E-tailers must wrap up a better package
Amazon made its UK entrance in 1998, selling books online from a single office in Slough. Nineteen years later, the company is now the country’s largest e-tailer, a shopping behemoth which has expanded its original inventory to offer everything from vegetables to drones.
The exponential growth of Amazon over the past two decades can perhaps be attributed to what founder Jeff Bezos calls the company’s three “big ideas” of low prices, fast delivery and vast selection. But with the ability to have more or less anything you can think of rushed to your front door comes an unprecedented number of parcels and packaging.
Business-to-consumer parcels such as Amazon’s account for 42 per cent of all postal deliveries in the UK, with this figure expected to rise. According to commerce consultants Pitney Bowes, if parcel volumes continue to increase at 2016 rates, the UK could be sending 3.9 billion parcels a year by 2021.
E-retailer packaging challenges
Amazon and the tens of thousands of other e-tailers doing business in the UK therefore face a number of challenges when it comes to coping with this growth. Firstly, there is the sheer amount of cardboard and plastic waste created by sending items by post. Shoppers are increasingly aware of the environmental impact of using these materials and do not wish to contribute to the problem.
There is also the issue of making parcels fit for purpose. A phrase has been coined for customers’ packaging irritations – “wrap rage”. Many of us have ordered an item online which could have easily slipped through a letterbox, only for it to be delivered as an oversized parcel. Isabel Rocher, former Amazon EU head of packaging supplies and now head of e-commerce solutions at parcel firm DS Smith, says many e-commerce packages are 50 per cent air. Other well-known bugbears include boxes which cascade with foam upon opening, and impenetrable hard plastic packaging requiring a knife and a steely nerve to prise open.
Stephen Mills, managing director of packaging consultancy TPG, says online packaging innovation has failed to keep pace with the spiralling volume of parcels being sent out. “E-tailers cannot ship goods at present levels – it’s not sustainable,” he says. For the e-commerce industry, “oversized packaging, the amount of material and related carbon dioxide are the biggest issues”.
However, a desire to send items on time is trumping investment in better, more sustainable parcelling methods. “Just keeping pace is the priority,” says Mr Mills.
Amazon does not release figures about its materials consumption, but it is not hard to imagine the levels of cardboard and filler materials – bubble wrap, polystyrene and so forth – required to wrap the millions of items it sends out in the UK each year. Mr Mills also points out that the packaging industry itself is dominated by big corrugated cardboard suppliers that are often unwilling to sell or develop alternatives.
Standardised box sizes are a key problem, both Mr Mills and Ms Rocher note. “Attempts are made to optimise box sizes and infill, but invariably fixed sizes will always lead to over-packed or oversized parcels,” says Mr Mills.
To counteract this, Amazon has invested in new technologies such as Box on Demand, a machine which creates a snug delivery box to fit the exact dimensions of each product. Such investments have been limited – as of May 2016, Amazon used around four such machines in Europe – and the technology has not yet been fully rolled out across Amazon’s giant global fulfilment centres.
E-tailers that make intelligent, economical packaging their focus could find themselves well ahead of their competitors
Amazon also runs programmes to teach suppliers how to make efficient, “frustration-free” internet packaging, which is easy to recycle and easy to open. At a May 2017 conference in Washington DC, Mr Bezos claimed Amazon had saved 55,000 tonnes of waste in the past year as a result of such efforts. However, the scheme appears to largely rely on suppliers changing the packaging of the products Amazon sells, rather than Amazon honing its own parcel offering.
One potential evolution in the development of e-tail parcels is omnichannel packaging. Ms Rocher says the goal of this concept is for packaging that works anywhere; to have a robust design solution that delivers on shelf, online and during general distribution. This creates a more streamlined supply chain. Omnichannel packaging is no mean feat, as the journey of a product sold in store is very different to one picked from an online warehouse. The typical e-commerce supply chain has more than 50 touchpoints or moments when the product is handled.
“This is far more than the handful found in traditional retail, so the packaging needs to be designed to meet many more situations,” says Ms Rocher.
Mr Mills says that looking further ahead, the ultimate goal is zero packaging. The industry’s big question is whether consumers will want packaging at all. “Increasingly they don’t; our waste handling systems are at capacity and consumers are pushing back on what they see as unnecessary content,” he says.
As consumers become more aware than ever of the implications of poor packaging, e-tailers that make intelligent, economical packaging their focus could find themselves well ahead of their competitors.