E-Commerce

Jan 10, 2020

On the need for a fundamental e-think

Tim Sykes talks to Smurfit Kappa's Gérard van den Boogaard about the challenge of optimising e-commerce packaging.
By:
Tim Sykes

Smurfit Kappa’s Gérard van den Boogaard (supply chain specialist) spends much of his working life helping customers adapt to e-commerce; a transformation in the supply chain which presents a mind-boggling array of variables, and overturns almost all of the suppositions that have served logistics and tertiary packaging well until now. Gérard conveyed his thoughts on the first steps of optimisation to Tim Sykes at Smurfit Kappa’s Global Experience Centre at Schiphol.

“Preventing product damage is the starting consideration in designing a corrugated box and it’s the first of several aspects in which e-commerce completely changes the paradigm. In traditional bricks-and-mortar supply chains you’re limited to two or three handling moments in fairly controlled and standardised conditions. If there is a drop, it’s treated as an ‘incident’ that the retailer will take charge of. With e-commerce drops are to be expected and a broken product at the end of the supply chain is a disaster. At the same time there are far more variables; you can’t define the standard behaviour of a single product with the same primary packaging because supply chain conditions are different every time. All of our historic assumptions go out the window.

The likes of Amazon and big logistics suppliers of course want to create new frameworks to deal with these challenges. ‘Frustration Free’ is a great objective but we’re still at the first step and we expect more nuances in the future approach. For instance, we had a customer who was selling yoga mats through e-commerce and in order to meet the standards, the packaging had to undergo drop tests! In the future we need to move beyond one-size-fits-all: yoga mats and porcelain cups have different requirements. Similarly, shipping is very different across geographies. I’m sure that in a couple of years the e-commerce standards will recognise that shipping from A to B in the Netherlands, for instance, is different from shipping between A and B in Russia.

“How much damage is acceptable?”

Another nuance we need to grapple with is that while everyone agrees they want to avoid damage, all too often what exactly a customer means by ‘damage’ is not defined. If it’s coffee pods, do we mean that the product itself doesn’t leak, or that the pods are in pristine condition, or that the secondary sleeve is in perfect condition? Some of our customers would even prefer that the outer box doesn’t get damaged – but absorbing the energy and getting damaged is the actual purpose of the outer box! Smurfit Kappa can always design a box that meets the protective brief but first we need to define clear parameters. The crucial question is what level of damage the customer finds acceptable (keeping the consumer in mind).

Another way of approaching this issue is to design products so that they themselves can withstand a defined level of impact. Certain industries already think in this way. In electronics, for instance, a phone is designed to withstand drops, whereas a television is not. A company that manufactures televisions has probably figured out that it’s more resource-efficient to accept that one in a thousand units will get damaged than to design every TV to be droppable. Maybe FMCG industries also need to start thinking about designing minimal strength requirements into the primary product.

However, another way to avoid damage is to optimise the supply chain. Amazon’s Frustration Free Packaging is a good first step, but also puts the responsibility for preventing damage on the vendors and brands; I think we are likely to see some supply chain innovation in the future. Creating packaging that can withstand 17 drops means using a lot of corrugated. Should it be up to packaging to deliver zero risk or up to the supply chain to ensure there are fewer drops? Hopefully we’ll end up somewhere in the middle.

“My daily job can be mind-boggling”

Space efficiency is another area where we have to rethink much of what we know from bricks-and-mortar experience. My daily job can be quite mind-boggling! With any project I’m looking at getting a truck full, the maximum number of layers on a pallet – metrics that were optimised at design stage in traditional supply chains. Now suddenly you have a single bottle in a huge box. In e-commerce 40 per cent void could be an acceptable target. In addition, cube fill is challenging when you have boxes of different sizes and no control over orientation of boxes.

Aside from these practical considerations, there is a lot of talk about how e-commerce enables a direct communication between brand and consumer, and how personalised or bespoke packaging may be important in creating a good experience. However, often what we really need is a fit-for-purpose experience.

For example, Smurfit Kappa has conducted some market research which found that when a consumer bought an expensive bottle of whisky or cognac, their top priority wasn’t the beautiful unboxing experience: what mattered was being convinced that the expensive bottle was well protected. Consumers responded more positively to brown boxes with protective void fill than to a white coated substrate.

“The basic functionality of a box is also an element of consumer experience”

These things differ from case to case. For a premium brand like Apple it’s important to invest in an unboxing experience. For other brands it’s different. But generally speaking, the functional requirements of the box are also priorities for the consumer. The first job of the box is to prevent product damage, and that’s also what matters most to the consumer. Consumers also get upset about excessive unnecessary void fill – this is in fact also an element of consumer experience.

Another consideration when thinking about decoration and personalisation of boxes is that different couriers stick a variety of different labels on the boxes, so often the messages on the exterior are completely covered up. The inside of the box is a different matter.

When it comes to digital print, everyone is excited by the potential of late-stage customisation. But before we rush to change our printing presses, we should also ask ourselves whether it is technology or brand owners’ business systems that cause the bottlenecks at the moment. A brand like Coca-Cola has probably already designed its 2019 Christmas campaign in February. Often here at Smurfit Kappa we find that the flexibility of digital print is not fully utilised compared to analogue printing. The problem is that to leverage digital technology, marketing teams also have to be more agile, be ready to change campaigns at short notice, perhaps to rationalise the number of meetings and levels of sign-off. In the meantime, we are capable of changing the artwork with traditional print in little more than a day. So perhaps customisation is more of a business systems challenge than a technology problem.

“Optimisation in e-commerce requires a case-by-case approach”

Smurfit Kappa has a wide portfolio so we don’t set out to sell one particular solution to our clients. The emphasis is on finding the right solution. That means always starting by analysing the contents of the box. There’s a big difference between designing packaging for a €700 item of kitchen equipment or for a pharmaceutical company with multiple SKUs in a single box. With single items it’s simpler – you know the parameters for buffering, packing etc. It’s more challenging with multi-items, where e-tailers themselves hardly know what they are going to sell and when. In this case you need to turn to the data.

We’ve developed a void fill reduction tool that looks at average volumes and distributions and computes the optimal range of pack sizes and dimensions. It enables the customer to look at permutations such as what the implications for void would be if they changed, for instance, from stocking nine different box sizes to seven.

Smurfit Kappa has also developed a supply chain analysis tool called ePackExpert, which assesses protective requirements based on actual conditions of supply chain and product vulnerability. A yoga mat doesn’t need to be treated the same way as a television. A controlled supply chain with a single logistics partner in a domestic market may not need the same ‘worst case scenario’ packaging used across global distribution. And the product cost is another consideration: if the value of the product is low, the value to the customer of protecting it is also lower. The ePackExpert tool takes all of these variables into consideration. You could view this as a second step in the Frustration Free ethos.”

Tim Sykes

Tim Sykes is Brand Director at Packaging Europe and founder of the Sustainability Awards.

ts@packagingeurope.com
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