After the Gold Rush, E-Comm Packaging Gets Complex, Sophisticated
Survey respondents who sell via e-comm focus on what they can control, citing packaging’s sustainability, robustness, and appearance as top considerations. But complex carrier/seller platforms and their associated costs continue to bother brands owners.
Gone is the gold rush era of e-commerce and direct-to-consumer (D2C), when customer acquisition was cheap, the channel was new, and only a few pioneering seller platforms existed. The channel today is maturing, accelerated by the pandemic, and now consists of a complex ecosystem of carriers, seller platforms, 3PLs, drop-shippers, and packaging designers and materials suppliers.
“Brands spend a lot of time working on their product, launch it, and then are surprised people don’t immediately buy it like the early days of e-comm. You have to work to get customers, and the cost of acquisition is high,” says Lynn Power, founder of D2C haircare brand Masami. “You have to be scrappy and experiment a ton, because you don’t know what’s going to work. What works today might not work tomorrow. You have to be willing to spend not just on your product, but on getting the sales right.”
The e-comm channel might be maturing, but it’s not slowing down. While only about a third of respondents to an autumn 2024 Packaging World audience survey* (methodology at bottom of page) claim to be using e-comm channels, nearly half of those that do (46%) say business there is growing, and another half (46%) say it’s holding steady. Only 7% see it shrinking. We asked a handful of brand owners and experts what attributes define e-comm and D2C packaging these days.
Musts for D2C packaging
“Sustainability and robustness make the strongest impact on packaging decisions, and the two are actually often in tension with each other,” says Brent Lindberg, chief curiosity officer at packaging design and testing agency Fuseneo.
Tradeoffs between competing priorities have always been an issue in e-commerce packaging. To get a given product to a consumer intact, it could require more, or heavier, or non-recyclable packaging. And by avoiding breakage/spillage, you also avoid wasteful, unsustainable returns and reorders.
“But that heavier package is always perceived by the consumer as bad,” Lindberg says. “People don’t see the other side of it, the perception is that it’s overpackaging.”
Referring to the respondent results (see chart above), “I might change the order of sustainability, robustness, and appearance, but they’re definitely in the top three considerations,” says Samantha Greene, owner of D2C resort-wear brand The Tiger and the Monkey. Luxury brands like hers tend to lean into appearance, porch appeal, and unboxing delight.
Another brand, Simple Times, meanwhile, makes all-natural cocktail mixers and syrups in shatter-prone glass. Still, 20% of Simple Times’ business is e-commerce, which comprises a mix of self-fulfilled direct-to-consumer, “Fulfilled by Amazon” (FBA) business, and other drop-ship partners, like Etsy and other online sellers that don’t carry inventory.
PW’s survey rankings of the most critical attributes of e-comm and D2C packaging ring true to Tinius’ experience, too. Specific to third-party drop shipping and FBA channels, he says optimizing overboxing (not quite SIOC) might be even more critical to his glass product. Simple Times uses Sealed Air brand Korrvu retention and suspension packaging for FBA, suspending his glass product in film between robust six-sided corrugated packaging.
“It was a must-have for us because we were getting beat up by consumer reviews when Amazon would break a bottle,” Mark Tinus, Simple Times' founder says. “To protect the brand, we went with a more robust packaging, but there’s a cost associated with that. Korrvu is associated with shipping expensive durable goods like computers. Ours is a less-than-$30 consumer good. It’s costly but necessary.”
Simple Times also does some B2B to boutique shops, bars, and restaurants via website Faire.com, but the volumes in these orders are similar to consumer volumes—2-packs, 6-packs, etc. rather than a 50-case LTL pallet. So even though it’s B2B instead of B2C, packaging and fulfillment still fit neatly within Simple Times’ D2C model.
“If you flip the thinking such that it’s not just direct to consumer, but who would receive ground shipping versus freight shipping, there is this huge opportunity for us as a consumer packaged goods company to work directly with these smaller regional boutique stores and treat it the same way we would with D2C,” Tinus says.
As far as packaging format, Tinus jokes that his mixers are almost the “perfect storm for what doesn’t work well with D2C,” given the product itself is a liquid, and the bottle is heavy, breakable glass—and not the 750-mL cylindrical wine bottle shape, around which many e-comm packaging suppliers have standardized. But a big factor that Simple Times products have going for them is that they are hot-filled and shelf-stable, so they don’t require refrigeration. That simple fact makes e-comm possible.
Power’s Masami is a premium, clean-label haircare brand. The company sells shampoo, conditioner, shine serum, and styling cream in package sizes that range from a 10-oz standard size for everyday consumers, to a 32-oz ceramic bottle designed to serve salons and spas. It sells refills for both formats in lightweight spouted flexible pouches.
