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11 Jan 2020 --- In Part 1 of Packaging trends 2020, PackagingInsights explored the biggest driver in packaging today: sustainability. Sustainability is at the center of another major trend – the rise of e-commerce – which is set for a pivotal year, especially after Amazon announced that its Frustration-Free Packaging (FFP) program will be enforced with financial penalties as of October 1, 2020, in five major EU countries and August 1, 2020, in the US and Canada. Part 2 explores this major trend in addition to another anticipated development in 2020: the continuing popularization of connective packaging technologies.

“We have reached a significant next step in Amazon’s packaging vision,” Virginie Maes, Vice President of Corporate Strategy, Amcor, tells PackagingInsights. “Amazon is now pushing for the adoption of its standards. They want to prove that both the smallest and biggest items can be packaged in an e-commerce ready format.”

“Amazon has collaborated with a non-profit organization, the International Safe Transit Association (ISTA), to develop specific criteria that evaluate the ability of primary packaging to resist damage from various environmental forces,” she says.

“Packaged products – such as flexibles pouches or rigid containers – must pass the ISTA-6 simulation, a general simulation test for individually packaged products shipped through a parcel delivery system. Here, the packaged product undergoes dropping, vibration, temperature and humidity tests. In addition, a test that ascertains if the package is designed to protect against damage, reduce waste, be recyclable and ship in its own container,” Maes explains.

Amazon is set to incentivize adherence to its FFP regulations with reward rates of US$1.00 per acceptable item in the US and Canada (or US$1.99 chargeback for items which fail to meet FPP requirements). The currency equivalents will apply to France, Germany, Italy, Spain and the UK.

Style and substance: DS Smith's e@Box embodies forward-looking e-commerce packaging

E-commerce: Challenging opportunities

The rise of e-commerce and the might of Amazon cannot be ignored. Packaging suppliers have begun adapting to the challenges and opportunities that this space will offer in 2020.

For example, e-commerce packaging specialists DS Smith has launched a “foolproof” testing method for distribution packaging called DISCS. This testing facility measures the durability of a package against potential drops, impact, shocks, crushes and shakes. Likewise, Amcor is investing in two International Safe Transit Association (ISTA) testing laboratories: one in the US and one in Europe, which will both be fully operational by May 2020.

“Packaging designed specifically for e-commerce will grow in importance in 2019, as e-commerce itself continues to grow,” Susan Selke, Director of the Center for Packaging Innovation and Sustainability at Michigan State University, tells PackagingInsights. “Especially as e-commerce expands to perishable items, this brings very real challenges in terms of minimizing the environmental impacts of these systems.”

Packaging expert Neil Farmer believes that the growth in e-commerce packaging will be fueled by corrugated materials, especially as Amazon’s FFP program encourages packaging which is made from 100 percent recyclable materials. “The corrugated e-commerce market is growing at 14 percent per annum to 2023,” Farmer notes. “It has great performance qualities in e-commerce and the anti-plastics sentiment will aid its growth.”

In the caps and closures space, Director of R.A. Gross Design, Rick Gross, expects to see innovation driven by Amazon’s FFP demands. “I anticipate that we will see more caps and closures which will claim to enable packages to meet FFP, especially since Berry Global has announced that they have joined Amazon’s Packaging and Support (APASS) network,” he says.

Meanwhile, Pack IDS Director Mike Swain believes that reusable shippers will become more relevant in the next 3-5 years as a result of e-commerce growth. “This is especially as EU Extended Producer Responsibility (EPR) and the UK Resources and Waste Strategy come into play.”

“Amazon sees overpackaging as an issue. The key message seems to be to pack minimally but effectively,” he adds. “Meanwhile, volumes are set to increase and sector growth looks buoyant. There is anticipation in the industry of standardized shipper sizes for shipping efficiency.”

The rise of e-commerce and the demand for FFP packaging has also presented design and branding opportunities. The point of focus has transferred to the “unboxing experience.” Based on the evidence of 2019, the year ahead will likely witness a wealth of e-commerce packaging designed to deliver the “wow” effects brands desire.

A notable recent example of this is DS Smith’s e@Box – an award-winning design which combines both primary and secondary packaging in a stylish box which appears to unzip when separated.

FFP packaging does need to come at the expense of design, according to Maes. “Quite the opposite in fact – the possibilities of innovative packaging are almost endless when designing for e-commerce.”

For example, Amcor recently developed a highly-sustainable, polyolefin-based film that can be used for ambient and retort high-barrier applications. When used for pet food packaging it performs better in the online channel than cans and at a lower overall cost, according to the supplier.

Increased sustainability and e-commerce ready: Amcor's innovative AmLite technology

“While not every CPG product has technical requirements that necessitate a redesign to ensure e-commerce suitability (temperature, fragility, etc.), there are some products that do: pet food, detergent, pasta sauce and shampoo are just a few examples,” Maes continues.

