Chinese Ecommerce Wants Better, Faster-to-market Packaging

China is the world’s largest consumer population; the largest pool of smart phone users; and its consumers easily embrace and try ‘the new’. These characteristics set China apart from other Asian regions. China has become a true digital pioneer across segments, especially in areas where others lag behind, such as grocery and healthcare, quickly adopting new ways of interacting with brands, shopping and doing business.

The Chinese ecommerce channel, like in the US or Europe, is growing substantially above consumption, capturing share from traditional channels and leading to supply chain and packaging challenges that are common across the globe. These common challenges are breakage & leakage, sustainability, need for smart packaging and faster go to market. However, due to the singularities of the Chinese market, the relative importance of each of these challenges and their ultimate translation into product level solutions are different.

The Chinese singularity

There is not a clear winner. The Chinese ecommerce channel is fragmented and does not have a clear winner. There is not an Amazon-like player that drives the market. Instead, several large players such as JD and Alibaba, as well as a tail of large, emerging specialists such as PingDuoDuo, Xiaohongshu, Wangyi, Douyin, ShunFeng are fighting through constant business model and service innovation to dominate a space that changes by the minute, driven by constantly changing consumer behavior.

Price is king. Today, about 40% of EU and US consumers seek convenience ahead of price as reasons to buy online. In contrast, most Chinese consumers are still very price sensitive - a factor that some players are using to disrupt the current status quo. Players like PingDuoDuo are seizing the chance and growing faster than any other competitors by delivering lower prices at same or better level of service.

Speed is queen. The Chinese consumer is busy with limited time to spare on picking, receiving and arranging deliveries. Moreover, many do not own a car to benefit from ‘pick and collect’ systems that work very well in EU. The large Chinese ecommerce players are capitalizing on this need for speed with many offering deliveries in minutes rather than hours or days like in US or EU. To make it happen, they are investing in a sophisticated distribution network and leveraging, when possible, their offline footprint - i.e. Alibaba leverages Hema to deliver in under 30 minutes.

The digital experience is a must, products are no longer enough. The Chinese consumer wants to experience beyond the end-product. They want to connect with similar buyers, explore options through VR, video-based shopping and promotion tools. Thus, platforms such as DU for all sneaker fans or Xiaohongshu for all female cosmetic products are thriving by offering consumers an enhanced virtual shopping and usage experience.

Sustainability is a legal imperative. As the largest ecommerce market in the world, the Chinese ecommerce channel generates thousands of tonnes of waste every single day. Given the magnitude of the issue, and in contrast with other geographies where the change is slowly led by the industry, the Chinese government has started to act. It is releasing a series of guidance documents that aim to use less plastic material in ecommerce, make it more recyclable and reusable where possible.

What all of this means for packaging

Avoiding waste is the most sustainable option. As ecommerce grows, brands and ecommerce retailers start to realize the environmental impact of non-suitable packaging. Product leakage and breakage, due to lack of ecommerce ready packaging, amounts annually to tonnes of product waste & unproductive CO2 generation, which could be avoided. Plastics are excellent materials to provide strong, ecommerce ready primary packaging that reduces CO2 footprint, product waste and secondary protective packaging more than any other material today. However, the use of plastic is not without its challenges. Plastic recyclability is an issue that players like Amcor, together with the help of consumers, industry and the government, are committed to resolve.

Smart is the new normal. As Chinese consumers look for the next shopping and user experience beyond the product, smart packaging is becoming an imperative. Virtual reality elements are often used today to enhance the unboxing or consumption experience. Serialized QR code and adjacent technologies are a must to deliver personalized services, protect the brand identity against counterfeits and provide with the confidence the consumer needs in a fast and fragmented space.

Development is counted in weeks. The pace of change is unprecedented. Brands need to satisfy ever evolving consumer needs in a highly competitive landscape, where the barriers to entry have never been lower. The classic months long, waterfall development process does not deliver winning products anymore. Therefore, fast, enabling technologies such as digital printing or virtual product simulations are an imperative for brands to agilely test, learn, fail fast if required, and deliver products that can quickly evolve to continuously adjust to the consumer needs.

In summary, the Chinese ecommerce space is thriving and quickly evolving. It requires players across the value chain to adjust to new challenges, many of which can be solved through smarter, better protected, greener and faster-to-market packaging.

The good news is: Amcor can help with all of that.

Discover more about how packaging can help you achieve ecommerce success in our latest e-book or use our contact form to speak to one of our packaging experts.

Sources:

1. https://www.digitalcommerce360.com/article/us-ecommerce-sales/
2. https://ecommercenews.eu/ecommerce-in-europe-was-worth-e534-billion-in-2017/
3. Where to Play in a New Digital and eCommerce World – Kantar Consulting
4. Slice - www.slice.com

Amcor will participate in the China International Import Expo from the 5th to the 10th of November 2019. We look forward to meeting you there!