With packaging now a vital part of the product proposition, innovative brands in the online direct-to-consumer (D2C) market are giving customers more than just a product, they’re using packaging to deliver an experience
There are many strange internet phenomena, but unboxing videos tops them all. They’ve skyrocketed in popularity on YouTube; 129 million web-page references isn’t to be sniffed at, nor is a growing movement on social media. Unwrapping a subscription box, smartphone, make-up, even vegetables: that so-called moment of truth brings supposed rapturous joy to some.
[Packaging] is the store front, experience, service and product for direct-to-consumer or D2C brands. It replaces the store as the place where an emotional relationship is made and reinforced every time with the customer
Online shopping brands are injecting fresh vitality into packaging. Take Lifebox, which supplies healthy snacks and wellness products each month to a fanbase in the UK. Their smart cardboard box, with specially folded tissue paper, is carefully curated. You don’t want too much space, it might feel a bit empty; too small a box and subscribers feel hard done by, and it has to be “Instagramable”.
“The box and wrapping are integral to the experience,” says Lifebox managing director Howard Rawlings. “The doorstep opening must feel valuable, as well as surprise and delight every time; subscribers must believe they are getting value for money. We add a ribbon round the box if it’s gifted to make it feel even more special.”
Packaging is the “storefront” for D2C brands
They aren’t the only ones. Apple and Amazon set the scene years ago. Now it could be Revolution Beauty, BrewDog, HelloFresh or Graze. What can seem like ordinary consumer products, from simple ingredients to razors, are being presented as extraordinary through one important medium: their packaging.
“It is the store front, experience, service and product for direct-to-consumer or D2C brands. It replaces the store as the place where an emotional relationship is made and reinforced every time with the customer,” says Michelle Du Prât, executive strategy director at Household.
It comes at a time when online retail is red hot. Almost nine out of ten UK consumers are on Amazon, while more than £12 billion was spent on online groceries in 2018; it’s one of the fastest-growing channels, according to Mintel. In Germany, online shopping is almost universal. It means packaging is no longer shackled by in-store shelf space or constraints along the supply chain.
“D2C packaging doesn’t need to say ‘buy me’ like it does in a supermarket aisle either, so the opportunities to innovate and take a competitive advantage are there to be exploited,” says Paul Jenkins, managing director of ThePackHub. “Packaging is now an integrated part of the product proposition. The aim is to engage people in meaningful ways.”
Creative packaging solutions can be expensive
The biggest challenge for online brands is to resist homogenisation, as well as push for intelligent design, one that speaks of brand personality and tells a story. After all, the bar has been set high by some companies and we now live in an era of great consumer expectation. There are many reports of packaging being so good that it doesn’t even get thrown away.
“The issue is that D2C brands can often lose significant parts of their profitability in packaging. It is a higher proportional cost of goods sold compared to shipping a pallet of items out to retail stores,” explains Paul Smith, SAP’s customer experience global industry principal for consumer products.
What it does mean is that digital D2C brands invest more time, money and effort in how a product is housed. They’re also able to innovate quicker than many traditional players since they control the relationship with the customer, beta-testing new packaging rapidly.
“It used to take 15 days to engage with a buyer who was expressing negativity after experiencing issues; that’s down to 48 hours with the advanced statistical analysis, which helps identify any needle in a haystack of responses,” says Mr Smith.
How D2C brands are now paving the way for competitors
Packaging by D2C brands has been innovative on the sustainability front too. Riverford Organic Farmers supplies weekly vegetable and meat boxes to people’s doorsteps. It’s one of the first companies in the UK to use compostable nets made from forestry waste and collects all the boxes it delivers.
“We’re able to invest in packaging that can be reused, up to ten times for some of our boxes. Reuse is far more sustainable than recycling after a single use,” says Greg Penn, Riverford’s recipe box commercial manager.
“As we’re in control of the product from field to doorstep, we can ensure the packaging is fit for purpose. We also don’t add superfluous packaging to help sell products as it’s not sat on a shelf and a customer has already made the decision to purchase it.”
D2C brands that use so-called conversational commerce can also help educate people about sustainability issues. At Riverford they’ve introduced leaflets highlighting this in their boxes. “These explain not only what the packaging is made from and what to do with it when it’s finished, but also why we have to use it,” says Mr Penn.
Splosh, which sells laundry products via a subscription box online, claims to cut plastic packaging waste by 90 per cent when you return their containers. This is another D2C, digital brand looking to meet consumers’ growing needs for environmentally responsible packaging. Smol, maker of laundry detergents, has similar aims.
In the future, innovation observed in D2C and online brands could spur on change elsewhere. “As we become the early adopters, a better way of packing should trickle through to the traditional retail environment,” says Mr Penn. “But this is largely driven by consumer demand. If the traditional retailers believe there’s a commercial benefit to reducing their environmental impact based on customer opinion, then they’ll do it.”