Omnichannel packaging: The future of ecommerce

A solid ecommerce strategy is essential for modern brands trying to keep pace with the competition. As customers increasingly browse, buy and repurchase items in a variety of ways, the brands that succeed will be those that adapt their offering to meet these needs, and are able to scale and innovate quickly for ecommerce.

But with complex supply chains to consider, how can primary packaging help brands achieve success in an omnichannel world?

Right now, most brands are grappling with a dilemma: whether to simplify their supply chains or design products specifically for each channel. Some brands are creating specific packaging formats per channel, delivering different and more customized experiences. Others prefer a unified packing design that performs in both online and offline environments, simplifies inventory and maximizes efficiencies across the supply chain. Here’s a closer look at both these approaches, and their respective benefits and challenges.

Channel-specific packaging

One of the biggest challenges of designing packaging specifically for ecommerce is ensuring it can withstand a complex supply chain. Brands have spent decades optimizing the typical five points of handling across the traditional manufacturer-distributor-retailer model. But now, there can be 10 points of handling or more. This has increased the logistics burden and chance of product damage or failure.

That said, packaging design can in fact help brands overcome these challenges. For example, replacing glass and aluminium cans with flexible pouches and PET containers that are ecommerce-ready prevents damage and reduces the need for extra protective wrapping, polybags and secondary packaging, cutting costs considerably. This is possible because ecommerce-ready packaging is free from the rules of on-shelf packaging (such as a bulkier design to stand out). Brands can instead embrace shapes and sizes optimized for shipping efficiency and in-home use versus shelf presence. Not only does this streamline the supply chain, but promotes improved sustainability. Recycling-ready primary containers minimize excess packaging, improve recycling rates and reduce overall waste.

So, what are the benefits of a channel-specific packaging approach? One big advantage is faster experimentation: ecommerce makes for the ideal test-bed for product development. This is thanks to short-run printing technology, such as digital and offset printing, which enables pre-launch testing and can reduce speed to market from two years to 3-6 months. Mars, for instance, uses its online channel as a ‘test and learn’ platform. The brand can then gauge consumer demand and make improvements before stocking in brick-and-mortar stores, without the risk of wasted inventory.

Ecommerce also affords brands the opportunity to adapt prices. Depending on the category, customer behavior and competitors, brands with sophisticated real-time data collection and analysis capabilities can monitor the marketplace and tweak pricing accordingly. Smart omnichannel retailers will use ecommerce to sell a tight range of products in order to support their multi-channel positioning, discounting online products heavily (and in-line with competitors such as Amazon) to reinforce the perception of competitive pricing.

At present, a channel-specific packaging strategy is working well for many companies –particularly nimbler ecommerce brands such as meal kit company Hello Fresh and toothbrush brand Goby. Some large brands are taking steps in the same direction: Procter & Gamble just introduced an ecommerce-only version of their Tide laundry detergent, swapping their 96-load PET jug for a lighter weight bag-in-box.

Omnichannel packaging: is this the future?

Some big brands are exploring a different route altogether: one, unified omnichannel pack. In other words, product packaging that delivers the same performance on the shelf, online and throughout the supply chain. Those that believe online and retail primary packaging should be identical moving forward do so for reasons of brand consistency and operational efficiency. But before this can happen, brands have the bigger challenge of creating one lean, integrated supply chain. And with less than a quarter of CPG executives in Europe feeling confident they’re on the right track to omnichannel success, it’s clear that there is work to be done.

Fortunately, packaging can help. Specifically, smart packaging, which uses technologies such as Radio Frequency Identification (RFID), serialized QR codes, and Near Field Communication (NFC) to collect real-time data at every step of the supply chain, can drive greater transparency and efficiency for both brands and consumers.

Smart packaging drives engagement through targeted communications that help start a two-way conversation with customers, sharing detailed product information and special features. From a logistical perspective, goods can be tracked from A to B; perishables can be monitored and kept in optimum conditions; and counterfeit products can be identified from genuine ones. Consumers can learn about the origin of their products, as well as where the package can be recycled. They can also reorder and add the product automatically to their virtual shopping carts.

This real-time data allows brands to optimize for demand shaping and predictive forecasting, streamlining operational efficiency. This reduces the risk of inventory shrinkage, allowing CPG brands to achieve better margins for their business. And, with an integrated omnichannel supply chain in place, there is the opportunity to begin exploring the possibilities of unifying packaging design across both online and brick-and-mortar, saving costs by reducing the number of packaging formats, and keeping brand consistency across channels.

Are you ready for the ecommerce evolution?

Ultimately, whether a brand develops identical packaging designs across channels will depend on the product and SKU in question. Where competition from small start-ups is fierce, brands will increasingly move faster with channel-specific packaging in order to experiment and capture growth. For products that see similar volumes of sales across brick-and-mortar and ecommerce, identical omnichannel packaging might be the best approach.

Summary of Omnichannel vs. Channel-Specific Packaging

Consider omnichannel packaging if...

• Your brand already sells high volumes in brick-and-mortar stores
• Brand consistency across all channels is a requirement
• Your supply chain is lean and integrated enough to realise the benefits of simplification
• You can deploy smart packaging to make omnichannel packaging more ecommerce-savvy

Consider channel-specific packaging if...

• Disruption from small brands and upstarts in your market is high
• You need to experiment and capture growth quickly
• Tailoring packaging to specific needs of each channel would benefit your consumers, i.e. robust ecommerce packaging that reduces leaks and breakage, post-box-friendly sizes
• You want to offer shoppers promotions by channel without direct price comparisons
• You can deploy smart packaging to support new business models

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.