Market Topic: Keeping your E-commerce Packaging in the Game

The uptick in e-commerce prompted a rise in stock keeping unit (SKU) proliferation for secondary packaging

Succeeding in the Online Marketplace Takes the Right Strategies, Solutions, and a Whole Lot of Agility

By: Joe Schewe, Director of Design and Engineering at RRD

It comes as no surprise that the pandemic changed consumer habits — in particular, the accelerated growth of e-commerce. According to a report by Insider Intelligence, U.S. e-commerce sales are expected to cross $1 trillion for the first time in 2022. Before the pandemic, e-commerce sales were forecast to meet that milestone in 2024.

A recent survey of packaging professionals underscores that acceleration. The 2022 RRD (Un)packaging Reality Report revealed that over the past one-to-two years, e-commerce has increased for over half (57%) of survey respondents representing consumer packaged goods companies (CPGs).

This sharp growth continues to drive operational changes for impacted brands. Of the study respondents who cited e-commerce growth between 2020 and 2021, 92% saw their organization’s packaging related needs increase. These include inventory, warehouse space, and staff as well as materials substitutions and re-designs. Companies continue to tackle these challenges as supply chain shortages disrupt regular operational activities. However, the right strategies, solutions, and a whole lot of agility, can help packaging professionals succeed in a more unpredictable online marketplace.

How does e-commerce impact packaging?

E-commerce places different demands on packaging than traditional brick-and-mortar supply chains. Brick-and-mortar promotes shelf-stable formats with high-impact design elements that stand out against crowded shelves. Secondary packaging requirements may include retail-readiness; retail-ready packaging (RRP) refers to cases that can be easily opened and displayed on store shelves for efficient restocking. Package design for an e-commerce-driven supply chain presents a different set of needs.

The uptick in e-commerce prompted a rise in stock keeping unit (SKU) proliferation for secondary packaging, even as SKU counts slowed for primary packaging to prioritize output and efficiency over variety. This is explained by the expansion of sizes and formats to accommodate a shift to more online orders.

Many consumers despise the waste of excessive secondary packaging. Receiving small items in comically oversized boxes filled with bubble wrap or paper stuffing not only offends sustainability-minded consumers, it can also have a negative impact on brand image. Online consumers also see an unboxing experience as a treat—especially when in-store experiences were few and far between. As a result, today’s online consumers are looking for thoughtful, comprehensive design that engages and delights without adding unnecessary waste.

Re-thinking package design for a more online world

The differing demands of e-commerce can redirect brands to more refined, luxurious, or creative e-commerce packaging solutions. Let’s consider how these changes can look from the inside out. First, a right-sized secondary package that isn’t too large for its contents—nor barely big enough to contain them—is the first step in the right direction.

Better yet, shippable packaging that is beautifully branded can make a durably coated corrugated box feel like a gift box. Inside the secondary packaging, consumers should find thoughtfully designed product protection. Specially designed structural inserts can ensure contents arrive secure and intact without the waste or mess of crumpled brown paper or other dunnage.

Secured within the protective elements should be neat, clean primary packaging. To make the best impression, companies can offer degrees of personalization or customization such as different sizes, specially written messages, visuals, or even added brand collateral.

Another important consideration is flexibility in the face of shortages. In the (Un)Packaging Reality study, 52% of respondents said they changed packaging materials based on availability factors. Packaging decision-makers must consider alternatives when go-to options are in short supply. Regardless of changes, ensuring quality and consistency is key to e-commerce packaging that evokes a positive brand experience.

Structural engineering can reduce a package’s footprint, and introduce freight and storage savings.

Considering supply chain challenges

The implications of the e-commerce expansion aren’t limited to package design. The study also found 55% of respondents reported having to increase inventory and, unsurprisingly, 53% said they expanded warehousing. These correlating needs are an outgrowth of more e-commerce orders requiring more materials, and therefore, more warehousing space, especially as the potential for shortages prompts companies to stock up supplies.

In many cases, pre-COVID, “lean,” on-demand supply chain structures did not set companies up for success in meeting increased demand while coping with material and labor shortages. One potential solution is moving to a replenishment model. This enables companies to receive partial orders for rolling shipments when they don’t have the space on-site to warehouse a larger order of packaging materials. Suppliers with their own nearby operations or warehouse locations are best positioned to run a replenishment model for distribution.

All hands on deck

Fighting the onset of the Great Resignation, 51% of the (Un)Packaging Reality study respondents said they increased staff and 43% claimed to increase support from external vendors. Expanding staff and leaning on suppliers to meet spikes in demand is often critical, especially approaching busy seasons, such as holiday periods. However, brands should also consider re-designs for packaging efficiency. Minimizing steps in packaging operations should be a priority. Standardizing package sizes, streamlining elements, and even the creation of universal inserts that can accommodate multiple order sizes are all good practices to cut down the time and labor of packaging operations.

Be prepared for the unexpected

For many companies, the pandemic prompted unforeseen challenges to production operations and supply chains. While no business can ever truly predict what the future has in store, having a true packaging supplier-client partnership is key to help meet changing demand. When combined with a wide range of capabilities and expertise, building a partnership based on dynamic business solutions, communication, and dedication to success can help prepare for what is to come.

About the Author

Joe Schewe is the director of design and engineering at RRD. To read the (Un)Packaging Reality Report, visit: www.rrd.com/reality-report.