How Corrugated Packaging Companies Can Respond to Online Grocery Challenges
Online grocery is a strategic opportunity for corrugated packaging companies, as it allows them to add value growth by improving customer satisfaction. The key challenges for online grocery packaging are related to perishability and logistics, but there are several ways in which corrugated packaging producers can tackle these challenges through innovation.
The growth of online grocery creates challenges and opportunities for all businesses involved, including corrugated packaging providers (see European Corrugated Packaging Becomes a Strategic Value Provider). Between 2015 and 2020, global online grocery sales are expected to more than triple for the top 10 countries, from USD 97bn to USD 290bn. The UK is the largest EU market, followed by France, Germany, Belgium and the Netherlands (see Figure 1).
Figure 1: Top ten global online grocery markets and online grocery retail penetration, 2015 vs. 2020f
The key challenges for online grocery lie in preserving the quality of perishable products and logistics—in particular, last-mile delivery. Through innovation, the corrugated packaging industry can respond to these challenges by adapting packaging for online grocery needs. Examples of these innovations include:
1. Cool corrugated solutions
Fresh and frozen food requires cooling to arrive at the consumer’s doorstep safely and still look appealing, especially in the case of meat and fish products containing natural juices. Innovations in coolant packaging—such as corrugated boxes with cooling elements or isolating inner covers—help retailers keep fresh produce in mint condition and enhance consumer trust in delivered products. Smurfit Kappa and Bunzl are active innovators in cool corrugated solutions. Different concepts like Foodmailer, ISOPRO and Woolcool are already active on the European market.
2. Tailor-made logistics solutions
Last-mile logistics challenges for online grocery relate to pick-and-pack operations. Packaging aspects such as stackability and volume efficiency should be further optimised to reduce the amount of air transported, the logistics costs and the carbon footprint. Introducing corrugated boxes of different shapes and sizes with dividers for different food categories inside the packaging would allow for a more efficient use of space when shipping online grocery orders. For example, Bunzl, together with software supplier Cretech, has launched a tailor-made box concept.
3. The internet of packaging
Internet-of-packaging innovations track deliveries, support customer logistics and give consumers the assurance that food is delivered under the right conditions. Examples include digital (barcode) reader and radio frequency technologies, temperature and humidity devices (especially for cool solutions). To take further steps in internet-of-packaging innovations, some corrugated players are investing in technology companies—BillerudKorsnäs, for example, recently invested in UK technology company Hanhaa.
4. Protection against breaking
Online deliveries of bottled drinks come with the risk of the glass breaking during transport, particularly when sending multiple boxes. Companies such as flespakket.nl offer corrugated boxes that are specially designed to be strong, and have an interior with different compartments and bottle-fixing elements, allowing users to send multiple bottles with peace of mind.
5. Active solutions
Active packaging helps to slow down the ripening process, and extends the shelf life of fresh produce and flowers by implementing active components—such as ethylene absorbers—into the corrugated substrate. Examples of such solutions include active packaging for fresh produce by Consorzio Bestack (marketed by Italian corrugated players) and the active SmartFlowerPack concept by KCPK. Active packaging also helps to reduce food waste, enables flexibility and provides new delivery options in the supply chain, all of which create opportunities for online grocery deliveries.
6. Smart solutions
Smart convenient corrugated solutions, such as a box that closes or seals without using tape (like the Box Latch), mailbox packaging (like the Graze Box for snacks), easily removable packs and easily foldable boxes—which are also easily disposable—are another way to meet specific online grocery packaging needs. Turning a shipping box into an eye-catching container using shape and printability is another smart innovation. Smart solutions relating to visuals not only increase branding potential; they also enhance the consumer experience on delivery. VPK's daughter company Rigid Containers is launching an inside-printed packaging concept box for increased branding potential. DS Smith’s PackRight Centres provides smart solutions for e-retail of flowers, by designing packs that deliver flowers in a perfect condition, enhancing the experience of the delivery.
Rabobank expects corrugated packaging companies to respond to challenges related to perishability and logistics through innovations and strategic investments to grow the value-added portion of their online grocery portfolio.
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Natasha ValeevaAnalyst – F&A Supply Chains Read more