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03/11/2015

Think sustainable packaging for long-term e-commerce growth

The e-commerce industry has grown considerably in the United States in recent years, and it will continue to do so in the years to come. However, the market is highly competitive, placing considerable demand on retailers and manufacturers to produce high-quality, reasonably priced products that, in turn, must be shipped to the end user in excellent condition in packaging that is representative of the product’s brand.

A major point of difference with which brands are trying to compete here is sustainable packaging, said Jeff Wilson, an analyst with the Sedulo Group, a Louisville, Ky.-based market intelligence consultancy that recently created a report on e-commerce and packaging for Reston, Va.-based PMMI. “E-Commerce in the US: Challenges, Growth and Trends,” a presentation Wilson gave Feb. 27 at the Innovation & Marketing Summit — which took place at the Hyatt Regency O’Hare hotel in Rosemont, Ill. ­— detailed the report’s findings.

“The overwhelming theme that we saw with trends [in e-commerce packaging] is that things tend to come back to ‘sustainable,’” he explained.

For instance, Wilson pointed to second-life packaging — packaging that can be reused instead of recycled — and easy-return packaging as areas of e-commerce packaging differentiation. He also points to value of having Programme for the Endorsement of Forestry Certification to win shoppers’ trust, and packing products with paper instead of polystyrene materials for protection.

“You don’t see ... Styrofoam peanuts as much anymore,” he says. “The paper fill really helps to put in a fill that is recyclable and sustainable at the end of the day.”

Although some might argue that the economy is behind these sustainability-related trends, Wilson noted that his team did not find an economic link.

“Really, we got the sense that these are longer-term trends,” he explained. “People don’t see them going away anytime soon, and that ultimately, they are reflected [of the fact] that e-commerce is a hyper-competitive environment.”

Trend drivers

Behind these trends, Wilson found four drivers — none mutually exclusive — with shoppers’ concern for personal environmental impact being a big one driving the sustainability trend, as consumers today wish to feel like they’re ultimately being better toward the earth.

“And because of that, sustainability is [a big deal], and manufacturers and retailers are following suit,” he explained.

Three other critical drivers Wilson listed are customer perception (if a customer is not happy with an experience, product or package, he/she can go online and “really trash the brand”), quality (with unprecedented amount of competition in today’s market, quality is key to gaining ground) and cost (products must sell at a reasonable price).

But it’s not enough to simply jump on the “greener” package bandwagon, Wilson noted.

“We definitely got the idea that green packaging is here to stay … but how can we make it more cost-effective?” he asked.

Retailers first must look at a greener package’s cost, taking the whole lifecycle into consideration. They also need to consider the “whole due-diligence factor,” he stated. Right-sizing, for example, is worth considering.

“How usable is the material?” he asked, noting that if a label is recyclable but doesn’t stay on a box — or if material is greener but isn’t as durable — then what’s the point?

And finally, retailers must think about cost neutrality. True, greener packaging might require investment that might not pay off in the short term. But because people want greener packaging in the long term, it just makes sense.

“That’s going to create customer loyalty; that’s going to create sales; and that’s a long-term dividend,” he stated. “So invest in the short term; prosper in the long-term.”