Two years ago, I attended a packaging industry event that brought together operations personnel from many well-known Consumer Packaged Goods companies to discuss current market challenges and opportunities. In one small-group discussion, the topic was e-commerce, and the opinion of the group was unanimous: E-commerce would not significantly affect their food and beverage businesses.
“I just don’t see someone having a jar of jam shipped to them,” said one member of the group. “Due to the cost of shipping, it wouldn’t make sense.”
Today, you can find a range of jam products for sale on Amazon.com, along with other food and non-food household items, such as snacks, soda, shampoo, laundry detergent, diapers, pet food, toilet paper, and more. For Amazon Prime Pantry members, it costs a flat rate of $5.99 to ship anything that can fit into a 45-lb box. Consumers can also order jam direct from companies such as Smucker’s, through the brands’ online stores. And let’s not forget the “Jelly of the Month Club” made (in)famous by Christmas Vacation’s Clark Griswold.
E-grocery is growing rapidly; in fact, it’s coming online faster than any other industry that has come online before. That’s according to a new report from The Food Marketing Institute and Nielsen, “Digitally Engaged Food Shopper,” which estimates that consumer spend on online grocery shopping could reach $100 billion—or one-fifth of all grocery spending—by 2025.
Just as co-packers have assumed so many of the operations outside of product development and marketing for brand owners, e-commerce is another area where they can provide added value. According to Mike Repp, Vice President & General Manager of Bell-Carter Packaging, because co-packers are experienced in being agile, creative, and quick, they are perfectly positioned to handle e-commerce distribution for their customers.
Repp’s firm, Bell-Carter, began working with a startup snack subscription business five years ago that was packing product in their living room. “Their business got too big for them to handle, so they came to us,” Repp says. “We helped them grow from the ground up.”
Beginning with 700 customers, the snack business now has well over 300,000, with all subscription boxes—each containing from three to 20 pouched snacks—picked, packed, and shipped direct to the consumer from Bell-Carter’s Modesto, CA, facility. Repp estimates his company ships around 1 million pouches of snacks each month. While taking on this service for their customer required a change in processes and knowledge, it has created an entirely new business for the co-packer.
The subscription box business, in particular, offers great potential: As of March 2017, there were 2,000 subscription box services in the U.S.
You can learn more about how Repp and others are capitalizing on the opportunities presented by e-commerce as well as customization of packaging in an article—“Co-packers adapt to meet changing consumer buying trends”—in the March/April 2017 issue of Contract Packaging magazine.