As consumers demand more convenience and greater variety in their products, e-commerce sales continue to boom. Brands must enter the channel to compete and retain or grow their consumer base. In fact, e-commerce sales in 2018 were estimated to be between $400 and $500 billion and are forecast to reach nearly $700 billion by 2020, according to the 2018 E-Commerce: Think Inside the Box report by PMMI, The Association for Packaging and Processing Technologies. But as this channel becomes increasingly popular, how can manufacturers equip their products to perform as effectively on the online platform as the store shelf? The following considerations provide a starting point for brands seeking to tackle a new landscape.
Recognize that e-commerce is inevitable
It’s critical to remember that in many cases the move to e-commerce is not an option, and you will need to have a strategy in place. Even if your company is hesitant to move online, a competitor, third party—or worse, a counterfeiter—may recognize demand for your product and dominate the space. By embracing the transition to online distribution, your company will retain ownership and control of its brand and reduce your chances of being overtaken by the competition.
Choose your path to e-commerce
Manufacturers must determine the best method for serving online customers, whether it’s directly through your own channel or a third party like Amazon or Walmart. This will require further high-level decisions about fulfillment and packaging requirements as well as costs and production methods.
The choice to handle fulfillment internally or with an outside distributor may also depend on the size of your established consumer base. If your product is a household name, consumers will seek it out even among the countless options on Amazon. If it is a more niche product, fulfillment may work better—at least initially—using the company’s own website, which customers can land on after browsing social media or searching for terms specific to their own needs, like “gluten-free,” “non-GMO,” etc. In this way, e-commerce can help build greater awareness and a more loyal following.
Prioritize product protection
Product protection remains the biggest issue in e-commerce, so it’s critical to select packaging formats that keep your goods safe and maintain their appearance. E-commerce changes the nature of product shipments and presents a number of risks.
On the retail shelf, the product is touched six to seven times from the moment of packaging to the time the consumer takes it from the shelf. With e-commerce, this number increases to roughly 20-30 touches and the risk of damage is significantly higher.
For e-commerce, brands and online fulfillment centers do not ship products on pallets, where padding and wrapping protect them. Instead, they ship them loosely as singular items, making them more vulnerable.
Shipments often combine incompatible items in one box. A food product, for example, may arrive in the same box as a household cleaning product, and if either product incurs damage and/or leaks, it may present a health risk.
Many companies address product protection by moving toward plastic packaging, both rigid and flexible. Plastic packaging can provide the required durability to guard against product damage without the risk of breakage that comes with glass. Metal packaging offers similar benefits, maintaining its shape throughout shipment but also offering a lightweight package with high recyclability. Determining what’s best for your application, depending on your product’s weight, consistency and shape, is critical to ensuring your product reaches the consumer in the proper condition.
Don’t forget about your price point
Products sold online cannot have the same price point identified for retail shelves, as the amount shipped is drastically different. The lower your product’s price point is, the higher the number of units required to make online fulfillment cost-effective. Similar to a warehouse-style store like Costco, consumers may be required to purchase multiple units in order to receive their products straight to their door.
Manufacturers can address this variation in product count in multiple ways. If shipping the units in their own container, they can place them in a corrugated box. If they are going in a third-party distributor’s box with other unrelated items, the manufacturer can make a multipack of sorts through shrink wrap or other materials, upping the unit count but bundling the items into one solid mass.
Determine where a redesign should occur
Not all companies will need to adapt to e-commerce in the same way. Some products will require a primary packaging redesign, while some will be more suited toward a secondary packaging redesign.
Amazon created different levels of certification that may impact manufacturers’ decisions on where to make the packaging change. The first and most expensive option is to add a bag to your item before it goes into Amazon’s box. This is to ensure the product does not leak, become contaminated by or contaminate other products, but it requires extra labor that is charged back to the manufacturer. The second option is to place the item straight into Amazon’s corrugated box, mixed with other products, and the third option is to ship the item straight in its own container. This is by far the cheapest option, as Amazon simply pulls your product from the shelf and places a label on it—no wrapping, packing or fitting needed.
To meet the second and third options and save on costs, some brand owners are redesigning their primary packaging to be efficient from the beginning. A redesign of primary packaging enables the product to fit into a smaller box size and save on the cost of shipping. The price point will again aid this decision. If multiple units are necessary to meet e-commerce shipping costs, adding durable secondary packaging is more likely the way to go.
Think about enlisting a copacker
E-commerce demands such a wide variety of products and a greater number of products—different packages, sizes, shapes, etc.—that a copacker can be of immense value. Bringing on a partner can provide a cost-effective way to meet a higher number of SKUs and deliver the extreme flexibility e-commerce demands from brand owners.
Copackers can take existing products and prepare them for the e-commerce channel, placing them into multipacks, shrink-wrapping them and optimizing them for home delivery. This is due to copackers’ abilities to provide the quick changeover needed to accommodate smaller product runs. Moving forward, copackers will likely be used more and more at the primary packaging level to meet growing needs for product variety.
Consider moving to an omnichannel design
To simplify production and save on costs long-term, manufacturers can consider designing a package that fits both retail and e-commerce channels. This requires packaging that not only has shelf appeal but also travels well. It must look attractive in a retail setting and have the right information on display for the consumer. On the e-commerce side, consumers are making purchases without seeing the physical package firsthand, so the pressure is on brands to deliver a product true to what customers viewed and understood online.
Part of the challenge of adopting an omnichannel design comes with placing brand imagery on a new format. Looks don’t necessarily make or break the sale with e-commerce, where the purchase has already been made, but they do play a role in the opening experience, which hinges upon the condition and presentation of items at the time of arrival. Outward appearance is still critical, however, for the retail shelf. Consumers at the grocery store aren’t going to be drawn to the plain cardboard box expected with a home Amazon delivery. This requires brands to implement creative designs, striking graphics and other unique elements that can add visual appeal to a shippable package. Technologies like digital printing can help meet these needs, with the ability to transfer fine-tuned graphics in vibrant, rich colors onto corrugated boxes and other formats.
Once a brand chooses the right design and format, an omnichannel design can yield significant benefits. It eliminates the need to run separate lines for products only applicable to one channel, saving on the costs that come with packaging design time, production line builds, downtime and changeover time. In the long run, investing in an omnichannel design is going to be the most cost-effective method for the majority of manufacturers.
With consumer demands and distributor requirements constantly shifting, the ever-changing landscape of e-commerce requires manufacturers to stay at the forefront of industry trends. Brands looking for greater insight will find the latest technologies and industry solutions at Pack Expo, being held Sept. 23–25 in Las Vegas. Produced by PMMI and co-located with Healthcare Packaging EXPO, this event will bring together more than 30,000 attendees, including 5,000 international visitors from more than 125 countries and 2,000-plus exhibiting companies spanning nearly 900,000 net square feet of the exhibit floor.