As Online CPG Sales Boom, Brands Rethink Packaging Practices
For decades, manufacturers of consumer packaged goods (CPGs) have had a daily battle on the shelves of brick-and-mortar stores, competing for shoppers' attention and hoping to earn prime shelf space right at eyelevel. But with the rapid growth of eCommerce, the retail landscape for CPGs is changing.
As Pregis’ Clint Smith noted in Parcel magazine, “consumers are drawn to distinctive shapes, colors, powerful label graphics, unique dispensing options, ergonomics, and other attributes that enhance the experience and facilitate the purchase” during those few key seconds when purchasing decisions are made.
That was the complicated part. Shipping these nondurable goods - including packaged foods, beverages, toiletries and over-the-counter drugs, just to name a few - was the simple part. Since these products were delivered to stores by truck and weren't expected to endure the rigors of parcel delivery, they were palletized and faced little risk of damage.
But with the rapid growth of eCommerce, the retail landscape for CPGs is changing. According to the digital marketing company Tinuiti, online sales of CPGs surged nearly 35 percent in 2018, fueled largely by pet supplies and groceries. Led by the upstart online retailer Chewy, eCommerce sales of pet supplies rose about 60 percent over a three-year period ending last August, according to research from Nielsen and Rakuten.
Similarly, research from the Food Marketing Institute (FMI) found that almost half of U.S. consumers are purchasing at least some of their groceries online, and by 2022, FMI expects online sales to account for about 20 percent of total grocery sales. Cereal, tea and nutritional beverages are among the food products seeing the biggest growth in online sales, according to Nielsen and Rakuten.
With more consumers shopping online, the battle for dominance on store shelves is beginning to take a backseat as brands focus on creating a rewarding unboxing experience for customers.
Secondary Packaging Solutions
Tech-savvy younger shoppers, busy parents, and the growing population of retirees and the elderly all are taking their purchasing power online to capitalize on the convenience of doorstep delivery. That trend has created a challenge for manufacturers and distributors of CPGs: choosing new packaging solutions to protect products throughout the bumpy parcel delivery process.
With more consumers shopping online, the battle for dominance on store shelves is beginning to take a backseat as brands focus on creating a rewarding unboxing experience for customers. In addition to primary packaging - the materials that touch the product - brands now need high-quality secondary packaging to ensure products reach customers in pristine condition.
Brands that fail to upgrade their packaging for online CPG sales risk losing customers after products arrive damaged. Manufacturers are being forced to re-evaluate their packaging practices to make every product "parcel ready."
Making the Right Choice for CPG Shipments
With the unboxing experience in mind, manufacturers face another difficult choice: whether to entrust a third-party distributor to fulfill their orders or whether to maintain brand control by fulfilling orders internally. There are advantages to both options because third parties may have parcel fulfillment expertise, but they also are unlikely to care for the brand as much as the brand owners themselves. For those choosing to keep distribution in-house, the easiest, most immediate thing to do is to properly protect retail packaging with the right protective packaging.
In this new era of eCommerce CPG fulfillment, consumers expect brands to make the right packaging decisions. After all, delivering damaged products is one sure way to lose customers and depress customer lifetime value. When it comes to their CPG deliveries, customers really do want the total package.