:55 - Adept Group
Okay, perfect. So, do you want to talk about some of the results that you saw during the study?
02:58 - Dylan
For some of the results for the study, we got demographics as well. We did ask the participants around five demographic questions. This wasn't a consumer study, it was a business study. So the demographics were more business-oriented.
So we did employee titles, and we found that the majority of the employees were either directors or engineers. We also did a time and company involved in e-commerce. So, the company itself, and most companies, a little bit over 50%, were only involved in e-commerce for three to five years, the same thing with employee time with the company. So, most of these employees were with the company itself for less than three years. As for the experience with e-commerce, the companies don't have much. And then as for location, this did have a little bit of bias towards Midwest and Northeast. Those were the companies who participated in the survey. They were located within the Midwest and Northeast of America, and the company sales also had some bias. This was a little bit of a limitation to our study since we were emailing and surveying packaging engineers. Most packaging engineers are at larger companies, so you didn't have many small companies participate in the survey. Most of it was above a billion dollars in annual sales.
04:07 - Adept Group
Yeah, it's really interesting that this part of the study that, as you look, and certainly e-commerce has been around for quite a while, when you see that these companies, less than five years, a bulk of that experience, and then certainly the engineers doing the work, less than three, it's really not a lot of time from the customer side experiencing the food through the e-commerce channel, as well as having the expertise within the company as well.
04:27 - Dylan
Oh yeah, and in some of the later questions, we just had a comment slide, and a lot of the companies posted how they're just getting started in e-commerce, just opening up e-commerce teams, as well as for the comments they had at the end of the survey.
04:39 - Adept Group
And then within the food, did you break that down into further categories, into the different segments?
04:44 - Dylan
Oh, yes. So, for categories of food, we broke it down based on the FAO category system. Since these are anonymous surveys, we can't release the actual brand foods that were surveyed. So the FAO category system is nomenclature used by the United Nations to categorize food products, and so there are 16 types of categories.
We added two categories, “undetermined,” because there was one brand product we couldn't determine as to the category to put it in. And also, we added something called “pet food” because we did have pet food as one of the answers to the survey, and then, that was category 17. But for the most part, we had fats and oils, soups and sauces, beverages, dairy products, sweeteners and nutritional drinks, like protein drinks. The most popular of these categories that we did have were beverages, nutritional drinks and soups and sauces. As for the differences between supply chains for food categories, when we surveyed the participants, we saw e-commerce had fewer beverages and soups and sauce products than traditional supply chains, but e-commerce did contain more, actually, dairy products and pet food products.
05:49 - Adept Group
That's interesting. Did you guys figure out anything from that? Is it, due to the weight or cost of shipping, or any idea why that is?
05:57 - Dylan (Guest)
We didn't ask the participants why it was that. It was interesting to find, and again, the way we asked the question, each participant answered for three of their top products in each category, so you had your top products in e-commerce and top products in the traditional supply chain. So, this was based on sales. It must be that they're just selling pet food more and dairy products more in e-commerce, according to the participants at least.
06:26 - Adept Group
Yeah, so in terms of the different packaging formats, obviously, I'm assuming that all those different types of products are in different types of packaging. Do you guys see any trends, or how did the different types of packaging formats break out?
06:37 - Dylan
For packaging formats, we looked at rigid packaging and flexible packaging, and we put those two down. Asking them about rigid packaging and flexible packaging, the majority of all products, 90%, were closely split between e-commerce and the traditional supply chain. Just rigid packaging was dominant for liquid, but as for flexible, most of 83% of the flexible packaging was sold through e-commerce. So we did have more flexible packaging in e-commerce. And, after looking at the formats, we did look at package types. So, looking at bottles, cartons, jugs, cans, cups and pouches, as I said, we mostly had rigid, and of the rigid, most of it was either bottles or cans, especially bottles. Fifty percent were the bottle type of packages. Looking at the flexibles that were the majority in e-commerce, the majority of flexibles, actually all the flexibles, were pouch types. There are much more pouches in e-commerce than in the traditional supply chain.
07:35 - Adept Group
And then in the materials?
07:37 - Dylan
For package materials, there are five types of package materials. We looked at glass, metal, paper, paperboard and plastic. Most of the materials were plastic of what we found, which makes sense, looking at bottles being the most popular and also pouches being popular. And so, about 64% were plastic type, but there wasn't really too much of a difference among traditional and e-commerce supply chains. However, there is when looking at flexible plastics versus rigid plastics, combining the package type and package material, there was a significant difference that there are more flexible plastics in e-commerce than in the traditional supply chain being used currently.
08:16 - Adept Group
From what I can tell, it doesn't look like your study focused anything on the sustainability side, but is there anything you guys saw, or did you guys look at all in terms of sustainability or recyclability of any of these plastics?
