How packaging innovation can overcome ecommerce challenges

The manufacturer-distributor-retailer supply chain model that has existed for decades is being reinvented and remodelled by the rise of ecommerce. The traditional two-point ‘moment of truth’ – where the consumer chooses a product and buys it then gets home and uses it – has expanded to at least five points in the modern customer journey.

Now it begins with researching a product and choosing a product, before unboxing the product, then experiencing, using and disposing of the product, and finally actively engaging with the brand and/or reviewing the product, which (ideally) sees the customer become a ‘brand evangelist’.

This shift offers major opportunities, but also presents serious challenges. For example, seven of the top ten largest consumer goods companies are lagging in ecommerce penetration, according to Bain & Company research, while smaller brands are gaining an advantage with high-quality products, low prices and tech-driven user experiences.

Currently, one in five Americans (78 million) lives in an Amazon same-day delivery zone, which only increases their customer service expectations. And, potentially due to brands’ keenness to meet these demands, one in three packaging-related returns are due to product damage.

As ecommerce shifts those goalposts, packaging innovations are enabling brands and retailers to keep pace.

Packaging evolves to meet ecommerce needs

Advances in packaging are helping businesses thrive in this age of ecommerce, by enabling lower damage rates, optimising supply chains, ensuring faster product delivery and improving sustainability credentials.

For example, switching from using glass jars to plastic containers can lower damage rates from between 1-3% down to just 0.5% – in some cases, even reducing them to zero. Furthermore, plastic jars are six times lighter than their glass equivalents, which means lower freight costs.

Increasingly, packaged products, such as flexible pouches and rigid containers, will have to pass International Safe Transit Association (ISTA) specifications, such as the ISTA-6 protocols defined by Amazon. ISTA tests put packages through the rigours of the parcel delivery system, such as dropping, vibration, temperature and humidity, and assess whether they protect against damage, reduce waste and are recyclable.

Additionally, Amazon’s Frustration-Free Packaging program, launched in October 2018, enmrequires that packages shipped by vendors selling through Amazon meet its specifications – such as using kerbside recyclable packaging materials, ensuring minimal volumes of packaging material and being ready to ship without an Amazon over box.

More generally, this shows the direction in which ecommerce packaging is heading: there will be less of it, it’ll be more sustainable, and it will be fit for the specific purpose of direct delivery to consumers.

Amcor has invested in two ISTA testing laboratories – one in the US, and one in Europe. These sites will help with the development, testing and certification of primary packaging and accelerate the process of getting customers’ products ecommerce-ready.

Snacking joins the party

The grocery sector has been relatively slow to join the ecommerce revolution, mainly because shoppers have preferred to buy products in-store. However, research from the Food Marketing Institute and Nielsen found that online purchases of consumer-packaged goods in the US doubled between 2016 and 2018, and predicts 70% of people will be grocery shopping online by 2024. The European market is heading in a similar direction, with Mintel research finding that online grocery sales in the UK hit £12.3 billion in 2018 – an increase of 9% on the previous year.

Retailers are responding to this change by investing in technology and strategic partnerships that boost their ecommerce offerings, optimise their supply chains and reduce delivery times. For example, retailer Ocado struck a deal with US supermarket chain Kroger to automate online orders and build automated warehouses. Meanwhile, supermarket chain Sainsbury’s bought consumer goods retailer Argos to capitalise on its ecommerce and fulfilment expertise, and Waitrose is working with smart home innovator Yale to become the first UK supermarket to test the delivery of groceries when customers aren’t at home.

Meanwhile, emerging brands are capitalising on the new opportunities presented by ecommerce, and the packaging technology that supports it. For example, healthy snacking startups such as Graze (recently acquired by Unilever) are leading the way in creating attractive, direct-to-consumer packaging that appeals to online shoppers. Graze has reaped the benefits of differentiating itself from its competitors by working with KlikLok (a compact packaging process designed to pack flow wraps, roll wraps, and tablets) to create unique, environmentally-friendly formats and styles that capture the imaginations of health-conscious shoppers.

We’re also seeing innovative uses of packaging to ‘wow’ shoppers and build confidence among customer bases. Smart packaging, such as Amcor’s MaxQ, feature scannable barcodes and QR codes to encourage consumer engagement and build loyalty. Additionally, the technology exists for brands to track the journey of individual products while optimising internal supply chains and protecting against counterfeiting.

Ecommerce for snacks, nuts and sweets is a growing opportunity. To find out more about how consumer expectations are changing and how packaging can help you succeed online you can download the Five Moments of Truth Ecommerce Guide here.