How Is E-Commerce Transforming the Prospects of FMCG Packaging?

Highlights:

• Introduction
• Consumer engagement through customers’ sensibilities
• Using technology to provide real-time tracking
• Redesigning the supply chain management

E-commerce has witnessed overwhelming growth over the past few years. The rise in online shopping requires FMCG brands to adapt their strategies, including how they package products for sale and delivery. Companies make sure that their products are not only appealing but also capable of withstanding the rigors of shipping and handling. This has led to a re-evaluation of packaging materials, designs, and functionalities. To address these concerns, many FMCG companies have invested in innovative packaging solutions that prioritize product safety and yet do not fail to engage consumers with the product.

Consumer engagement through customers’ sensibilities

E-commerce not only demands functional packaging but also offers an opportunity for brands to engage consumers visually and emotionally. Effective packaging attracts customers' attention, especially for online shopping where there’s a lack of tactile experience. According to a survey by McKinsey & Company, 66% of consumers are willing to pay more for sustainable brands. Hence, packaging serves as an important aspect through which brands communicate their values and product benefits directly to consumers. FMCG companies use this scope to use eye-catching designs and informative labels to enhance brand visibility online.

For instance, they have incorporated sustainable materials into their packaging strategies. This includes using biodegradable plastics, recycled materials, and compostable options that minimize environmental impact. Brands like Unilever have committed to making all their plastic packaging recyclable or reusable by 2025. In March 2024, SEE introduced a paper-based bottom web, aiming to assist food processors and retailers in curbing plastic usage and cater to the rising consumer preference for paper packaging. CRYOVAC brand Barrier Formable Paper, crafted from 90% FSC-certified fibers, reduces plastic usage in bottom web packaging by nearly 77%, particularly when replacing conventional PET/PE webs. Moreover, in August 2024, Pakka Limited, known for its compostable packaging solutions, forged its second partnership with Brawny Bear, a nutrition company renowned for its date-based healthy foods. This alliance has led to the debut of Date Energy Bars, making them the first energy bars in India to utilize compostable flexible packaging. These initiatives show how FMCG brands align their packaging strategies with sustainability goals, appealing to environmentally conscious consumers.

Using technology to provide real-time tracking

Brands are also using technology such as augmented reality on packaging to create interactive experiences for consumers. These innovations allow real-time tracking of products, ensuring efficient inventory management and enhancing the customer experience by providing instant access to product information. For instance, Nestlé has integrated AR into its product packaging, letting customers scan labels with their smartphones and access recipes or nutritional information. Coca-Cola uses personalized labels that feature individual names or messages, encouraging consumers to share their experiences on social media platforms. These methods increase consumer engagement and strengthen brand loyalty, further contributing to the expansion of the FMCG packaging market.

The integration of smart technology into packaging has changed how FMCG products are delivered and experienced by consumers. Smart packaging solutions, such as radio frequency identification tags allow brands to provide real-time tracking information and interactive experiences. For instance, consumers scan QR codes on packaging to access product details, promotions, or usage instructions directly on their smartphones. This improves customer engagement and encourages brand loyalty. For instance, Sealed Air has evolved its corporate and iconic brands to SEE, showcasing a market-driven, customer-first, solutions company. SEE partnered with customers to deliver packaging solutions integrating automation, digital, and sustainability, creating significant value for their businesses.

Innovations in supply chain management

The shift toward e-commerce requires FMCG companies to rethink their supply chain strategies as well. Previously, the supply chains were designed for bulk distribution through physical retail outlets. However, e-commerce necessitates more responsive systems that handle smaller orders and direct-to-consumer deliveries. Companies have invested in technologies such as real-time inventory tracking and predictive analytics to adapt effectively. These tools help maximize inventory levels based on demand forecasts, minimizing stockouts or overstock situations.

Walmart, for example, collaborated with Fulfillment by Amazon, in 2020. This partnership allowed Walmart to use Amazon's extensive logistics network to improve its last-mile delivery capabilities. By utilizing Amazon's fulfillment services, the company enhanced its efficiency in managing smaller orders and direct-to-consumer deliveries, meeting the growing demands of e-commerce shoppers.

Endnote

The rapid growth of e-commerce has led FMCG brands to innovate their packaging strategies, focusing on catering to customer sensibilities. Whether it is integration of cutting-edge technologies or restructuring the supply chain for sustainability, companies are creating packaging that protects products and improves customer interaction and loyalty. In the upcoming years, this adaptation is expected to bring lucrative opportunities for FMCG packaging in e-commerce. 

For more updates on the FMCG packaging industry’s whereabouts, reach out to our analysts today

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