08:26 - Dylan
Oh, this was before sustainability became such a hot topic since this was about two years ago now, but we didn't focus too much on sustainability. We did have one question asking about sustainability, but we only had one answer, so we couldn't really draw any conclusions from that answer.
08:50 - Adept Group
Yeah, no, I think that, certainly, as we look at future trends in e-commerce, as you said, it's getting more and more mainstream and less of a niche. It’s just a standard part of business. So, it’ll be interesting as this progresses and matures in the industry, do we see more of a sustainable push and how that leads to different action types and formats.
09:02 - Dylan
Yeah, now, in looking at some of the literature I've read on it, a bunch of consumers are having issues with how to deal with the trash from e-commerce because they're seeing a lot more corrugated board boxes. They're seeing a lot more damage than they are used to seeing, so they do perceive a lot of unsustainable practices in e-commerce.
09:22 - Adept Group
Yeah, it's interesting. So, we do a lot on the corrugated side, and some analysis around there, and part of that increase in board costs has been, there's just less board coming back into the system. A Walmart, a Target, they're really good at recycling corrugated goods. When you get a shipment to your house, people aren't as good as the big corporations.
09:42 - Dylan
Yeah, yeah, that is funny. And then I wonder, are we using more corrugated in e-commerce, or is it just that consumers are perceiving more corrugated use?
09:50 - Adept Group
I think it's a little bit of both. I think, when it's, in retail, people don't see anything beyond the primary package. It just shows up on shelves. It shows up undamaged. They don't see any of that. So, I think it's a little bit of both. Consumers are seeing it firsthand and then having to deal with it, and then, there's more currently, but obviously, there are a lot of shifts of, especially Amazon, pushing the chips to their own container and trying to eliminate some of it as well.
Lots of challenges on the e-commerce side. So, one of the things I know you looked at, and I also think is interesting, is, certainly, the defect rates. I think that's also a big difference from e-commerce, and when you go to the store shelf, there's quality control as they put it on the shelf and as you see it, but when it comes to your house, it needs to be in usable shape.
10:33 - Dylan
Right, yep. So, looking at defect rates, this is where we had some interesting results, and some were a little bit puzzling as well. So, we split our defect rates into low defect and high defect, and this is just based on percentages of defects, and they're all very low percentages because you wouldn't be having a lot of very high percentage defects when you're selling products or you're having some issues. But as for low defect rate, this is from zero to 1.5%, and we had lower defect rates when it came to leaks in e-commerce and a little bit more order changes in e-commerce, but we had more punctures in the traditional supply chain. They're about even on scratches, and there are actually more deformations among the low defect rate in traditional supply chains as well. As for the high defect rate, there were more leaks in traditional, there were more punctures in e-commerce, more scratches in traditional and more deformations in e-commerce. However, since the numbers were so close to each other, the median values were so close, that we couldn't really claim any significant difference among supply chains, except for low deformations.
There was actually a significant difference between e-commerce and traditional. So, there were more deformations in traditional, and this could be attributed to either the packaging engineers not fully understanding their damage rates for e-commerce and traditional supply chain products, especially since a lot of them are just starting in e-commerce. So, we did actually go further in defect rates, looking at package formats as well, seeing if there were any differences among package formats defect rates, and we did see that there were more in median defects for leaks among rigid than flexible and also deformations in e-commerce. There's a higher median defect rate for rigid as well in e-commerce. And just so everyone knows, we did median rates rather than mean rates. This is just because our data set was non-normal, and there were some outliers, and so, in order to present values more accurately, we used median values rather than mean values.
12:37 - Adept Group
Okay, and what about odor changes?
12:38 - Dylan
Odor changes, so aroma, to give an example, would be, I had a colleague who did just a little bit of a test, not really a full experiment, where they ordered cereal and, let's say, lavender detergent, and they ordered this online. They then brought the package to their house, and they opened up the package, and, actually, the cereal itself started smelling like and even having a flavor of lavender. So, that would be an example of an odor change.
13:05 - Adept Group
Okay, yeah, it's interesting, especially as you look, from like an Amazon, you don't necessarily know, as the brand owner, what's going to go in the box with yours. But, I don't know how many people are actually thinking about that, beyond obviously, leaks. I think leaks are more important in e-commerce. Same thing, you could have a box with 10 different things in it, and your detergent leaked. Not only do you have a detergent issue, but you potentially ruin things in the box with it as well.
13:29 - Dylan
Yeah, it doesn't seem like, at least when the study was first started, that many package engineers had much knowledge on e-commerce. We also asked package engineers the rationale, so why leaks were happening, why odor changes were happening, why punctures and scratches were happening, and we actually found that the reason for leaks among e-commerce and the traditional supply chain, the majority of them was for the cap and broken seals, so like around 30% in e-commerce and traditional supply chain. As for the location of the leak, it was cap and seal. And then, we also looked at the rationale for odor changes, and we found that there were a lot more odor changes that were related to e-commerce than in traditional supply chains.
