Growth of eCommerce

John Weedon, Managing Director of the Weedon Group, considers the growing on-line retail business and its effect on corrugated packaging.

The on-line share of retail trade is growing. Time-poor, cash-rich consumers are turning to eCommerce for speed of delivery and convenience. Even relatively conservative forecasters predict two-figure percentage growth of on-line sales in the UK. Retail Research, for instance, has shown the proportion of on-line sales in the UK rising by 14%, 15% and 17% year on year between 2014 and 2016. The UK seems to be leading with way in Europe, with growth noticeably higher than in France, Germany or Europe as a whole. UK predictions for 2017 show eCommerce rising by another 14% – which is equivalent to some £13bn.

At the same time, the change in sales of ‘bricks and mortar’ retailers has fallen faster here than on the continent. While it is undoubtedly over-simplistic to see eCommerce ushering in the demise of the high street store, it is nevertheless probably true that on-line retailing has issued a wake-up call to our over-stored retail landscape which has failed so far to catch up with changing shopping habits.

As buying patterns change, so too must the packaging that protects and promotes the product. Packaging for eCommerce has to achieve a different functionality in a new supply chain. Individual despatch and delivery requires packaging that is easy to open and resealable in case the product has to be returned.

In addition, although brown paper has long been the traditional material for postal packaging, today’s customers expect to experience the wow factor when their new purchase drops on the front door mat. As a result, we have seen the introduction of gift boxes, with attractive and colourful printing on the reverse of the outer postal packaging and the opportunity for additional brand promotion.

This innovative use of the outer protective wrapping to make an impact takes corrugated packaging into new territory. In effect this new eCommerce packaging is Retail Ready Packaging (RRP) relocated from the shelf to the front door.

In addition, the on-line marketplace is a global one so its packaging must be sufficiently robust not just for posting to Newcastle, but also to New Delhi.

The economic crisis of recent years must also be factored in. This has resulted in an increase in self-employed entrepreneurs and start-up businesses, and much of the growth in on-line retail will come not from the giant e-tailers, but from smaller companies using the Internet to boost sales around the country and around the world, without the need for expensive premises.

These small or medium-sized companies need packaging suppliers with the flexibility and the willingness to accommodate their individual needs and help them get off the ground. Inevitably they will have to look to the independent corrugated manufacturers for this level of service and commitment.

eCommerce is expected to be one of the fastest growing sectors in the corrugated packaging market over the next few years. While traditional RRP and Point of Sale displays will not disappear from our shelves or our customers’ buy lists, on-line retail will represent an increasing proportion of retail sales. Corrugated packaging manufacturers must therefore gear up for a new type of packaging with innovative designs and new production capabilities.