How e-commerce is changing the way businesses approach packaging
DHL Supply Chain's VP of global packaging solutions, Mark Patterson
As the most disruptive event of modern times, the pandemic has had a major influence on the packaging industry. While shopping habits were steadily migrating online already, that shift saw a phenomenal acceleration, with research showing there was a 28% leap in e-commerce sales in the US in just the first month of lockdown.
Despite shops reopening across much of the world and some balance returning between on- and off-line, e-commerce looks set to continue along its upward trajectory. While this is a boon for many retail and consumer brands, it comes with new packaging considerations and complexities: managing higher volumes, the need for customisation, not to mention increasing packaging’s sustainability.
As a result, decisions that may have been kicked down the road previously have now become more pressing. Businesses are being forced to look at their approach to packaging and ask some challenging questions. Is it optimal; is it working as hard for the product or business as possible? And, at an even more fundamental level, is it sustainable - both financially and environmentally?
As package volumes rise, so does the carbon footprint of an e-commerce operation. This means examining the packaging lifecycle from cradle to grave, or even cradle to cradle where reuse is the end goal. The Design Council recently estimated that 80% of the ecological cost of a product is set at the design stage. Reducing the environmental impact of any product during the concept design, therefore, is a crucial stage at which to make cost savings. Responsibly sourced or recycled materials, environmentally friendly manufacturing, recycling or closed-loop systems and design that maximises transport efficiency are just some of the factors that businesses seeing their e-commerce operations scale up need to consider.
The surge in e-commerce has created opportunities and new requirements in terms of design. Businesses are seeing the potential to delight customers and secure future preference and loyalty through packaging. Luxury brand Net a Porter’s iconic ribboned black boxes, for example, were trailblazing two decades ago, but is now relatively commonplace among everyday brands.
It’s all up for grabs and in these exciting times in design.
In addition, e-commerce design needs to look at practical considerations too, with strength and durability being important factors. Direct-to-consumer packaging needs to be able to withstand significantly more than packaging destined for a retail shelf - the equivalent of roughly three times as many ‘drops’.
Some of these opportunities to help a brand stand out - while also achieving more sustainable packaging solutions - do generate additional cost, which is one of the reasons that businesses seeing major e-commerce growth are exploring ways to drive operational efficiencies.
Automation in packaging and packing delivers major productivity gains, especially in e-commerce. Robotics, for example, enables businesses to cope with higher volumes as well as fluctuations such as seasonal spikes. It’s also a solution to the increasingly problematic labour shortage for roles involving repetitive, manual work.
In response to the growing need for faster, more efficient packaging operations, many businesses are bringing their packaging operations under the same roof as their distribution. By bringing packaging closer to the downstream supply chain, businesses can make changes more rapidly, based on real-time intelligence.
DHL has adjusted its business to enable the integration of its packaging solutions operations with warehousing and distribution. What this means is that customers can now have their packaging designed, customised, protected and ready for product shipment into retail or direct to customer from their existing distribution centre. In doing so, customers get access to economies of scale as well as access to smart and sustainable design solutions and procurement, whilst also tracking the environmental performance of a piece of packaging through its entire lifecycle. In addition, they get the benefit of a third party’s automation investment and reengineering of manual processes to tackle growing demand and increase flexibility.
The requirement for retail and consumer brands to achieve speed, responsiveness, practicality and customer delight, all while balancing against cost and environmental impact, is a major challenge. But, in a new world in which packaging is the first physical impression consumers have of your brand and when e-commerce is the primary - if not only - revenue stream, these are major strategic decisions for businesses to take now, at this major turning point.
Main image: Jordan Perata, Kilo
Prior to the arrival of COVID-19, the consumer move from bricks & mortar to online was alive and well. Since early-2020, however, the jog became a full-out sprint. Mark Patterson, VP of global packaging solutions at DHL Supply Chain, considers the impact of this trend on packaging providers.