This was mostly package material, so surrounding package foods were the reason for odor changes, just like the example I gave. And then, there was a reason for punctures. Most of it actually, for punctures, packaging engineers in both supply chains were relatively unknown why their packages were being punctured, around 30% for both supply chains. As for the reason for scratches, most of it was interactions with identical packages, but there are a lot more scratches with the traditional supply chain among identical scratches than in e-commerce. And then, for deformations, for shock, e-commerce was mostly shock deformations, while traditional supply chains had static load, vibration and impact deformations.
14:51 - Adept Group
All right, great. So yeah, when we talk about the results of this and the future of e-commerce for food packaging, what do you guys see? What do you see as the next steps and trends in this?
15:00 - Dylan
So, we asked some of the consumers about what they're looking at for food products with increased presence and what type of e-grocery products do they think are going to win out in e-commerce. And they were saying meats and fruits and vegetables will increase in presence. We also asked them whether they believe their company is looking at packaging changes for e-commerce. All of the respondents did say that there is some change necessary for e-commerce. As for what type of changes, 60% claimed that flexible plastics will have the best performance in e-commerce, and then, they had varying reasons. We did ask them an open-ended question, so just some of the reasons they did give weren’t really calculated or anything, but some of them said lighter weight and more robust packaging.
A lot of them are trying to consolidate as well, like omnichannel, making one package for both supply chains, but they're unsure if that will work or not. After we asked them some questions about actual packaging, we did ask them questions when it came to penalizations and margins, and e-commerce, unsurprisingly, has had a lower margin than traditional supply chains. Seventy-five percent of them say they sell products with lower margins in e-commerce. And then for penalizations, when a product is damaged, 80% of the companies are penalized when the package fails to protect the product greatly. And, in terms of recommendations, format, type and material selection, this is just based on the study, so, only taking into consideration the results of the study, we did have e-commerce and traditional flexible formats prove to be better.
The respondents did say that they're looking towards flexible options, so increasing flexible formats, increasing pouch use and flexible packages strictly in the e-commerce environment did look like that would be better as for damage rates. 16:49 - Adept Group Great, and then, like I said, in terms of defects, it would seem to be two big areas. Seal, I think, is always a big thing around those leakages. 16:58 - Dylan Yeah. So one thing, looking at just how the seals are poor in both supply chains, well, in e-commerce, reducing those leaks and reducing the leaks from the seals would be ideal for e-commerce. Also, reducing the use of cans and bottles, since we did also look at deformations in cans and bottles, and in e-commerce, cans and bottles did have more deformation than other types of package formats.
17:22 - Adept Group
Yeah, that makes sense. So what are you going to see in the next steps? Certainly, as you mentioned, e-commerce is obviously growing. It's only going to get a bigger category and more and more products. You mentioned meat, which I'm not there yet, but that'll be interesting as we get more and more comfortable with the food market. What do you see as the next steps?
17:40 - Dylan
As for next steps, what we're doing currently, as for MSU, is we're conducting studies on meal kits. So, we’re looking at fresh meats and fresh perishables because that is a growing trend in e-commerce, so, conducting shelf life studies, doing ISTA 6 testing with those and then also conducting further research for market studies. Since this was fairly limited in scope, since it was only liquid food products, and also the response rate was a little bit lower than we would have liked, we couldn't make too many strong claims in the study. It would be nice to do a study with a larger scope and a larger sample size to get a more powerful reading on what's actually happening in e-commerce.
18:19 - Adept Group
Yeah, no, that's great. Thank you again. I think this is really interesting work that you guys are doing over there and getting ahead of this. Certainly, I think it's going to drive the future in packaging formats and the packing process. So, what's the best way for people to get in contact with you? Or, if people are interested or want to help, what's the best way for people to reach you?
18:36 - Dylan
Yeah, if you'd like to learn more, you can contact me at spruitdy@msu.edu. Or, you can contact my professor, Dr. Eva Almanar, at ealmanar@msu.edu. And also, you could contact the sponsor of the research, UBE America. So, they sponsored this research. They also have the report public, so it's s.salva@ube.com. That's Sergei. He's the nylon development manager at UBE America. He is the main contact that we have for this research.
19:13 - Adept Group
Yeah, that's great, Dylan. Thank you. I really appreciate it. I want to thank you again for hopping on here with us, and we'll talk to you soon.
19:19 - Dylan
Okay, thanks.
19:20 - Outro
Thank you for listening to Unpacking Excellence with Adept Group. For more resources and information on all things packaging, head to our website, adeptpackaging.com. Don't forget to subscribe, and thanks again for listening.
About Adept Group
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