Make Strategic Decisions and be Ready for E-commerce

This article has also been published in the Packaging Technology Today, Sept. 2018 issue.

By: Mark Kitzis, President North America, Aptar Food + Beverage

There’s a shift underway, and whether you work for a CPG brand, in retail, or in packaging, you know that e-commerce has become a major part of our everyday lives. E-commerce allows us to engage with our customers and consumers in a new way. It creates a whole new conversation with the brand owners, and that is driving innovation. As consumers continue to demand convenience in every step of their shopping journey, online sales for consumer packaged goods is projected to grow at an incredible rate.

In 2017, the U.S. Commerce Department reported the strongest year-over-year growth for e-commerce in six years as consumers spent more than $450 billion in online retail purchases. E-commerce gains accounted for nearly half of all retail sales growth last year. Statista estimates that fast-moving consumer goods’ (FMCG) e-commerce sales will account for 17.5 percent of total global retail sales by 2021.

As important as it is that CPG’s optimize the online shoppers’ experience when purchasing products, it is also intrinsic that they provide consumers a positive experience when the products arrive at their doorsteps. There are areas of improvement that can benefit CPGs, online retailers and consumers alike. One example is the adoption of a primary packaging strategy designed for the e-commerce supply chain.

Most CPG product packaging is currently meant for the traditional shipment to distribution centers or backrooms before being presented on shelves in brick and mortar stores with very few touchpoints along the way. When shipped via e-commerce, it’s a different journey with five times as many touchpoints, challenging primary packaging to withstand the harsh shipping and handling conditions of the e-commerce supply chain.

Pay Me Now or Pay Me Later: Packaging Cost

Over the last 10 to 15 years, brands have been striving to reduce costs by developing lighter-weight packaging and using less material. Some brands were very successful at doing so, but it can reach a tipping point where packaging becomes too fragile.

What may be a sufficient package design for shipping across the country neatly packed with identical products, might not work as well when random items are thrown in a box together and tossed on a consumer’s doorstep.

When it comes to products with dispensing systems, these packages can face many challenges: closures disconnect from the package, breaking of closure, lost overcaps, unintended actuation, sealing failures, and much more. These problems result in product leakage, cause damage to other items inside the box and lead to chargebacks to CPG companies that cut into the bottom line. Not only do brands end up reimbursing chargebacks for their own damaged products, but payment for other items ruined, shipping charges and other related costs also become the CPG’s responsibility.

To mitigate the risks of damaged products during transport, online retailers may implement tertiary packaging. This includes shrink wrap, bubble wrap, plastic bags, air pillows and double boxing. It is meant for protection, however, it also increases the total costs as more materials and labor are required, once again significantly affecting profitability.

Addressing the Root Causes of Primary Packaging Challenges

Ultimately, tertiary packaging is not solving the problems CPG brands have with packaging that’s inadequate for e-commerce. It’s a temporary patch to cover up the underlying issue.

Even when protective packaging gets the product to the consumer’s home without damage or leaking, it still creates an undesirable experience. Online shoppers must deal with the supplementary packaging and dispose of the waste on their own. This will disappoint environmentally friendly customers while causing frustration as consumers struggle with unboxing, unwrapping and unsealing multiple layers.

A better approach to the challenge involves improving the primary package so it withstands the rigors of the e-commerce supply chain. This could involve packaging that’s more durable or adopting innovative options and technologies designed to make the product e-commerce capable.

Leaders in the packaging space are hard at work developing solutions to help brands protect products during shipping while simultaneously creating an end user experience that delights. For example, brands could implement user-friendly sealing technologies, closures, pumps and fitments designed to prevent sealing failures or accidental dispensing in transit while still providing a great consumer experience.

Embracing a Holistic Approach to Packaging

The questions most CPGs grapple with are when and how to address the shift to e-commerce. Is it too soon to start emphasizing e-commerce packaging when traditional retail consumption still makes up the majority? Is it possible to develop packaging that works for both channels? Not only is it possible, it’s necessary.

In order to succeed with a primary packaging strategy that addresses the multiple challenges imposed by e-commerce, it is key that CPG brands work with partners who can advise them on the best course of action. Identifying trusted suppliers who understand the standards that need to be met, have the knowledge of testing protocols and procedures that large online retailers have in place, the ability to help conduct proper testing, as well as solutions and technologies ready to be implemented, are the key to success.

Expect to see standards become more stringent as e-commerce expands its reach into consumer goods and e-tailers raise the bar. Amazon introduced ISTA-6 protocols, which are designed to assist brands and suppliers in evaluating the capabilities of a package to withstand the physical demands of the e-commerce supply chain.

ISTA 6-Amazon.com Over Boxing procedures simulate shipping from an Amazon fulfillment center to a consumer’s door. It uses drop tests, vibration testing and integrity tests for leak detection. When meeting the criteria, the packaging earns Prep Free Packaging (PFP) certification from Amazon, which means it can be placed in an over box with other items while requiring no extra labor or materials at the fulfillment center. Primary packaging can also achieve ships-in-own-container (SIOC) and Frustration Free Packaging (FFP) certification from Amazon.

Brands don’t need to navigate all these changes alone. Packaging suppliers that participate in the Amazon Packaging Support and Supplier Network (APASS) can provide services related to packaging design and testing in compliance with Amazon’s guidelines and certification test methods so packages can obtain certification as Frustration Free Packaging (FFP), Ships-in-Own-Container (SIOC) or Prep-Free Packaging (PFP). Aptar is one of many manufacturers committed to addressing the challenges in primary packaging imposed by the e-commerce supply chain.

Embracing the changes in demand and counting on strategic partnership to create primary packaging solutions designed for e-commerce will certainly help brands improve their bottom line and have a substantial competitive edge for many years to come. Above all, it will enable them to accentuate their brands by providing an enjoyable packaging experience resulting in greater consumer satisfaction.

Mark Kitzis is the president of Aptar Food + Beverage North America and has 22 years of packaging experience in both rigid and flexible packaging.  Prior to his current role, Mark was General Manager, VP of Global Accounts, and VP of Research in the packaging industry. Please visit www.aptar.com and follow Aptar on LinkedIn and Twitter at @aptar.