Since 2019, retail e-commerce sales and e-retail revenues have grown exponentially. Companies have been forced to pivot in their business models to accommodate the changes in distribution environments and rethink e-commerce packaging. When brick-and-mortar stores began to close due to COVID-19 disruptions, many businesses had to choose between shutting down entirely and adapting to meet the challenge.
Enter the e-commerce channel.
Brands will need to invest in packaging solutions that are robust, sustainable and consumer friendly as they refine or adopt online retail as part of their business model.
According to Mordor Intelligence, The e-commerce packaging market was valued at $27.04 billion in 2020 and is expected to reach $61.55 billion by 2026.A report from Spiralytics projects the number of online shoppers will reach 2.1 billion in 2021, up from 1.66 billion in 2016.
This growth will force brands to acknowledge the potential of building or expanding e-commerce capabilities. With this increase in e-commerce popularity, distribution environments will change dramatically and make it even more important to consider these changes when designing packaging.
Optimizing Packaging to Stay Successful and Competitive
When designing packaging for e-commerce, it is important to think beyond the current distribution environment and evaluate how primary packaging will perform in future environments as e-commerce and last-mile delivery continue to evolve. It may be worth investing in redesign or innovation and robustness of the primary pack. If a primary package redesign is not feasible, there are a few additional considerations that may help:
- How can the secondary packaging be optimized for product protection while avoiding excessive packaging and the use of void fillers?
- Is it cost effective to design specifically sized secondary packaging for each product or develop fewer sizes and ship some products with access space and void fillers?
- How do companies find the right combination between product size and package size ranges?
Throughout this distribution cycle, a package can pass through up to three times as many touch-points as a traditional distribution environment. By optimizing primary packaging for e-commerce, brands can invest in packaging formats that use less secondary packaging, which can help to reduce shipping costs while preventing damage and providing better functionality for consumers.
Opportunities to Boost Sustainability
Growing in parallel with consumer interest in e-commerce is consumer concern about the sustainability of the products they purchase. This demand drives the use of more bespoke designs that eliminate excessive packaging and new material concepts, such as fully pulp-based, easy-to-recycle mailers.
More than in the traditional retail environment, e-commerce presents an even bigger responsibility to the consumer to reduce waste. In the traditional retail channel, the consumer is responsible for disposal and recycling of the primary package. In e-commerce, the consumer is left to dispose of and recycle all of the packaging (product and shipping packaging and materials).
It also presents increased opportunities to leverage sustainable packaging. Unlike packaging for the brick-and-mortar retail environment, where the look and feel of a package on a store shelf may influence consumer behaviors, many brands can prioritize sustainability over aesthetics for e-commerce packaging. Because consumers do their shopping and purchasing online, the packaging provides an opportunity to community sustainable messaging and recycling instructions.
As requirements for e-commerce packaging solutions grow, new demands emerge to encourage companies to rethink logistics, marketing and supply chain sustainability.
Unknowns Abound during Last-Mile Delivery
Even after accounting for the rest of the distribution environment, the final delivery is difficult to plan for. How the package is handled by the carrier, its exposure to weather and several other factors are beyond the brand’s control. When the package reaches the consumer, however, the experience they have is not with the carrier, but the e-retailer. Damaged packaging and/or product can significantly impact a brand’s reputation.
According to eMarketer, ecommerce damage is estimated to set companies back nearly $6 billion per year, with 58% of Americans saying their relationship with the e-retailer would be impacted by a damaged product, making it important for packaging to withstand a wide variety of conditions it may face during last-mile delivery.
While the current state of last-mile delivery includes plenty of unknown factors, the future of this portion of the distribution environment also includes conditions that are difficult to predict and plan for, and that future may be closer than it seems.
Amazon, UPS, and Google are already experimenting with delivery drones. Wing Aviation, owned by Google’s parent company Alphabet, has already received authorization from the Federal Aviation Administration to begin delivering goods via drone. When designing e-commerce packaging, companies need to consider what’s around the corner.
Packaging as Part of the Consumer Experience
As new online stores and subscription boxes emerge and physical retail stores turn to e-commerce, customers are prioritizing three benefits when they choose who to buy from online: speed of delivery, reliability, and hassle-free returns. It’ll be those three qualities that will have the largest influence on future e-commerce and omnichannel packaging design.
Choosing delivery formats that enhance the customer experience is a huge added value for businesses and consumers alike. Since most of the world’s shopping is currently being done online, companies have had to compensate for the loss of the consumer’s singular experience of being able to see or touch something on a shelf or rack before heading to the checkout line.
Birchbox, Julep, Trunk Club, FabFitFun and Glossier make the receipt and unboxing of their packaging fun and personalized. With more and more unboxing videos being posted to social media platforms like Instagram and YouTube, the impact of e-commerce packaging has never been greater.
How the package looks on the outside may impact how the product or brand is perceived, even if the product is not damaged. As more consumers move to e-commerce, brands should consider new ways to improve the packaging experience from start to finish.
If new to e-commerce, companies should evaluate a variety of scenarios, including outsourcing packaging, partnering with a third party/co-packer and build an in-house packaging and fulfillment center.
To understand the e-commerce channel, companies need to establish a solid packaging strategy. Adept Packaging has channel audit and market research expertise, internal innovation panels and an established relationship with an Amazon approved testing facility. With a team of over 70 packaging engineers, Adept has the capability and expertise to help companies create an e-commerce roadmap and implementation plan.
At Adept Group, we have engineers that specialize in the design, engineering and qualification of new or redesigned packaging. If you’re looking for assistance developing e-commerce packaging that will withstand its distribution environment and delight consumers, contact us.