E-commerce powered retail in 2020

packages by door
Our lives changed significantly as we adjusted to the new normal of the pandemic. One of the many new behaviors that we incorporated into our everyday routine in 2020 was an increase in online shopping. E-commerce surged nearly 37% in 2020 compared to 2019, accounting for almost 90% of last year's retail growth compared to only 49% in the five years prior.1 Consumers also branched out, buying new categories online to limit in-person contacts. CPG e-commerce grew 59% in 2020 compared to 22% in 2019, driven by grocery delivery.2 Safety and hygiene are likely responsible for the other major trend – buy online pickup in store (BOPIS) surged by 250% by the summer of 2020.

While many retailers benefitted greatly from the acceleration of e-commerce in 2020, the pace of growth didn’t come without its costs. Retailers had to adapt quickly to meet the new demands, putting efficiency and profitability on the backburner in favor of fulfillment solutions that met shoppers’ needs at that moment. With e-commerce claiming a bigger piece of the retail pie today, retailers are now shifting to capital investments to turn this sales growth into profitable growth.

The Future of Retail

Leon Nicholas, vice president, Retail Insights and Solutions at WestRock
Leon Nicholas
Vice President, Retail Insights and Solutions

As we look to the future of retail, we see two consumer dynamics emerging from the pandemic. “Shoppers are of two minds,” explains Leon Nicholas, vice president, Retail Insights and Solutions at WestRock. “On the one hand, they are planning purchase occasions with caution and purpose. At the same time, they are prioritizing convenience on their terms. Optionality for shoppers is a big outcome of the pandemic, and the expectation that retailers will provide an array of convenient fulfillment options is here to stay.”

While they weigh shopper behaviors, retailers are adjusting to the new operational reality accelerated by the pandemic – e-commerce, driven by more localized fulfillment options, is driving growth and will dictate the terms for all commerce in the years ahead. That means the co-dependency between brick-and-mortar and online will only heighten in a mutually reinforcing manner.

As retailers look to sustain the growth of e-commerce in a profitable manner, we see the greatest investments in e-fulfillment across inventory deployment, labor and layout optimization, and especially automation. According to Gartner, through 2023, demand for robotic goods-to-person (G2P) systems will quadruple. In the near term, this emphasis on automation will drive packaging and supply chain ecosystem management strategies – critical areas for manufacturer alignment.

Packaging Automation

Packaging will play a critical role in reducing costs and gaining efficiencies for e-commerce fulfillment in the years ahead. In addition to the manufacturing of packaging itself, WestRock is a leader in automated packaging solutions that enable retailers to take out cost and increase sustainability in their operations.

Our machinery creates on-demand or right-sized packaging, reducing materials, void fill and dimensional weights, all of which can lower shipping costs.
  • 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.

“The accelerated transition to e-commerce drove retailers to innovate rapidly in 2020,” says Manuel Suro, vice president, E-commerce Solutions at WestRock. “As we look ahead, we are partnering with our customers to translate this surging demand into profitable growth with automation, packaging, insights and fulfillment solutions that enable retailers to meet their efficiency and sustainability goals more easily in the context of increasingly complex supply chains.”

Headshot of Manuel Suro, vice president, E-commerce Solutions at WestRock
Manuel Suro
Vice President, E-commerce Solutions

In the years ahead, e-fulfillment investments will continue be a strategic priority across the industry, with an emphasis on packaging automation and supply chain management. To learn more about how WestRock can help you success in retail’s accelerated reality, click below.

Retail Fast Forward
1 Kantar
2 IRIWorldwide.com
3 Adobe