The Convergence of Economic Growth and E-commerce RelianceThe U.S. consumer has emerged from the COVID-19 pandemic ready to spend. The healthy state of our economy serves as proof: we’ve retained economic growth from 2020 and are seeing continued growth into 2022 off this already elevated base. Consumers are spending money—but as the 2021 holiday shopping season demonstrates, how they’re shopping has changed. E-commerce continues to gain share as an increasingly integral part of the shopping ecosystem.
Online shopping has been on the rise since well before the pandemic, and lockdowns in 2020 only expedited its growth. In 2015, e-commerce was responsible for just 8% of all sales. Five years later, it was up to 19%1 – and shopping patterns indicate this acceleration will continue. Deloitte forecasts that in the 2021-2022 holiday season alone, e-commerce sales will grow by 11-15% from last year, faster than the pace of brick-and-mortar.2 Going forward, it’s predicted that nearly 60% of all retail growth through mid-decade will come from e-commerce, and by 2026, online shopping will be responsible for 27% of all sales.3
In response to this rise in e-commerce and change in shopper behavior because of the pandemic, retailers are re-platforming their retail spaces to adapt to the future of shopping. Many retailers have shifted digital order fulfillment to stores, enabling customers to buy online and conveniently pick up near where they live and work or have order delivered to homes from local stores. In the fourth quarter of 2020, for example, it’s estimated that stores fulfilled 60% of online orders.4
“To meet this growing need, the store of the future will be a hybrid merchandising and fulfillment center, with sections for both shipping and shopping,” explains Leon Nicholas, vice president of Retail Insights & Solutions at WestRock. “What does that mean for packaging? As these fulfillment centers increasingly leverage automation to fill orders, there will be new packaging requirements to increase efficiency, including size, shape and easy ‘grab-ability.’”
Between fulfillment and shipping needs, this increased reliance on e-commerce means an inevitable rise in the use of packaging materials. Meanwhile, sustainability is proving to be more important to the consumer than ever. In a study by IBM,5 90% of consumers surveyed reported the pandemic affected their views on environmental sustainability, and 60% are now willing to change shopping habits to reduce their environmental impact. Furthermore, nearly half of consumers now pay attention to the amount and type of packaging when making a purchasing decision.6 This intersection of heightened environmental awareness, economic growth as we emerge from the pandemic and an increase in online shopping has brought e-commerce to a crossroads: It’s time to rethink packaging and fulfillment, with a focus on e-commerce sustainability.
How Do Retailers Achieve This?When rethinking packaging through a sustainable lens, the use of fiber-based, eco-friendly packaging materials that are renewable, recyclable and compostable is an essential component. The impact of this choice is far-reaching: according to WestRock’s 2020 Pulse Packaging survey, 65% of consumers say packaging that can be easily reused or repurposed impacts product satisfaction.7 For online purchases, there are even more factors affecting packaging as a wider variety of products are being shipped in varying quantities. In this new normal, retailers are facing the challenge of creating sustainable e-commerce packaging for a broader range of products than ever before.
Sustainable packaging is at the center of everything WestRock does. In 2020 alone, WestRock launched approximately 30 new paper and packaging products with defined sustainability benefits across a range of end markets and applications. WestRock works with a number of customers in the e-commerce space to replace plastic with fiber-based packaging, including fiber-based mailers and foam reduction solutions.
Integral to this goal is WestRock’s commitment to responsibly source fiber and promote healthy forests, while advancing a circular economy. “Fibers produced in our paper mills are sent to production facilities, which make and ship boxes to clients including e-commerce delivery boxes and Domino’s. The boxes that make their way to WestRock’s recycling plants are recovered and then turned into fibers to start the papermaking process all over again,” explains Kevin Hudson, WestRock’s senior vice president of forestry and recycled fiber. The recycled packaging created by this circular economy is a critical part of furthering e-commerce sustainability.
Another essential component in advancing sustainable packaging for e-commerce is the use of automated packaging solutions. Innovative machinery can be used to create right-sized packaging, which yields substantial sustainable benefits. It produces eco-friendly boxes by reducing the amount of fiber required. It minimizes the need for bubble cushioning wrap and similar fillings, which are hard to recycle. And it allows more packages to fit on one truck shipment, lowering carbon emissions from gas. Ultimately, this approach lowers both cost and waste for retailers. It has the added benefit of satisfying customer desire for environmental impact, which helps foster long-term customer connection and loyalty.
When it comes to innovative, sustainable packaging machinery and automation, WestRock leads the way. WestRock’s automation solutions include:
- Box On Demand® systems give customers the flexibility to create perfectly sized boxes for highly variable or odd-shaped items, in-house and on demand.
- Pak On Demand™ Pouch System provides a sustainable alternative to plastic mailers. The system creates a lightweight, curbside recyclable pouch on demand and seals the package for shipment—all with a single operator.
- BoxSizer® offers customers a way to continuously right-size different packaging footprints by measuring the empty volume of the box, cutting, folding and sealing each single or multi-item order.
2Deloitte: Holiday Retail Sales Expected to Increase 7-9%
5IBM Study: COVID-19 Pandemic Impacted 9 in 10 Surveyed Consumers' Views on Sustainability
6EY: US Future Consumer Index 7: how to satisfy the sustainable consumer
72020 WestRock Pulse Packaging Survey