“This focus on design (and redesign) for e-commerce is an industry priority and it’s no surprise that the big e-retailers, such as Alibaba, Amazon, and JD are driving innovation in this area and implementing protocols that ensure packaging survives the e-commerce channel, without product damage or failure,” she concludes.

Connective technologies: Much more than an experiment

Also on the 2019 radar is the steady but certain rise of connective packaging technologies. 2019 evidenced that brand owners are beginning to realize the massive potential of pioneering technologies such as Near-Field communication (NFC), QR codes, barcode scan and Augmented Reality (AR). This is the case amid increasing brand loyalty and awareness and amid a better understanding of consumer behavior.

To date, the use of connective packaging technologies has mostly been restricted to temporary projects, such as Malibu’s “Coco-nect” cups which can be twisted to request a refill at events. However, Founder of IoT agency SharpEnd, Cameron Worth, anticipates that in 10 years’ time the cost of connected packaging will have decreased to such an extent that the world’s biggest FMCGs will be utilizing the technologies as standard.

What will 2020 witness in terms of bridging the gap between experimentation and the standardization of connective technologies? “I see connected packaging being deployed across ‘dark markets’ in highly regulated industries,” Worth tells PackagingInsights. “I also anticipate brands across FMCG/CPG rolling out much larger scale trials and deployments, as well as connected clothing gaining mainstream adoption.”

Worth believes that NFC and AR can expect progress in 2020 because the implementation of these technologies is becoming simpler and the packaging materials are becoming easier to work with.

“AR will do well because of the efforts OEMs are taking to help brands deploy AR within their app environments,” Worth says. “I think Blippar going into administration is a good thing for the overall approach to brand adoption of AR. There is no longer a ‘middle man’ to consider - sometimes as the easy choice – that could take the audience away from the brand.” Blippar fell into administration at the end of 2019. 

Connected Packaging and the Internet of Things (IoT) has opened up a world of possibilities for brands to communicate with their customers in a more engaging and proactive way. Based on the evidence of 2019, brand owners are beginning to realize the massive potential of connective technologies in increasing brand loyalty and awareness and better understanding consumer behavior.

Malibu's twistable cup concept alerts staff for a refill. Expect further connective packaging projects in 2020.  

“QR codes offer a window into the IoT and Big Data,” comments Swain. “For packaging specifically, this data will help refine analytics of consumer functionality and design.”

“RFID will become more widespread in 2019, as it becomes cheaper and printing technology advances will allow it to be utilized widely by FMCGs. In mainstream CPG, this technology would be a game changer, having the potential to revolutionize retail and many other CPG outlet channels, like convenience purchasing and vending,” Swain adds.

Coles believes that connective technologies will become particularly valuable to brands targeting the increasingly affluent millennial market group. This is not necessarily because of their tech-savviness.

“Surveys have shown that millennials are concerned about brand values, brand authenticity and ethical/sustainability issues,” he says. “The Internet of Things (IoT) shift to the Internet of Packaging (IoP) is set to create tremendous commercial opportunities to engage these consumers with the aim of gaining and retaining their brand loyalty.”

“Ideally for marketers, Millennials will become lifelong advocates for the brand and spread the word through the power of social media. In addition, smaller challenger brands and start-ups which embrace connected packaging technologies stand a better chance of differentiating themselves especially in the intensely fierce competitive retail environment,” he adds.

Coles explains that a transition is occurring from basic connected packs to intelligent, media-enhanced packaging, known as “Connected experience design,” with smart technology and data analytics being used to link the brand experience across all touchpoints – from social media to packaging.

“This digital trail will provide valuable insight into consumer behavior for brand owners, retailers and packaging firms. However, this raises privacy concerns about data collection and identity management by firms which apply ‘user behavior analytics,’” he says.

“Also, the presence of chips may compromise ease of recyclability. Smart home technology, such as smart fridges, is still at an early adopter stage but strong growth is anticipated over the next ten years as costs reduce and tech-savvy millennials embrace it. Once that happens, smart packaging will become more widespread,” Coles concludes.

As for the immediate future, Worth sees Europe leading the connected packaging space. “Looking at the markets and large trials SharpEnd is scheduled to deploy across 2020, this really is the year that trials are going far and wider than ever before,” he says. SharpEnd global IoT agency collaborates with leading companies like Pernod Ricard to deliver innovative trial and scale deployments of connected packaging.

In Part 1 of Packaging trends 2019, PackagingInsights explored the biggest driver in packaging today: sustainability. 

Packaging innovation in 2020 will be driven by the demand for increased sustainability, while the growth of e-commerce and the development of connective packaging technologies opens up a wealth of opportunities for more effective and engaging design. How suppliers and brands combine technological advancement and increased sustainability will be a key challenge in 2020. Stay with PackagingInsights to see how these themes will play out througout the year.