Efficiency and user experience must be front and centre of green packaging’s sales pitch
The e-commerce boom has been one of the biggest mega-trends shaping business and retail over the last half decade. Shopify predicts it’s far from over, saying that around a fifth of global retail sales will be made online by 2026.
Of course, there’s no e-commerce without packaging. Online retail has made shopping synonymous with being snowed under each morning by parcels in every shape and size.
Unsurprisingly, the Covid-era spike in internet shopping has been a boon for packaging manufacturers. Market research company Smithers even reports that the e-commerce packaging sector continued to thrive after Covid restrictions ended and shoppers returned to the high street. Delivery packaging grew on average grew 12.5 percent in the year 2022 and was worth around $63.6 billion.
Within this general growth of delivery packaging, we find rising interest in greener options. Zion Market research says that the sustainable packaging market is expected to grow by 5.10 % between 2022 and 2028.
Demand for sustainable e-commerce packaging tracks a growing sophistication in how consumers define sustainable consumption. A survey by Deloitte indicated that 52 % of all UK adults consider the recyclability, compostability, and biodegradability of packaging in deciding whether a product is sustainable. Many shoppers are no longer content with low-emissions products – they are also interested in the entire life-cycle of their purchases.
The Gen Z shift
Over the pandemic, the online shopping surge was driven above all by the pursuit of convenience. At the same time, the slower pace of lockdown life led some consumers to reflect on the environmental impacts of their lifestyle choices. Can the packaging boom survive as consumers return to brick-and-mortar outlets?
Delivery packaging growth will likely outlast the pandemic swell mainly be thanks to certain demographic and cultural shifts that were fuelling the rise of e-commerce long before the pandemic.
Gen Z is a key segment in the online retail industry. The Center for Generational Kinetics found in a 2021 study that 54 % of Gen Z, currently in the 10-25 age range, believe all shopping will be done online by 2031. A further majority said they plan to continue online shopping after the pandemic.
Gen Z are even more likely to spend in online markets over brick-and-mortar stores than even millennials – the other generation prone to spending their lives on the internet.
While a Salesforce survey found that 48% of millennials still prefer in-store shopping for immediate purchases, only 39% of Gen Z preferred the instant gratification that only offline shopping afford. More are inclined to wait for delivery if they can find their products online.
Already at an estimated $140 billion in spending power, the demographic is poised exert ever-increasing influence over the retail landscape as their ages and incomes increase.
With their online shopping habits, this youth segment holds the fortunes of the future green packaging industry in their hands. 56 % of a Gen Z group surveyed say they are less likely to buy from a retailer again if their e-commerce packaging isn’t sustainable.
There are interesting nuances to Gen Z’s understanding of sustainability. They hold a particular idea of what it means for packaging to be green. For them, reusability – not just end of life recyclability – is key to their assessment of whether a packaging option is up to scratch.
The re-usability packaging is important to the Gen Z group because they are much more likely to have their own e-commerce enterprises. Many are selling used clothing online, motivated by a combination of thrift and an eco-backlash among against fast fashion.
This entrepreneurial culture is will up demand for circular packaging, as opposed to merely recyclable options, which means materials that last and can be re-sealed.
Social media shopping and green packaging
Gen Z are shaping the retail scene in another way that green packaging firms should take note of.
This generation is the key market for an emerging e-commerce micro-segment: social commerce. This is where consumers purchase directly from social media platforms such as TikTok, WhatsApp, and Instagram. Sellers advertise their wares in video and photo formats on these networks while offering the option to click and buy instantly.
The implications of social commerce for the future of green packaging remains an underexplored topic among market researchers. However, one implications could be that it spurs the green packaging industry.
Gen Z consumers are more likely than any other segment to buy wares separately from the social media profiles of smaller online sellers. This is contrast to the buying habits of older demographics, who are staunchly in favour of agglomerated marketplaces like Amazon where multiple items often get picked, packed, and sent together.
Although the largest market for e-commerce packaging is still dominated by Amazon, this may not be the case for long. Coupled with their distinct lack of brand loyalty, Gen Z’s online shopping habits could spell an explosion in delivery packaging, with the need for more parcels driving innovations in leaner, greener wrapping.
Limits to sustainable purchasing
The shift to green packaging is not just happening among younger people, however.
In a January 2022 report into the US market by First Insight and the Baker Retailing Center, 73 % responded that they think sustainable packaging is very or somewhat important compared to only 58 % in 2019.
Nonetheless, another recent Deloitte survey indicated that changing attitudes automatically translate into changing purchasing decisions. There are still limits on how far consumers will shell out on a green packaging premium, although it could be pushing higher over time.
Only 22% in their survey said that green packaging is a consideration when making their purchase. Clearly, consumers still prize traditional criteria like packaging durability and strength when it comes to their actual spending decisions.
Another consumer trend survey by RetailX finds similar patterns. Sampling 1000 consumers across France, Germany, Poland, Sweden, and Turkey, lower prices, time efficiency and direct delivery are the priorities in all age groups when it comes to online purchase choices. The top packaging priority is that the materials protect the product – 94 percent of participants placed this highest – and second came sustainability of the packaging (84 %).
Green packaging can compete on consumer experience
Despite limits to the extra amounts people are willing to pay for green packaging, other important consumer attitudes – ones not necessarily tied to sustainability – offer the sector a way in to larger market shares.
One reason that e-commerce growth has coincided with a growth in green packaging options is the sheer volume of parcels we are getting through the front door. Rooms littered with the remnants of online order packages makes it harder to ignore the environmental impacts of single-use materials.
More importantly for many consumers, the over-load of single use materials also impacts negatively on user experience. 86% of participants in the RetailX survey expressed annoyance at oversized packaging while 78% decried excess internal packaging in their orders.
The green e-commerce packaging sector can tap into this consumer dissatisfaction by honing options that makes bulk reduction its primary selling point. By doing so, the industry can forge a link in the minds of consumers between greener materials, waste reduction in the home, and a more rewarding shopping experience.
While certain segments of consumers respond to environmental considerations alone when making their purchasing decision, this will not be enough for a wholesale shift to greener options. Green packaging that is more efficient while augmenting user experience should be front and centre of the industry’s product development and sales pitch.
As long as sustainable packaging materials makes them less competitive on price next to plastics, manufacturers must develop products which require less bulk for the same product protection.
With products like these under its belt, the green packaging sector could offer a two-fold proposition to consumers: products that solve overpackaging by using less material more efficiently and, second, that this enhanced efficiency and decreased bulk improves the user unpacking experience and saves on delivery costs.
Once the link between user experience, design quality, and green materials is forged can the industry highlight standalone environmental benefits: that lighter, learner, renewable packaging can cut both production and transportation emissions, for example.
Durability and price remain top of the list for consumers when choosing packaging options. Reducing bulk while conserving protective qualities are the way for the green packaging industry to tap into these preferences while negotiating a larger share of the delivery packaging market.