How e-commerce companies can differentiate customer experience through packaging.

Managing the boom in E-commerce sales

Consumer behavior never stops changing and evolving. But the pace of that change has recently seen consumers globally experience a massive shift in how they buy and their consumption habits.

With restrictions in place regarding physical distancing and as a consequence of stay-at-home orders, consumers were forced to shop differently. As a result, there has been a near universal shift of shoppers online, a new shopping behavior that many will stick with post the COVID-19 crisis.

The pandemic has been a major contributing factor to these rapid changes in buying behavior. A change in market dynamics that e-commerce companies have had to quickly adapt to, rethinking product and customer strategies.

Read more about what we saw as the trends and changes in 2020 with the CPG market and packaging.

In markets that had high online conversion rates before the pandemic (e.g., UK and the US), e-commerce continues to grow across all product categories. According to McKinsey research, more than 60 percent of global consumers have changed their shopping behavior.

People have been forced to live and work differently, which has had a direct impact on consumption patterns and shopping habits. Consumers have for example when faced with the challenges of the pandemic crisis adapted quickly to buying groceries online, often buying in larger volumes and bigger items.

With the increase in demand for e-commerce shipments especially for heavier or bulkier shopping items, it has presented a new set of packaging challenges to address. And this is where Persson Innovation can make a difference. Our durable and sustainable paper handles are better for the environment, comfy to grip and enhance the overall customer packaging experience, a small investment for a big return.

Read more about Persson products

A growing Direct to Consumer market

Also, as the e-commerce market overall has grown, so to in parallel has the Direct to Consumer (D2C) segment. D2C marketing is a strategy where businesses promote and sell a product directly to the end consumer, cutting out any intermediaries.

The number of businesses that independently manufacture, promote, sell, and then ship their own products has increased, growing in popularity hand-in-hand with the subscription box business sector.

The subscription box segment now covers a wide range of product categories, including beer and wine, child and baby items, meal kits, pet food, razors, and more.

McKinsey says that the subscription box sector alone has grown by more than 100 percent a year over the past five years. The largest such retailers generated more than $2.6 billion in sales in 2016, up from a mere $57.0 million in 2011.

Making first impressions count

In e-commerce, building a relationship with your customer can be an uphill challenge. Unlike the world of “bricks and mortar” retail stores, you don’t have the chance to personally interact with your customers.

For e-commerce the number of customer touch points are limited, you place an order and then receive your shipment. In a way, customer contact only really starts to happen when a customer receives their items, and when that box arrives it’s when first impressions really count. Applying a Persson handle to an e-commerce shipment makes a package stand out, it’s far easier to transport and shows your customers that you really care about the whole shopping experience.

A recyclable paper handle conveys “premium quality” a great point of differentiation to have especially in the subscription-box market. It also reinforces sustainability credibility by using paper and improves the overall customer experience through better ergonomics.

Request a handle sample.

Differentiation on experience not price

Without the face-to-face interactions, and the information that a customer can gather from an in-store visit, the online buying experience has to work much harder. Consumers today are far more swayed by online reviews, word-of-mouth (WOM) personal recommendations and referrals from within their network.

Just like CPG companies, e-commerce brands are looking to minimize the number of product returns, and to increase the number of happy and satisfied customers. By delivering a consistent and positive brand experience it means that e-commerce players can differentiate on service, not just price to win and retain their customer base.

Using packaging to make a positive impact

To accelerate efforts to grow market share, e-commerce companies are reinventing the customer experience by providing easy-to-handle, e-commerce-specific packaging.

Premium packaging creates moments that are ideal for social sharing. Who hasn’t watched the plethora of unboxing videos on YouTube and Vimeo and not come away smiling?

Most consumers admit to being somewhat influenced to make a purchase after viewing an image or video of a product they came across when researching online. So, packaging has become an integral part of the product experience.

E-commerce businesses have been quick to recognize and nurture social media as a way to influence online shopping behavior. Networks such as Instagram, TikTok, Facebook, Pinterest, etc. have provided a great way for users to visualize their own personal online shopping experience.

Packaging no doubt can enhance a product’s look and feel and reduce the environmental impact, if it is recyclable and sourced from sustainable materials. Using packaging which hasn’t been well thought through can negatively impact the customers’ experience and brand perception.

As the e-commerce market becomes more competitive, small points of difference can have a huge impact on the customers decision making process. And those points of difference can be magnified when posted across social media.

Request a handle sample.

The growth of subscription-box services

Subscription e-commerce has been one of the reasons that D2C marketing has grown so rapidly. Signing up to subscription services offers subscribers access to personalized collections with exclusive deals and personalized offers.

Broadly there are three types of subscriptions available, classified as:

Curation, which offers personalized items based on individual consumer preferences (BirchBox)

Replenishment, which offers a steady supply of consumable goods such as razors (Dollar Shave Club)

Access, which offers exclusive selection or discounts on items a consumer was probably going to buy anyway, such as food (NatureBox)

Brands in the subscription box sector really try to focus not just on their products, but also on the overall customer experience. They need to foster positive word-of-mouth recommendations to combat a sector known to be particularly prone to high subscriber churn.

Many players in this segment see packaging as a way to stand out, but also because it reinforces a great end-to-end D2C experience. So, brands know that generating positive reviews attracts customers to sign up. With a target audience known to be fickle when it comes to assessing a brands performance, packaging can make all the difference between churn or a devoted follower.

Read more about Persson products

McKinsey research shows that 15 percent of online shoppers have signed up for one or more subscriptions to receive products on a recurring basis, frequently through monthly boxes. With a market for subscription e-commerce box services estimated to be as big as $15 billion, and the largest online subscription businesses generated $7.5 billion in combined sales in 2018, up 30% from 2017.

Looking to reduce product returns and increase the number of satisfied customers is one of the primary motives behind product differentiation through packaging. By making a consumer’s life easier, happy customers tend to remain loyal customers.

Packaging can add “perceived value” to the brand because great packaging shows your customers that you value their experience and can of course help a brand stand out from the crowd.

Persson Innovation – A global company with strong local roots

The team at Persson Innovation are dedicated professionals, responsible for everything from handle design and production to ensuring we keep on top of our sustainability commitments.

Persson’s extensive global experience puts us in a strong position to develop a sustainable paper handle proposition for the e-commerce sector. We offer alternative materials to plastic and provide packaging concepts that focus on high quality materials and production values.

Request a call back, give us the opportunity to call you back to answer any questions or inquiries that you may have.

 

Author: Nancy Woodrich. Director of Sales, North America