Members Meeting
Opportunities and Challenges for Corrugated in the E-Commerce Economy BY STEVE YOUNG
E-Commerce: an Opportunity for Corrugated The sessions opened by offering a view of the total e-commerce economy and an outlook for its growth in the years ahead. Ron Sasine, a principal in the consulting firm of Hudson Windsor LLP, presented a positive picture of a corrugated industry that, although 2019 saw its growth slacken from the previous three years, will continue to benefit from the growth in online retail sales. The caveat, he said, was that this benefit will be reserved for those companies in the industry with the “best assets and best operations.” Every year, online sales capture a greater percentage of the $3.8 trillion U.S. retail sales market. According to Statista, in 2013, 6% of all retail sales were online; in 2019 the figure was 11%, or $546 billion, and by 2023 it is forecast to be nearly 14%, or $740 billion. Sasine reported that the e-commerce sales of major consumer packaged goods, or CPG, companies are growing at five times the rate of conventional retail sales and are expected to double by 2024. Sasine predicted that online grocery sales would be a major driver in the demand for corrugated packaging. He made the case for this by showing how
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BOXSCORE May/June 2020
buying a book four times a year online from Amazon will result in the use of four five-panel corrugated folders. On the other hand, online grocery purchases made through Amazon’s Pantry unit or from retailers such as Walmart or Target require several boxes every week for 52 weeks. Grocery items, Sasine said, are “bulky, inexpensive, and low-margin” and are not suitable to Amazon’s ship-in-own-container (SIOC) guidelines. As a result, Sasine predicted that as e-commerce sales grow, consumption of corrugated packaging will increase. ‘The Future of Amazon’ Disclosed Brent Lindberg, CEO of Fuseneo, gave an insightful presentation on “The Future of Amazon.” Fuseneo’s focus is to help clients improve their packaging, minimize unnecessary material consumption, and thereby better conform to the new rigors of the online sales platforms. Amazon, the largest digitally native online sales platform, last year captured upward of 47% of all those online sales; its closest competitor, eBay, trailed at 6%. Because Amazon dominates this market, it exerts the lion’s share of influence in setting new packaging guidelines for brands wishing to sell through its platform. These standards, also known as “frustration-free packaging,” include new requirements on design and ease of use, both for the online fulfillment and distribution system and for the end-use customer. Lindberg explained that Amazon’s standards look at packaging in three tiers; all three tiers consider the level of handling that must be done in
Spring Meeting Supplier Innovations are located at aiccbox.org/SI2020
Photos courtesy of AICC
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ICC’s E-Commerce Xperience, which took place February 18–20 in Irving, Texas, brought together brand owners, packaging designers, converters, and suppliers for a comprehensive look at the e-commerce economy and how it will affect the corrugated industry. More than 150 AICC members and industry experts attended.
Ron Sasine of Hudson Windsor presented “The Future of Corrugated: Everything Depends on It” at AICC’s E-Commerce Xperience.
Amazon’s distribution centers and on the customer’s doorstep. Tier one requires that packaging products arriving at the customer’s door be curbside-recyclable where those programs exist. The second tier requires vendor products to SIOC (ship in own container). Neither tier one nor tier two requires any additional packaging modification, or “overboxing,” by Amazon. Tier three products require some sort of preparation or overboxing to prevent damage or to allow oddsized items to ship more easily through the distribution system, and Amazon currently charges vendors up to $1.99 per
