E-commerce: UPS boxing clever

10 / 07 / 2017

Thinking outside of the box has never been truer when it comes to e-commerce and the social media trend of ‘unboxing’.

Unboxing is defined as the “an act or instance of removing a newly purchased product from its packaging and examining its features, typically when filmed and shared on a social media site”.

In other words, e-commerce packaging needs to look as good as a Christmas present, even in the height of summer, as well as being environmentally friendly, robust and compact enough to make the most efficient use of the global supply chain. Simple.

The demands of e-commerce have seen US parcel giant UPS linked up with Sealed Air Corporation to open a Packaging Innovation Center in Louisville, Kentucky.

It will help solve the packaging and shipping challenges of e-commerce retailers, and companies in many other industries, by “maximising efficiency, minimizing waste, reducing shipping costs, and increasing brand affinity”.

Alan Gershenhorn, UPS’ executive vice president and chief commercial officer, said: “UPS customers don’t just need supply chain innovation. They also need packaging innovation. Our partnership with Sealed Air, and the new Packaging Innovation Center, will allow UPS to bring a more complete set of solutions as we help customers re-imagine their entire supply chains, including packaging.”

According to UPS, traditional “brick-and-mortar supply chains” have been designed to move in a linear fashion with standard-sized packaging sent from a supplier to a warehouse. From the warehouse, products are sent to a store, where they are unboxed and placed on shelves.

In this model, according to UPS, “consumers never see secondary or tertiary packaging. In the new e-commerce world, everything is upended and consumers now see, touch and need to dispose of packaging on a more regular basis. As a result, what consumers think about a brand increasingly starts with their experience with a product’s packaging”.

Everybody in the e-commerce supply chain needs to take note, as worldwide retail e-commerce sales are projected to top $4trn per year by 2020, according to eMarketer.

But as with any Pandora’s Box, there are challenges ahead. 

Louis Dejianne director of consumer goods and apparel and retail at UPS, said: “The whole supply chain has to evolve with the world of e-commerce. Traditionally, you knew what your supply chain looked like, as packages move through from a supplier to a warehouse, ultimately to the store and then unpackaged and put out into the store.

“That is changing, and those goods are now going from the supplier or the warehouse directly to the end consumer. When that happens, then the traditional experience in the store changes.”

Before the joys of internet shopping from a mobile phone, shoppers would walk into a store, touch and feel the products before having them packed and taken home.

Replicating that “great consumer experience” is now the big challenge for the e-tailers and their supply chain providers.

Said Dejianne: “Retailers are looking to recreate that great customer experience as we enter into the e-commerce world, a world where you send a package directly to the consumer's house.

“You want them to have an experience when they open it, so that it carries your brand all the way through to final delivery.

“Customers get really excited when they see something new and different. The supply chain has to evolve and incorporate that and the customer experience at the time when package is delivered to the person's home.”

Another important aspect of the Packaging Innovation Center is to understand how manufacturers can minimise the non-product contents without the annoying and superfluous filler, bubble wrap or paper used in the past.

The idea is to produce environmentally-friendly packaging that is robust enough to stop any damage in transportation and so reduce the number of returned goods.

The package has to be as light and as small as possible while retaining that “wow factor” when opened, in front of an adoring YouTube audience.

Said Dejianne: “Environmental impacts are reduced throughout this whole process. You want to minimise the size of that package, as well as the weight, so that you are neither creating waste nor additional cost in terms of weight.

“The other piece is the cube size. As packages get bigger, they take up more space and that means there is a need for more vehicles and more aircraft.

“If we can minimise the waste within the package, as well as minimise the size, it will be beneficial across the entire supply chain.”

There is also the speed at which you can package a box, in order to move it through the warehouse and ready for shipping as quickly as possible. Time is money.

It is estimated that better design can reduce the cube size of the package by up to 30%, and thus the transportation cost.

Another factor is that an increasing number of goods are being despatched not from a warehouse but from the high street store.

This would seem to be an efficient use of resources, and thus adding unnecessary cost. Apparently not.

Said Dejianne: “In terms of physically shipping the package, it is less efficient, but you need to think about it from a consumer’s perspective. 

“If I want to order something from a large retailer and the distribution centre is three or four days away in transit, but I can ship it from the store and get it the next day, that becomes something that is more efficient and it is also reduces the cost of transportation.”

Is there a spin off for the traditional air cargo industry as it looks to increase its share of e-commerce volumes?

Said Dejianne: “Everything here is related to the end consumer, and in making sure that the customer experience is positive, which includes packaging, branding and transit time.

“E-commerce will continue to grow for air cargo companies and we are moving forward in the packaging endeavour to create a positive customer experience.

“Anyone in the transportation of e-commerce needs to take a similar approach to understand the end consumer: what are they looking for and how do they work with the customer to provide transportation in the most effective and efficient manner.”