I had the privilege to speak at Smithers Pira’s E-PACK event in Chicago in September. E-Pack provided brand owners opportunity to discuss the challenges of staying competitive in the online retailing space and how packaging converters and packaging design firms can provide additional solutions for brand owners. If you missed the event, I’ve got three key learnings that I’m happy to share with you, as well as a recap of the presentation I gave with my former customer and still-current colleague *John Morrow (past companies include Colgate Palmolive, Procter & Gamble, PepsiCo and Bristol-Myers Squibb).
To better summarize my learnings, I think it helps to consider the many topics that have arisen for consumer goods manufacturers as e-commerce has increased. The key areas impacted are: sustainability (more trucking, more packaging), marketing (selling the product online) and technology (digitizing operations to keep pace with consumer expectations).
When it comes to e-commerce and packaging, the packaging industry is most concerned with the effects of e-commerce on packaging sustainability, specifically related to secondary packaging (shippers).
Till now, the cradle-to-cradle flow of materials has been set up to serve the mass consumer goods supply chain, in which pallets of products are shipped in trucks to fulfillment centers and then to local retail stores. From the unpacking of the pallets at retail, the collection and subsequent recycling of secondary packaging (corrugated and folding cartons) was fairly straightforward. The current model does not maximize the collection and recycling of shipping boxes from individual consumers’ homes and is even worse for apartment complexes or multi-family units. Major shifts to are required to adjust the municipality infrastructure to adjust to a much more fragmented waste and recycling collection paradigm.
On a related note: the differences in structural requirements for retail packaging vs e-commerce packaging can be striking. The demand for more strength and durability in e-commerce packaging is clear since retail packages are only handled an average of 5 times, but packages purchased through e-commerce channels are handled 20 times. Protecting the product, one of packaging’s primary functions, is obviously more challenging in the e-commerce context.
Packaging is the central consumer experience.
For consumer goods companies, and for all companies delivering products to homes through e-commerce, the unboxing experience is the apex of the consumer experience of the product. Opening the shipper, opening the product package: these moments have even higher stakes (more than 3x higher) than when a shopper picks up a package off a shelf in a retail store. At retail, if the product is placed back on the shelf, the sale isn’t necessarily lost, and even if a shopper purchases, then returns the product, it can still be sold at a discount. But return rates are 8-9% at retail vs 30% for e-commerce, a stat cited by several presenters at EPACK. If the unboxing experience, the packaging experience, doesn’t meet the consumer’s expectation, the penalty can be devastating.
The research I conducted with my colleagues found that 34% of shoppers have returned something due to the packaging specifically, most of those because the package itself was damaged. Brands must focus on the experience of the product through packaging as a key way to protect their margins as e-commerce grows.
Shopper expectations can be managed through technology and marketing.
It’s important to sync up the expectations of the online shopper with the benefits and the appearance of the product they are purchasing. The core element of appearance and of inferred quality for consumer goods products is the product package itself.
My colleague John Morrow mentioned this in his part of our presentation: what a shopper sees online is often just flat images cut out of packaging photographs, with no live text, no searchable ingredients, and nearly impossible to read on a mobile phone. When brand marketers leverage technology to present information and imagery to shoppers online in ways they can read, search and trust, they create an accurate shopper expectation that then matches the product experience at unboxing.
There are many digital tools that can be applied to connect product packaging with e-commerce marketing, and those with the best sources of high quality product content will be the best to leverage to align shopper expectations with the reality of what the product looks like AND delivers.
This last learning was the central point of our presentation: How to Tune Packaging to Fuel E-Commerce
We shared several statistics from our recent survey of online shoppers (specific to food & beverage categories):
20% of shoppers tried a new product specifically based on in-store taste samples or an in-store display
65% of shoppers support brands who share their values
37% of shoppers have taken a photo of a packaged product to search for more information
13% of shoppers have taken a selfie with a food or beverage product
26% of shoppers who returned a product due to the packaging reportedly did so because they thought it looked wrong or was fake.
79% of shoppers expect the product packaging they see online to be exactly the same as it is in-store
49% of people expect the image they see online to exactly match the product that arrives on their doorstep.
And then this number: #1. Consumer Packaged Goods is the LEAST digitized sector, according to McKinsey.
During our presentation, John and I called the audience to action, asking them to apply digital tools to their packaging development and communications processes in order to speed innovation and bridge the gap between e-commerce marketing and the consumer experience of the product. These challenges can be overcome with technology and may be simpler to solve than many leaders currently imagine. When fueled with the right technologies, packaging can contribute to growth through e-commerce, or it can be the source of increasing e-commerce purchase returns. The time is now to digitize packaging, to connect packaging to marketing, to connect packaging with the supply chain partners, to connect the shopper experience with the consumer experience in a way that meets expectations, or even exceeds them.
*A special thanks to John Morrow for speaking with me. Learn more about John here:
John Morrow has extensive experience leading successful Global Business Process Improvements at Colgate-Palmolive, Procter & Gamble, PepsiCo, and Bristol-Myers Squibb. This includes Packaging Artwork Systems, Omni-Channel Marketing Systems, R&D/Product Development Systems, and Quality Assurance Systems.
Most recently, John was World-wide Director of Global Artwork Operations at Colgate-Palmolive where he led the successful implementation of Colgate’s Global Artwork Management System. This included the global rollout of the Esko Webcenter software and resulted in a two-thirds reduction in global artwork cycle-times.
John earned a BS in Chemical Engineering from the University of Notre Dame and an MBA in Marketing from Xavier University. He retired from Colgate in early 2018 and now runs his own consulting practice for business process improvements.