The rapid growth of e-commerce is changing how Americans purchase and receive goods, and it’s also forcing changes to product packaging. The COVID-19 pandemic also drove significant change to the landscape, said speakers at the E-PACK conference in Chicago last week.
“Now we're going online first” to browse instead of going to traditional stores, said Poonam Goyal, sector head and senior equity analyst at Bloomberg Intelligence, pointing to solid e-commerce sales growth even since the pandemic “pop” in 2020. Consumers have “normalized” after the post-pandemic desire to go back to brick-and-mortar stores and are settling into a routine that leverages the convenience of online shopping.
Amazon remains the e-commerce leader, currently comprising about 30% of the $1.6 trillion in online sales, Goyal said. But “if anyone can close the gap to Amazon in a matter of time, it would be Walmart,” she said. “They have the resources to put into place to drive the growth.”
Despite the sector growth, recent economic pressures may prompt consumers to trade down, or seek products that are comparable to premium products but at lower prices. “Consumers are looking for deals ... unless they need the product right away,” Goyal said. “They’re buying what they need versus what they want.”
All of these factors influence the kind of packaging that brands use for items that will be shipped, said other E-PACK speakers. For instance, many cost-conscious consumers are currently more inclined to purchase multipacks than individual items, so brands are responding with different e-commerce formats.
Amazon itself has highlighted recent packaging changes, many of which are driven by the company’s sustainability push. On Wednesday, it released new 2023 data showing it avoided more than 446,000 metric tons of packaging and decreased the average plastic packaging weight per shipment by 9% from the previous year.
Last year, Amazon shipped 12% of orders without additional packaging as part of its “ships in product packaging” initiative, up from 11% in 2022. As of this month, the e-commerce giant eliminated plastic air pillows from delivery packaging and transitioned to 100% recycled paper filler. And it reports having retrofitted 120 automated packaging machines that made plastic bags to now make rightsized paper bags; last year the company introduced its first distribution facility with machinery retrofitted and upgraded to only handle paper packaging.
Here are three other examples of brands’ e-commerce packaging design considerations and changes that speakers highlighted at E-PACK:
Mars Wrigley
Innovating packaging design with e-commerce in mind is different than for traditional retail, and the candy company is upping its attention to the former. To guide these decisions, Mars Wrigley created an evaluation framework with critical criteria that include profitability, sustainability, efficiency, protection and appeal.
“There's a lot of intentionality right now to get the whole organization to do more” in e-commerce, said Paola Appendini, a principal for packaging innovation and breakthrough technology at Mars. “We also want to make sure that our packaging engineers understand this area and that we can upskill them to understand better what they need to design ... We’re not there yet.”
E-commerce packaging is “really the first impression, that first moment of truth” for the consumer, Appendini said, referencing the heightened importance of a consumer’s unboxing experience. Impressions of packaging also matter during consumers’ online searches, such as through appearance and messaging.
“It's important to understand the shopper experiences during the search and discovery of items online, and how can we help shoppers through our packaging designs to make the final decision of purchasing,” she said. “Pay attention to the packaging, because consumers do pay attention.”
A broad challenge is: “As we develop that very consumer-centric portfolio, how do we develop it in a way that it's flexible and scalable?” Appendini said. And while brands aren’t constrained by shelf space like in physical stores, other factors can limit their packaging decisions for e-commerce.
For instance, the rise of automation means more e-commerce fulfillment is being done by robot pickers. But some of those machines don’t have the light touch needed to handle conventional plastic film candy wrappers, which could result in breakage and wasted product spilling onto the fulfillment line. Another consideration is how to ship temperature-sensitive products like chocolate to a consumer without traditional cold-chain packaging.
Appendini pointed to research showing that consumers prefer plastic packaging because of the impression that it’s “more robust and providing better life and keeping the product fresh.” So if Mars Wrigley wishes to boost sustainability by making a substrate switch to fiber, it must overcome the challenge of changing consumer perceptions and preferences.
Nestlé
Nestlé has put a lot of time into optimizing packaging for its premium water brands, such as Perrier and San Pellegrino, to work in the e-commerce environment.
When the products arrive in the United States from Italy and France, they must be repackaged to specifications for different retail scenarios, such as store shelves or e-commerce — especially to be compatible with the growing practice of “ships in own container.” Nestlé’s work on co-packing for SIOC has stopped and started several times since 2019, in part due to the pandemic, said Russ Beadle, a co-manufacturing manager at Nestlé, but also to comply with Amazon’s requirements and fees.
Nestlé reworked aspects of its shipping packaging for its premium waters to avoid Amazon’s fees, such as for repackaging products over a certain weight.
“Amazon is 82% of our e-commerce sales altogether for premium water, and they are our number seven customer overall for premium water,” so catering to their marketplace is important, Beadle said. “So instead of having Amazon box those up as they get the orders, we’re doing it in mass production at our co-packers and sending [Amazon] the pallets [of water] already in SIOC containers.”
It took Nestlé three months to develop packaging for five SKUs that it took to market through Amazon. The e-commerce giant provided help along the way. “We took advantage of their certified testing labs,” Beadle said.
The brand focused on factors such as designing the cardboard SIOC packaging so consumers can easily grab handles on the sides and lift the heavy box. It also tweaked the gluing and taping process. It harmonized the production processes so they could be performed at all of the different co-packaging facilities. And a big change is that “we no longer do glass [bottles] in e-commerce” due to the initial 60% failure rate for shipping that material, Beadle said, referencing a change to PET bottles.
Clorox
E-commerce dynamics “really changed” post-COVID, in terms of “how we had to rethink our packaging design and our product design,” said Mark Pszczolkowski, principal R&D scientist at The Clorox Co.
During the pandemic, people began buying large quantities of the company’s cleaning products online, so Clorox had to factor in shipping conditions and regulations that it previously didn’t consider as much when consumer purchases primarily occurred in brick-and-mortar stores. The pandemic and the supply chain snarls that followed underscored the importance of thinking about design from the start.
One example is designing robust spray nozzles that don’t break or leak in transit. And Clorox’s push toward reusable, refillable containers presents design challenges: The size of the container and instructions on the concentrated refills that the consumers mix with water have to be just right, because “we're also turning consumers into a little bit of a mixologist at home,” said Pszczolkowski.
The company looks at sustainability holistically. Only taking into consideration one or two design aspects could result in “something that’s e-commerce ready, but it’s not meeting my other requirements. So we have to think about the holistic value chain,” he said.
For instance, incorporating postconsumer recycled content into the packaging for Clorox cleaners is difficult due to the chemicals’ reactivity with different materials.
“We have to look at the chemical compatibility of every grade of PCR on a lot by lot basis to see if it's going to work,” Pszczolkowski said. Some grades of PCR, or even small amounts of contamination in the recycled resin, may make a container more rigid, which affects how the product flows or oozes out and how caps seal onto the container. And PCR can affect certain containers’ child-resistance properties, “so when you add PCR to those types of materials, that's effectively an entirely new child-resistant qualification,” he said.
In addition, the increase in big box stores like Walmart fulfilling orders from their backrooms is changing the packaging landscape.
“I can design something for e-commerce readily today in its own specialized format,” Pszczolkowski said. “But when someone from Walmart can pull it off a shelf,” that alters what goes into the design and requires designing for the future,” not just the present.
