Ecommerce Supply Chain Packaging Challenges
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The year 2020 will go down in history for many reasons. One of these will be the degree to which the coronavirus has shifted global purchasing patterns. Before the pandemic, there were segments of the population that were still resistant to online purchasing, or only bought specific products via the medium. Now, however, thanks to multiple lockdowns and health and hygiene fears, the big shift to digital has not only seen worldwide ecommerce sales reaching well over $4 trillion1, but according to insights from global analysts McKinsey & Co.2 and others, this shift in purchasing is here to stay.
Not surprisingly as shopping districts closed down, worldwide retail ecommerce sales grew by 27.6% in 20203, with 84% of consumers shopping online during the pandemic4. Obviously, this significant growth cannot be sustained long-term, as physical shops re-open, however global ecommerce growth is still predicted to grow by a further 14.3% in 20215. This means that ecommerce is expected to reach a staggering $5 trillion dollars in sales in 2021, according to the BCG Consumer Sentiment survey6. All of this is having a significant impact on the packaging of products and the journey that they take to consumers’ doors.
The pandemic triggered a shift in consumer shopping behaviour. Millions of businesses were forced to change their focus and either invest more heavily in existing ecommerce channels, or offer Direct-to-Consumer (DTC) services for the first time. The opportunity for DTC brands has been to build on their ecommerce expertise, whilst the challenge for everyone else has been to keep up7. From navigating distribution chain challenges to ensuring items arrive in peak condition at their destination, 2020 has seen some steep learning curves for many retailers.
What does this shift towards ecommerce mean for brand owners and packaging designers? Packaging materials are having to work harder than ever before. From rightsizing products and maximising their protection, to prioritising sustainability and ‘shelf-presence’, brand owners are having to accommodate an array of packaging challenges.
The journey an online product takes from the producer to the consumer are totally different to those being shipped to physical stores. Rather than being bulk shipped to a centralised location, the packaging has to withstand a variety of warehouse and handling processes on its journey to the consumer. This has been triggered by:
- Increased convenience and immediacy - A focus by consumers on convenience and immediacy is placing pressure on the supply chain as a whole. People expect to receive their deliveries as quickly as possible and a survey by UPS has shown that 46% of shoppers abandon their online shopping cart due to a shipping time that is too long, or not provided8. With more packages being handled by delivery services in shorter time-frames, packaging is being increasingly put under the spotlight.
- Increased demand - According to a Forbes report9, nowhere has the impact of ecommerce been greater than in the logistics industry. As the volume of orders online has risen, there has been an increasing strain put on logistics. To help keep up with demand, fully automated warehouses, which pick, pack, palletise and transport goods, are becoming the norm. Product packaging therefore needs to be robust enough to withstand multiple logistics and handling processes, protecting goods and performing well at high speed.
- Fragmentation of supply chain - The supply chain has become complex as more consumers seek products from independent players, as well as the major e-commerce platforms like Amazon, Alibaba and eBay. Retailers who are implementing DTC strategies are now having to work with internal or external storage and handling services and third-party logistics companies to get their products in the hands of the consumer. If this isn’t complicated enough, each of these services has specific product labelling and packaging requirements that need to be fulfilled to maximise efficiencies and ensure the product arrives safe and secure at its destination.
- A shift to airfreight - More and more goods ordered via ecommerce are being transported by air freight, due to consumer demand for immediacy. According to the International Civil Aviation Organization and McKinsey, air cargo now transports 80% of cross-border B2C e-commerce shipments10. Transportation of liquids and perishables via airfreight adds to the challenges packaging designers face. Protecting products from unheated cargo holds, spoilage and pilferage all need to be taken into consideration. Other concerns such as specific size and weight documentation requirements governing air cargo also play a part in the packaging decisions brand owners have to make.
- Increased sustainability - Consumers are placing increasing pressure on companies to package their products more sustainably. With this in mind, redesigned shipping cases and reduced package sizes are now a priority. In fact, three quarters of US consumers are now more likely to buy a product that is packaged sustainably, and many will also pay a premium for it too11.
What does all this mean for package design?
Looking at the ecommerce supply chain, it is easy to see that once the product has left the manufacturer it is placed under a wide range of challenges before arriving in the consumer’s hands. How can packaging designers ensure that throughout the product’s complex journey its integrity, security, quality and safety are maintained?
Packaging integrity, security, quality and safety
Packaging designers are having to go back to the drawing board to overcome issues that are created by changes in supply chain processes. Companies are, for example, looking at issues such as product integrity throughout their shipping and fulfilment process and the role that packaging plays in preventing spoilage before products reach the end customer.
New product categories
Businesses are increasingly relying on third party delivery and fulfilment services. As well as delivering a greater volume of products to shoppers than ever before, delivery services are also having to accommodate an even wider variety of packaged goods. A shift has seen online demand for new product categories such as groceries, health and hygiene, and home essentials surging across the globe.
When delivering online orders to the end customer one of the biggest challenges for ecommerce logistics companies is the so-called ‘last mile’. There is an increasing demand from them for packaging that is fit for purpose. One of the most challenging products for delivery services is packages containing liquids. It is no surprise therefore that all the major delivery providers have very specific packaging requirements when it comes to the shipping of packaged liquids.
Selig – safe and secure for liquids
When it comes to the fulfilment needs of fast, sustainable, and branded shipping, Selig is helping customers across the globe, using its highly robust, brandable, consumer friendly induction heat sealing technology. From vitamins and OTC medicine, to cosmetics, food and beverage, personal care products and household cleaning supplies, all these and more are benefitting from the hermetic seal that is created by applying a Selig induction heat seal.
Selig provides ecommerce packaging solutions
A recent example is a manufacturer that was receiving customer complaints due to leakage issues with its peanut butter product, so it approached an independent packaging consultant for help. The consultant realised there was an issue with the seal so conducted a test of seven different types of seal. Selig’s DELTASEAL™ liner, combined with its proprietary GlassFuze™ heat sealing technology, was the only one not to leak under test conditions.
The induction heat seal creates a very strong pressure and vacuum resistant sealed package, enabling it to be transported in challenging environments. Selig’s seals have also undergone stringent drop tests on a wide variety of packaging, without any leakage.
As a global leader in sealing solutions, Selig has helped many producers improve their packaging integrity and reduce subsequent delivery issues. Thanks to induction heat sealing, food and non-food products alike can be sealed securely, with no leakage, bringing peace of mind to manufacturers and delivery service providers alike.
As well as leak prevention, Selig’s induction seals preserve freshness, extend shelf-life, can be branded if required and create a tamper-evident seal. In addition, due to the strength of the Selig seal, less secondary packaging is required and the primary packaging can also be light-weighted, reducing environmental load and helping improve a producer’s sustainability credentials.
So why not see if Selig can help you reduce product damage rates and give your customers even more reasons to come back for more?
8. https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/Future%20of%20retail%20operations%20Winning%20in%20a%20digital%20era/McK_Retail-Ops-2020_FullIssue-RGB-hyperlinks-011620.pdf (page 32)