Online Retail Packaging
Does packaging require a revamp for online shopping? Packaging trends to be led by Mobile Commerce. Online retail represents exciting opportunities for South African marketers. Although the sector is still relatively small compared to total online sales, it’s growing.
A recent study by Dunnhumby showed online grocery shopping in emerging markets like the USA, China, Slovakia, Czech Republic, Poland, Ireland, Japan and South Africa was growing by 97%. In 2014, the study showed, these markets recorded an online sales penetration of 0.9%.
Although the base is small, projections are large: online retail in South Africa could potentially grow to achieve the 3.5% of total grocery sales over the next few years.
Two key factors will drive this growth: the proliferation of smartphones as we move towards a single screen market (instead of owning both laptops and smartphones consumers will use the latter for all online activities) coupled with continued dominance and growth of the millennial market.
Packaging headed for the dustbin? But with such a strong focus on online shopping, where does this leave packaging and the intimate interaction it enjoys with consumers in the purchase process?
Some argue packaging loses its edge in the online retail space. The holy grail of traditional retail, the store shelf, is dismantled and with it the chance to engage consumers’ senses and their emotions in positively influencing purchases.
Enter Advanced Analytics and the ability to target online customers with promotional items based on predictive Analytics working towards a forecast of what the online shopper will probably purchase. All these sophisticated algorithms working in real time in the background whilst the e-shopper is making product selections. Think of it as e-impulse buying.
The opportunity for competitive differentiation may be diluted, and all prospects for encouraging consumer brand engagement and brand loyalty, through on-pack brand and product information, potentially disappears at the touch of a button.
This further limits promotional opportunities through branded promotional packs and on-shelf visual disruption.
Prime opportunity for loyalty, retention and free advertising. Online shopping requires slightly more robust packaging to cope with the slightly more stringent courier leg. This probably means high GSM grades of paper, higher microns of plastic material and less influence on high graphic printing. The printing shift is debatable, however, while online packs require less demand to be eye catching, there is a strong need to consider the reusability of the slightly more robust packaging and thus the importance of the brand re-enforcement gained from a pack reused.
But the other side of the online retail coin tells a different story. Online products delivered in premium packaging provide a positive consumer sensory and emotional journey altogether, one that taps into the feel-good emotions associated with giving and receiving gifts.
A 2013 survey by US logistics solutions company, Dotcom Distribution, showed 52% of consumers surveyed said they were more likely to make repeat purchases with online companies that used premium packaging.
Packaging’s role as a powerful branding tool remains intact when quality branded boxes and bags are used; 90% of the online shoppers questioned, reused the packaging their online purchases arrived in.
Not only does this represent an opportunity to leverage customer retention, but also takes advantage of free advertising space (as many as 30% of consumers uncover new products after seeing other shoppers carrying coveted branded packaging like bags and boxes).
The packaging influence by this growing online retail trend will be largely driven by the growth of internal commerce itself. The key factors of this growth are smarthone penetration, broadband coverage and retailers gearing towards E and M Commerce.
By Gareth Pearson