Power says that Masami now uses every part of the omnichannel, including about a third of business from retail shelves via pop-up and specialty brand retail locations, spas, and salons. Another third of business is true D2C, wherein Masami handles order fulfillment and delivery directly, in-house. And the final spoke of the omnichannel wheel, representing the final third of the business, is through third-party seller platforms, like Amazon on the consumer side, sustainable consumer beauty sites, or B2B e-comm sellers like SalonCentric.com for hair salons. This diversity of sales channels gives Power a good view into all elements of the omnichannel, and the best ROI is on retail shelves. Even with D2C roots, Power is now leaning on the brick-and-mortar portions retail locations since e-commerce has gotten less profitable by comparison.
“It’s tough that the cost for digital customer acquisition and digital advertising is high, and has gone up,” Power says. “It’s not such an easy thing to be trying to do social media ads and Google search since the ROI is tough.”
The big three aspects of D2C packaging, as reported by our respondents—sustainability, robustness, and appearance—tracks with Power and Masami’s experience, just as it does with that of Tinus, Green, and Lindberg.
“Those indeed are the three biggest considerations, those three are definitely the top things.” she says. “In our case, I would probably flip the order. Sustainable options are limited in a shower setting (shampoo). Because we are premium, I think the appearance and the design is critical. Robustness is just table stakes.”
Heather Roberts is the founder and chief volunteer of all-natural personal care brand Mom Bomb, selling bath bombs and other bath and shower products. She agrees with Power that robustness is table stakes. “I can’t have something show up to an online seller or to a consumer that was falling apart, so packaging that’s sufficiently sturdy is the first order of business,” she says.
Save for a thin layer of shrink around the bath bomb product that braces it and acts as a moisture barrier, Mom Bomb’s packaging is entirely printed paperboard, so it’s curbside recyclable. The same goes for a kraft corrugated over-boxing used in the e-comm channel. Still, Roberts has her doubts about consumer’s actual willingness to recycle.
“The retail buyers care the most about sustainability, consumers care the most about appearance,” Roberts says. “It’s frustrating because sustainable packaging is an added cost, whether or not it’s recycled.”
Sourcing packaging is hard
Masami’s 10-oz bottles are stock packaging, but they’re tough to find. Power sourced them from Amsterdam in a bulk order of 30,000, without closures. For most products, Masami gets bottles from one supplier and closures from another, trying to source as much as possible in the U.S. But closures often come from overseas.
“We always end up with different quantities because one manufacturer says 5000 minimum, another says 10,000, and another says 2000. You don’t want to have to order and inventory 10,000 if you don’t have to. I would love to be able to consolidate and get like one supplier who could do it all, instead of having 10 suppliers and piecing it together. And then managing all your inventory—not even your finished products, but the component pieces—that’s a nightmare.”
Simple Times is a another clean-label brand that uses up-cycled ingredients, which dovetails with sustainable packaging themes. But the glass format requires extra protection, so finding the right D2C packaging was difficult.
“There were a couple of challenges. One was finding the right cost structure for e-comm packaging, and the other one was matching our sustainability story while still getting liquid in glass to consumers’ doorsteps intact,” Tinus says. “E-comm packaging was the first time we were misaligned from our sustainability story, because at first, we had to use a non-curbside recyclable foam. But even with the most sustainable packaging material, if the bottle breaks, you’re doing worse for the environment. You’re both re-shipping and wasting a whole packaged product. Really, breakage prevention and robustness aren’t separate from your sustainability story, whether the consumer knows it or not.”
The company has since implemented a fully curbside recyclable corrugated packaging solution.
“Finding a corrugated supplier that would work with us, from an engineering perspective, to ensure breakage would stay under 1%, was key,” Tinus adds. “Another thing I asked was, ‘what is the desired optimal pack format we want to send, in terms of bundling, to optimize for the size and weight? And how can we incentivize consumers to order in those formats? How do we want to build our digital ad strategy and discounting strategy to make sure that orders fit our packaging, and that we’re becoming as efficient as possible in the e-comm channel?’ We spent a lot of money unnecessarily with FedEx and UPS just due to inefficient pack sizes and DIM weights, until we learned.”
