Motive: Packaging trends to be led by mobile commerce
by Gareth Pearson (@gareth_pearson) Online retail represents exciting opportunities for South African marketers. Although the sector is still relatively small compared to total online sales, it’s growing. But with such a strong focus on online shopping, where does this leave packaging and the intimate interaction it enjoys with consumers in the purchase process?
Bright future for online retail
A recent study by Dunnhumby showed online grocery shopping in markets such as the US, China, Slovakia, Czech Republic, Poland, Ireland, Japan and South Africa was growing by 97%. In 2014, the study showed, these markets recorded an online sales penetration of 0.9%.
Although the base is small, projections are large: online retail in SA could potentially grow to achieve 3.5% of total grocery sales over the next few years.
Two key factors will drive this growth: the proliferation of smartphones as we move towards a single-screen market (instead of owning both laptops and smartphones, consumers will use the latter for all online activities), coupled with the continued dominance and growth of the millennial market.
Packaging headed for the dustbin?
Some argue packaging loses its edge in the online retail space.
The holy grail of traditional retail, the store shelf, is dismantled and with it the chance to engage consumers’ senses and their emotions in positively influencing purchases.
The opportunity for competitive differentiation is diluted, and all prospects for encouraging consumer brand engagement and brand loyalty through on-pack brand and product information disappears at the touch of a button.
Or so the critics say.
Prime opportunity for loyalty, retention and free advertising
Yet the other side of the online retail coin tells a different story. Online products delivered in premium packaging provide a positive consumer sensory and emotional journey altogether, one that taps into the feel-good emotions associated with giving and receiving gifts.
A 2013 survey by US logistics solutions company, Dotcom Distribution, showed 52% of consumers surveyed said they were more likely to make repeat purchases with online companies that used premium packaging.
Online shopping requires more-robust packaging to cope with the more-stringent courier leg. This means higher GSM grades of paper and higher microns of plastic material, significantly enhancing the reusability of this now inherently stronger packaging.
Although some argue there is less need for high-graphic printing because the product is being delivered, this reusability reinforces packaging’s role as a powerful branding tool when quality branded boxes and bags are used. A total of 90% of the online shoppers questioned reused the packaging their online purchases arrived in.
Not only does this represent an opportunity to leverage customer retention, but also to take advantage of free advertising space (as many as 30% of consumers uncover new products after seeing other shoppers carrying coveted branded packaging such as bags and boxes).
By all accounts, for every argument as to the potential diminishing role of packaging, there is an equally persuasive counterargument as to its continued importance.
Still a place for promotions
But what about promotions? There is a belief that online shopping limits promotional opportunities when it comes to branded promotional packs and on-shelf visual disruption.
Enter advanced analytics. This is a system of predictive analytics that interrogates online shopper behaviour to deliver a forecast of what the shopper will most probably buy when they shop online.
Sophisticated algorithms work in real time in the background while e-shoppers are making their product selections, recording, analysing and storing the information. Using this data, marketers are then able to target these online customers with promotional items, much in the same way as they currently do instore. Think of it as e-impulse buying.
As real as ever before
In this context, the opportunities for consumer promotions are as real as ever before.
The influence on packaging of this growing online retail trend will be largely driven by the growth of ecommerce itself, with key factors of this growth being smartphone penetration, broadband coverage and retailers gearing towards electronic and mobile commerce.
Gareth Pearson (@gareth_pearson) is CEO and shareholder of BMi Research, and was responsible for the merger of BMi Foodpack and Adcheck Research during 2008. As a market research specialist with particular focus in the industrial and fast-moving consumer goods (FMCG) markets in various sectors, including the retail market, Gareth has great insight into many workings of the retail world and has plenty of information that is valuable to share.
“Motive” is a by-invitation-only column on MarkLives.com. Contributors are picked by the editors but generally don’t form part of our regular columnist lineup, unless the topic is off-column.
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