How is E-commerce Shaping the Packaging Industry?

As more consumers skip the trip to the convenience store and opt instead to purchase products online, the focus of packaging is less on selling the good (though that is still a major aspect), and more on safely delivering it to its end destination. The e-commerce trend is hardly that anymore, but rather a fast growing method of purchasing and obtaining goods.

Screen Shot 2018-08-03 at 3.35.12 PM.png

Historically, product packaging was designed to sell on the shelf. However, with the necessity of e-commerce, traditional brands are having to rethink the way they originally packaged their goods. E-commerce sales are anticipated to rise from $1.3 trillion in 2014 to $4.5 trillion in 2021. That’s an increase of 246.15% If you’re thinking in your head, “what can my company do to capitalize on this e-commerce epidemic?” Don’t worry, we will provide you with some key considerations and takeaways to help get you started or improve your existing efforts.

Opening the package is one of the obvious issues that affect the e-commerce experience for the consumer. To combat the negative opening experience, Amazon embraces frustration free packaging. This packaging is 100% recyclable and has no need for additional shipping boxes. In just one year, the company was able to eliminate 55,000 tons of excess packaging. With e-commerce you can break all the ‘retail rules’. E-commerce packaging is made directly for consumers while retail packaging is designed for display and presentation.

Screen Shot 2018-08-03 at 3.38.03 PM.png

Brands are used to shipping product in bulk, pallet-size shipments from plant to brick-and-mortar stores. With e-commerce, they skip the retailer and go straight to the consumer, meaning they must figure out how to ship efficiently in smaller numbers. Getting the package to the consumer without excess waste of box material and dunnage is a major issue to overcome. Many brands have had little time to focus on this because they are just trying to keep up with the growing demand. But environmental issues like reducing landfill waste are a huge concern, especially with millennials who are not afraid to post pictures of packaging like the one shown above. There is no need for this kind of packaging, and companies must do a better job of evaluating their distribution system if they are to stay relevant in the e-commerce market.

Parcel services make the rules for shipping and they realize the lucrative business that is e-commerce. Recent changes made shipping by overall weight obsolete and instead, shipping prices are now calculated by dimensional weight, often referred to as DIM weight. So, unless your package is optimized to use all available space in a delivery truck, you are paying to ship air. Containers with unused volume space will eat into a company’s profit margins. This is a huge area where companies can take the initiative and begin designing packaging specifically for e-commerce.  

Companies like The Honest Company are also rethinking the products themselves. After your first order of cleaning supplies, you have the option to order refill cleaner instead of a whole new bottle with a sprayer. This not only prevents a sprayer from going to the landfills, but it also allows for smaller and lighter shipping boxes. A lighter, smaller box equals less fuel consumption and less trucks on the road. Spray bottles can be a challenge to ship, so this also reduces the number of products that are likely to be damaged during shipping. The loss of profit due to shipment damage is a factor that can no longer be ignored as e-commerce continues to grow.

Screen Shot 2018-08-03 at 3.39.38 PM.png

A new term, devicification, has been invented to describe the strategy of engineering products to include a durable structure that the consumer keeps at home and is refilled with a more shippable product. As technology advances, the device will order the refill product, so that it arrives before you ever run out. This strategy will increase profit, as less damage should be incurred during shipping, and help ensure brand loyalty.

E-commerce packaging works outside of the normal packaging thought sequence. Usually, half the battle in a retail store is getting the consumer to pick up your package, but this is not the case with purchasing online. The first moment of truth with packaging for the consumer is now in the home rather than in the store. Because the landscape is still evolving, companies have incredible opportunities to shape the way this emerging business will unfold.