Control what you can, manage what you can’t
“Hurdles to implementing e-commerce program involve both packaging components, and then there’s the non-packaging components,” Lindberg says. “Dealing with carriers, 3PLs, and logistics is difficult. And every one of the sales platforms is different, and all the different websites and retailers are different. Getting somebody in-house who knows those platforms and can manage them is key. You’ll be constantly fighting against those systems—against chargebacks, against false returns—there’s just a lot of pressure from each of those retailers. And generally, those retailers aren’t always doing a lot [of volume with your product]. It’s not like you’re selling Walmart volumes to any of those retailers, so you’re putting a lot of energy against a lot of little battles,” Lindberg says. “You’ve got to have people that are constantly fighting those battles. The fights with your big brick and mortar retailers are big, but you’ve got a point of contact, you can go and have a conversation and solve them. These [platforms] can be a black box. It’s a lot of self-help, chat bots, and online responses. It’s much more difficult to navigate these selling platforms and then the multiple logistics. It’s death by a thousand cuts, and they all speak a slightly different language.”
Fuseneo works with several brands who are paying fines in the multi-millions, when aggregated from different supposed transgressions. Whether they mislabeled products that went into a warehouse, so now they’re facing fines as goods that weren’t marked correctly, to damages, to returns, to chargebacks for consumer issues, these charges can spring up from a lot of places and they add up fast.
That’s why Lindberg was interested in the second most reported hurdle (see chart above), the cost of implementing and maintaining an e-comm program. The consumer expects a product to cost the same on the retail shelf or in e-comm. But a brand needs to incur a lot more cost to get the product to the consumer via e-comm channels intact, often by repacking or channel-specific packaging.
“But you have to be there,” Lindberg says. “You’ve got consumers who have gone completely digital. For example, they only buy soap online and only go to the grocery store for fresh produce. Brands feel they have to show up, and they have to be competitive on price.”
Tinus at Simple Times agrees cost is always the greatest hurdle, both in e-comm program implementation and maintenance. Costs associated with designing aesthetically pleasing, robust, and sustainable packaging are incurred right when a brand goes to market. After that, the packaging design phase is over—at least until the next redesign. But ongoing costs associated with platforms, sellers, drop shippers, etc. and with carriers, chargebacks, false returns, etc., don’t stop. Packaging is a finite step that has an end, but carrier and platform complexity is ongoing.
Sustainability, robustness, and appearance rank as the top three most critical attributes of D2C packaging, but compared to the complexity with carriers, complexity of platforms, and the costs associated with the carriers and platforms, those three critical attributes of packaging don’t seem to register as hurdles.
“Follow the money trail; it will show you where your priorities and challenges are,” Lindberg says. “The brands have major hurdles on the logistics side, and some of that they can fix by throwing money at the problem. Where their priorities are in making those fixes is where they can design packaging, or revamp their price point architecture, or restructure pack outs. They can fix some of these packaging attributes [sustainability, robustness, and appearance] by throwing some money and some energy at them. They don’t see the porch appeal as their biggest hurdle, but it’s one of their biggest priorities because they can fix it. They can design robustness, they can design sustainability into the packaging, and they can certainly design some of that consumer impact and porch appeal. They aren’t hurdles, but they are priorities.”
Notably, sustainability, robustness, and appearance of a package are all elements that a brand can control. Platforms, carriers, and the costs associated with them are outside of brands’ control.
“Combine that with the fact that management of these online sellers and delivery channels is constant. When you throw some effort and money at the package and fix it for the channel, you’re finished for a while. Selling platforms and carrier complexity are ongoing; they never stop.”
Feeling uneducated the biggest hurdle
“The biggest hurdle for me, starting as a D2C, was feeling uneducated and feeling like I didn’t yet understand the landscape,” Roberts of Mom Bomb observes. “That’s mostly not understanding the carriers and how they make money, and the platforms and sellers and how they make money. Understanding all the different players, the platforms, the sellers, and how they work together in an ecosystem was our biggest hurdle.”
She remembers starting on Amazon with a DIY approach, personally using the Amazon tools to navigate a complex marketplace. It became unwieldy to manage after time, and as Lindberg suggests, she’s since had to hire a dedicated 3PL to keep constant contact with those sellers, like Amazon. Just getting on those platforms is a feat itself, Roberts says, “but then you realize you have to continuously work to sell on them.” Updating photos, removing discontinued product formats, and introducing seasonal bundles, across many different seller platforms, can be daunting. Hiring that 3PL allowed Roberts to have one single hub where all the inventory and assets reside, rather than managing them thinly across distribution, and all the different sellers’ platforms like Amazon and drop-ship partners.
More specific to the carriers, Roberts stresses having an encyclopedic knowledge (or hiring a 3PL with knowledge) of shipping rates and dimensional (DIM) weights. “The difference of an inch can cost you a dollar per package,” she says. “Shipping is your biggest cost, so I would reverse engineer your packaging from your least expensive, but still structurally sufficient shipping dimensions, so you’re not wasting money unwittingly.”
Is packaging channel-specific or universal?
Does your brand have a single package that goes through e-comm, D2C, and appears on retail shelves? Or do you have a unique package for each channel?
