E-commerce is accounting for an increasingly larger proportion of the retail sector and offers a high level of convenience in terms of being able to shop anywhere at any time. Yet one of the biggest challenges facing the online industry is packaging sustainability as waste from product distribution and sales shifts from retail stores to homes. This mega-trend was one of the key topics discussed at the SustPack 2017 Conference held a few weeks ago in Scottsdale, Arizona.
Given the recent trends towards circular economy and sustainable materials management driven by regulatory, industry and consumer pressures, both producers and online retailers will need to closely examine packaging material usage and waste throughout product life cycles — from product packaging and design, to logistics methods, to end-of-life management. Meeting this challenge will need a holistic approach to product packaging means, including the use of recyclable or renewable materials and creating the right type and size of package for the product and its shipping environment.
The shift of waste concerns from physical stores to virtual stores
The e-commerce sales channel is witnessing continued growth and companies are preparing to account for its impact in their sales and changing consumer preferences. Companies are moving towards omni-channel distribution—the integration of both online and in-store consumer experiences. In the U.S. e-commerce grew by 23.7% in 2016 while retail sales overall grew only 6% (according to the U.S. Department of Commerce). In addition, e-commerce sales between 2014 and 2018 are expected to grow a cumulative of 88.4%. In 2016, global B2C e-commerce turnover reached $2,671 billion with goods sold online comprising 7% of total retail of goods. This sales growth will mean more packaging waste shifting to homes. This shift will also mean a greater amount of residential tonnage for municipalities and waste management service providers to account for.
It is believed that a greater percentage of packaging associated with these purchases, primarily old corrugated containers (OCC) and plastic, ends up in landfills. OCC, plastic, and various types of void fill are the materials most commonly used for e-commerce shipping packaging and for the larger parcel shipping industry. Products are handled on an average of five times in a traditional retail supply chain, while in the e-commerce network, products tend to be handled manually and may potentially be handled 20 times or more. Increased handling means greater potential for damages. Consequently, many producers have increased packaging to protect their products in shipping. But this is not the only solution, and certainly not the most sustainable one.
Amazon driving “right sized packaging”
On the side of e-commerce retailers, Amazon, the World’s largest online retailer, has recognized this growing trend and has taken action to optimize packaging design for e-commerce. One of the key issues that e-commerce companies experience is that packaging designed to stand out and display well and protect against theft in the retail environment is not optimal for online fulfillment. The classical retail oriented packaging is oversized, expensive and unsustainable.
With a large proportion of packaging waste beginning to shift from retailers to homes, the company is tackling this mega-trend with the development of right-sized and tailor made packaging. The “frustration-free packaging” criteria is part of the Amazon Packaging Certification Program and in 2016, collectively eliminated nearly 83 million corrugated boxes. Amazon is using their Certification Program to engage and educate industry on the benefits of more sustainable and “right-sized” packaging including reduced environmental impact, reduced damages and minimized costs throughout the supply chain, and customer satisfaction.
Dell Case Study: Sustainable material use in packaging
On the side of producers, Dell has taken advantage of the Internet to develop its distribution and sales strategy around online sales platform. The company decided to reduce wasteful packaging after hearing complaints from customers about excessive and non-recyclable shipping boxes and packaging materials back in 2008.
The company reduced its box sizes by about 10%, developed bamboo cushioning – a fast-growing material that can be composted or recycled as paper – to replace foam, and also began making packaging with wheat straw, which is produced from agricultural waste and mushrooms, in collaboration with Ecovative, a New York-based company aiming to replace plastic foam with materials made from mycelium, or mushroom roots. The bamboo and wheat straw materials eliminated 20m pounds of packaging and saved around $18m in reduced energy, water, transportation and production costs. At the same time, greenhouse gas emissions fell by an estimated 8%. By 2020, Dell plans to scale these efforts up to 100% sustainable packaging.
In an evolving retail marketplace, companies will need to consider a lifecycle approach in terms of designing product and packaging to meet varying requirements of online and offline retailers, growing customer preferences and a changing regulatory landscape. Both online retailers and producers will need to work together amidst this changing landscape and take a close look at their products, packaging materials, processes, logistics and end of life management in order to drive material efficiencies and reduced greenhouse gas emissions.