Consumer purchasing behaviors have certainly evolved over the last decade. Regular trips to retail stores have been replaced with subscription models, personal delivery or pick-up services and one-hour delivery windows. Technology has driven the expectation of convenience through every facet of life. Packaging decision-makers agree: 75 percent say convenience drives their buying community to purchase online, according to a Jabil-sponsored survey.
Essentially, everything comes down to the customer journey—the series of steps your customers go through in engaging with your company. Packaging is only one touchpoint within the customer journey - but it is a critical one! That's why we sat down with Phil Hague, the Managing Director of Radius Innovation & Development, a Jabil company focused on product design and ideation, to discuss packaging design, the trends driving it and how companies can elevate the customer experience through e-commerce packaging.
A decade ago, the barriers to entry were quite high (and expensive) for new Consumer Packaged Goods (CPG) entrants amid a landscape of large, established brands that dominated their categories. Things have changed with the growth of e-commerce as a channel.
"The landscape has really shifted as most categories are seeing upstart competitors," says Hague, reflecting on the changes within the industry. "People making interesting products in their garages weren't able to compete in the past, because they weren't able to get the placement. But now, they are able to use e-commerce channels and get into a lot of different categories, particularly with younger consumers."
The main challenge for today's brands is reaching the new generation of consumers, while maintaining the retailer relationships with the big box stores that drive the majority of their revenues.
"Packaging innovation plays an important role for brands to make the transition from the past retail relationship into this new world of e-commerce," advises Hague.
The teams within Jabil and Radius spend a lot of time looking into trends driving disruption in the industry. "It starts with big picture trends like global urbanization," says Hague. "There are more people moving to cities globally. Homes are getting smaller in many cases, so there's less space for big packaging or a month's supply of product."
This means there is an increase in how frequently consumers must do their shopping. However, it also means there's more out-of-home consumption as well. Urban consumers have a lot of consumption options out their front door, so they are less likely to cook their own meals every night or do their own laundry.
"We need to be thinking about how we really cater to that out-of-home experience as much as in-home," recommends Hague.
The changing demographics of the next generation of buyers require new ways to package and sell your products, too. "The new consumer is increasingly looking for a unique experience. They are spending their disposable income more on experiences and less on products, so how can packaging and products really deliver an experience that engages?" asks Hague.
"The most sophisticated brands work to understand the full context of how their consumers use their products and design packaging that fits real needs," says Hague. The critical piece here is how consumers actually use the product, not how brands think they will use it.
Some packaging formats, such as single-use packaging, is growing in popularity. "Detergent pods are an example that have really taken off, because they are tailored specifically to functional habits around each usage occasion - it eliminates a lot of steps for the user. Occasion-based packaging can offer opportunities in many categories," shares Hague.
Only 44 percent of brands say they create different packaging for e-commerce and store sales, according to the recent packaging decision-makers survey sponsored by Jabil. So what is the value in creating this differentiation for brands?
"Brands are so focused on delivering a retail experience," says Hague. "Their whole infrastructure is built on that."
When it comes to the e-commerce experience, however, consumers typically receive a corrugated box with a liberal amount of packing material and the brick-and-mortar package dropped into it. There are two big issues with this practice:
"All the features and cost utilized for on-shelf packaging is wasted in the e-commerce model," says Hague. "Brands must think about the out-of-box experience they want to deliver to consumers, from the moment they first open that package, no matter the commerce model."
The detail is in catering to the customer experience every step of the way. "Well-designed e-commerce packaging is just another way for the brand to say: we are catering to your experience down to every detail. And some of the most successful e-commerce brands are doing that."
Some subscription services, for example, are tailoring their product to fit in a typical mail slot. This gives customers the peace of mind that they don't have to worry about what will happen to their packaging if they are not home when it's delivered. The whole experience is designed and really thought-through for the e-commerce channel.
"The best brands consider every touch point with their consumer as an opportunity to build the relationship" says Hague. Packaging is a key opportunity for brands to build emotional connections.
Custom packaging allows a curated experience, where specific features can be integrated to help elevate the experience or highlight a specific product benefit the brand is trying to communicate. "In addition, the perception of the package is just as important: how we deliver a package that reinforces the brand personality that was communicated in other touch points builds brand confidence over time," says Hague.
But aligning all the touch points across the customer journey can prove to be a difficult task. "We find that launching new packaging is an exercise in change management," explains Hague. "You could have the greatest solution in the world from a user standpoint, but if you haven't done the work to align the internal stakeholders, it's going to be very tough to move ahead."