Channel-specific solutions are optimized for their purposes, but add SKUs and introduce more complexity. Some brands can’t manage SKU complexity; they’re already stretched too thin. For brands who don’t have a solid handle on their supply chain, their projections, their demand planning—SKU proliferation is debilitating. Also, some brands that don’t have the ability to customize their packaging, so they have to rely on stock.
“Omnichannel packaging vs. channel-specific packaging is how we think of it, and it’s one of the hardest things to answer for most brands,” Lindberg says. “It requires a lot of digging into how they how they work and at what point it makes sense to break their packaging supply chain into two. It’s different for each brand, and it takes a lot of work to answer.
“But generally, if your product already hits the retail shelf in a relatively robust six-sided box, it’s a really good candidate for omnichannel,” he said. “The combination of the durability of the packaging, and let’s say a less-than-fragile product, makes it good for the omnichannel. Robust pouches might work, too. Also, if it’s a six-sided box, it’s a good prospect for SIOC.” Lindberg says. “Where it becomes really challenging is with fragiles and liquids. We assess and treat them very differently. They are not immediately thought of as good candidates for omnichannel packaging, they’re automatically in a category that requires more careful consideration.”
How and when consumers interact with packaging is different between channels, another variable influencing pack design choices. Roberts built her Mom Bomb brand around a Continental aesthetic, adopting a French toile pattern in all packaging design. This design worked great when the company first hung out its shingle as a D2C-only brand. But in D2C, consumers don’t interact much with the packaging until they’ve already made the purchase. They were able to view the product itself on the company web page and any seller pages, like Amazon, that carried Mom Bomb personal care products.
“Now that I’m so deep into retail, what I’m finding now is that the toile pattern might make the package appear busy,” Roberts says. “When it’s on the shelf, I’m getting mixed feedback, because it’s busy packaging that’s sitting with other busy packaging on a busy shelf. When it was just direct to consumer, the packaging was winning awards, it was going viral on social media, and people were loving it. But now the retail sellers don’t love it as much, so I’m having to consider toning down that design for the retail shelf.”
Small brands tend to use only one channel, or set of similar channels, so they can get really good at one niche in the omnichannel. Or, like Roberts’ Mom Bomb brand, they might turn to a 3PL manage multiple channels. After all, 3PLs know the platforms, the sellers, and the carriers, and small brands don’t have the resources or the team to manage across the omnichannel.
Meanwhile, most large brands are working across a wide variety of e-comm and retail channels and platforms. Bigger brands that sell on Amazon will also offer several products, sub-brands, or selections that they will not sell to their Amazon buyer, because it’s not profitable via that channel.
Big brands use 3PLs to sell D2C, as well. Or, instead of using their own Amazon vendor account, they may use a 3PL to be their Amazon seller. In that case, the 3PL is designated to be the seller on Amazon, manage all the inventory, and fulfill directly, for products that they will not sell to a retailer. Bigger brands with a wide variety of offerings don’t make every product they offer, in every format available to every channel. The price point architecture is different for every unique SKU and package format. Some SKUs lend themselves better to retail, others to D2C, and big brands are surgeons in optimizing their offerings across different channels. Some big brands even create entirely new brand names, using existing product formulas, to tap into the different channels.
Lindberg knows of one brand owner, a major cleaning products company, that created a D2C sub-brand, “because we want a direct connection to our consumer, versus trying to get data from the retail platform,” the brand owner reasoned. “And even though none of the rest of the businesses and brands within our organization don’t do this, we’re going to sell directly to the consumer. We’re going to ship and fulfill the products directly from our factory. And we’re going to see what we can learn doing that. We’ll then have our own first party data on our consumer.”
Adds Lindberg of the strategy: “Those are the pros to it. The cons are you’ve got to build a consumer base that’s willing to come to your website, set up an account, and buy from your owned platform. There are hurdles that you can make things easier by offering different payment options, like Amazon pay, but the biggest hurdle is the need to bring this consumer directly to their website. I know of big brands that use all three of those [D2C, 3PL, and third-party platforms/sellers]. It’s very common for a lot of these large brands to use two of those, and it’s most common for smaller brands to just pick one of those, often the 3PL.”
The reality is that each channel in the omnichannel is its own animal entirely. The more sophisticated and resource-rich that a brand owner becomes, the more optimized that packaging and branding options become for each unique channel in the omnichannel. PW
* METHODOLOGY
The inaugural Annual Outlook Report on E-commerce reflects 118 unique survey responses collected from brand owner, CPG, and FMCG Packaging World readers. This online survey was deployed via email, and all responses were recorded between July and September 2024. The 10-question survey was devised and pressure-tested with CPG experts.
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