How to Evaluate Omni-Channel Packaging
The consumer shift in how purchases are being made presents an opportunity for brands with the inventory, IT infrastructure and supply chain expertise to meet the needs of today’s “connect anywhere, buy anytime” shoppers. At the same time, this new omni-channel environment also presents new challenges that require new solutions—especially packaging solutions.
Packaging that works in the traditional retail distribution chain may not be adequate for the increasingly unpredictable omni-channel distribution system, and consumer packaging preferences in the store may be different for packaging delivered to their homes. If you’re a packaging designer, packaging engineer or supply chain manager, there are three important questions you need to ask about your omni-channel packaging if you want to compete (and succeed) in the growing direct-to-consumer world.
Is Your Omni-Channel Packaging Designed for the Omni-Channel Supply Chain?
The requirements of “traditional” packaging are well established, but the omni-channel shipping environment and its associated supply chain processes are still in their infancy and less understood by even the major players in the space. According to a survey of senior supply chain executives from the world’s largest consumer goods and retail companies, 81% believe their supply chain is not fit for omni-channel, and 76% think that supply chain transformation (rather than incremental change) will be required to succeed. This may be true in your case, but short of reengineering your supply chain, the next best thing may be reengineering your omni-channel packaging.
Packaging shipped from a warehouse direct to a customer’s home experiences 10 to 15 times more “touches” than a similar package shipped via the traditional retail supply chain. These additional touchpoints and their respective hazards help explain why 64% of online shoppers have received a damaged product. If your packaging isn’t designed with these additional touchpoints and hazards in mind, your brand may suffer just as much damage as the products themselves.
The Interactive Media in Retail Group’s 2021 Home Delivery Report found that 39% of consumers consider inappropriate packaging as the reason for a damaged product (up from 33% in 2010). Compared to the 40% of consumers who consider handling by the delivery agent as the likely reason for receiving a damaged product, it’s clear that packaging matters in the eyes of consumers (whether the damage was a result of bad packaging or not). In addition to brand damage and lost revenue, the Association for Packaging and Processing Technologies estimates that a damaged product can cost up to 17 times more to replace than the original cost to ship.
How to Ensure Packaging is“Designed-for-Distribution”
Designing packaging that withstands the multiple touch points and hazards of the omni-channel supply chain is as easy as 1-2-3:
- Know Your Distribution Environment – Learn how your products move through the various lanes and channels on their way to consumers. Use this knowledge to identify sources of distribution hazards and to specify the level of packaging protection needed to minimize damage in transit.
- Test the Package – Once you know the actual hazards your products and packages face en route to consumers, you can select the appropriate laboratory test protocols to drive package design (such as ISTA and ASTM testing standards and procedures).
- Review, Improve, Iterate – Distribution hazards change. Review and retest packaging designs periodically, especially before and after changes in your distribution strategy.
Is Your Omni-Channel Packaging Return-Ready?
How a package gets to the consumer is an important design consideration, but so too is how the package gets back to the store or warehouse. According to the 2018 Omni-Channel Retail Report, shoppers expect to return up to 25% of the goods they buy online. This is the average across all age groups; the actual “expectation to return” rate varies considerably by generation: Gen Z is two times more likely than Millennials and Gen X (and six times more likely than Baby Boomers) to order multiple items with the intention of making returns.
The high return rate is easy to understand when you consider the experience of purchasing something online. Unlike traditional “brick and mortar” shopping experiences, shopping online requires purchasing products without being able to physically interact with them. It stands to reason that online shoppers are more likely to be dissatisfied with their purchase after it arrives. The question is whether the packaging it arrives in helps or hinders the return process—and to a larger degree, whether it delights or frustrates omni-channel shoppers who anticipate returns as part of the online shopping experience.
Return-ready e-commerce packaging should be designed to prevent damage to the packaging during opening to facilitate an easy return. A tear strip, for example, can give consumers easy access to their products while a hot-melt strip can make it easy to reseal the packaging and return it if the product is damaged or otherwise not up to their liking.
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Is Your Omni-Channel Packaging “Smart” Enough for Omni-Channel Shoppers?
The omni-channel consumer doesn’t care where the product is coming from—they want to know how quickly it will arrive: 73% of consumers want the ability to track orders across all points of interaction. This means going beyond simply offering an estimated delivery date, and that requires smarter packaging.
Imagine RFID sensors and advanced barcodes that can be used to track-and-trace products throughout the supply chain, allowing consumers (and supply chain managers) to see the exact location of a parcel in real-time. “Smart” barcodes can also serve as a gateway to experiential content such as recycling information, assembly instructions, recipes, tutorials and usage guidance. In an increasingly competitive market, unboxing experiences like these can set you apart from the crowd and drive customer loyalty.
Smart packaging can also mean packaging designed with “second life” in mind. According to the Billerud Consumer Panel, 35% of consumers said “give me a beneficial second use of packaging” when asked what they would like to see from packaging development. If the packaging of a product is highly functional, beautifully constructed or just extremely practical, it can easily have a second life that supersedes the life of a product. An attractive packaging design with a high-quality material can ensure your brand stands out in thousands of stores and millions of homes, without spending a single marketing dollar.
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Well-designed packaging requires methodical testing and a thorough understanding of how your products move from origin to destination. If you aren’t sure where to start, what to look at or what to do with the information in front of you, Billerud can help.
We’ve worked with some of the biggest brands in the world to discover savings opportunities hidden in their supply chain, so we know how to analyze even the most complex distribution channels to design fully-integrated, end-to-end packaging programs that eliminate waste, lower costs and drive revenue.