The rise of e-commerce has changed the way people shop – and the way brands sell. Instead of offering their wares almost exclusively in stores, consumer packaged goods (CPG) companies are increasingly shipping direct to consumer (DTC).
However, the DTC model routinely fails in one area: packaging.
“Traditionally CPG companies designed packaging solutions with the retail shelf in mind,” said Eric Hiser, technical vice president at Michigan-based International Safe Transit Association (ISTA), which develops testing protocols and design standards for packaging. “Products are packaged in bulk and put on a pallet – they have ‘strength in numbers’ and there’s relatively few touchpoints along the distribution chain. But this all changes in a DTC scenario.”
UNFIT FOR PURPOSE
The DTC model involves four times as many transfers or “touch points,” which increase the risk of damage. “Whereas traditional retail relied on an average of five touchpoints, e-commerce tends to involve 20 or more,” said Kyla Fisher, a sustainability analyst and program manager at The American Institute for Packaging (AMERIPEN), headquartered in Minnesota.
“In traditional retail, pallets of goods go from the manufacturer direct to the retail distribution center, where they would be unloaded and then reloaded onto smaller transport trucks for delivery to retail,” Fisher said. In e-commerce scenarios, however, shipments go from the manufacturer to a delivery hub, where they are unpackaged and stored. When orders arrive, they are repackaged, loaded onto small trucks, and then unloaded and reloaded at multiple hubs until they reach the recipient.
Returns multiply touches even more, and e-commerce involves a high rate of return – 30% versus 9% in the brick-and-mortar world, according to the 2017 AMERIPEN whitepaper “Optimizing Packaging for an E-commerce World.”
Fisher believes that damage rates are closely linked to packaging failures. “Not having enough packaging material has significantly increased the risk for damage,” she said. “But consumers are also equally as frustrated by overpackaged products.”
“Whereas traditional retail relied on an average of five touchpoints, e-commerce tends to involve 20 or more touchpoints”KYLA FISHER
SUSTAINABILITY ANALYST AND PROGRAM MANAGER, AMERIPEN
Damaged deliveries eat into companies’ revenues and brand reputations.
“The cost of replacing a destroyed item can be up to 17 times the cost of shipping, and negative website reviews resulting from the destruction of an item can take months to counterbalance with positive ones,” the Virginia-based Association for Packaging and Processing Technologies (PMMI), observed in its most recent “E-Commerce Market Assessment.”
SOLVING WITH SIMULATION
It’s clear that something needs to change. “For e-commerce situations, the entire package needs to be redesigned and re-evaluated from a distribution and end-use point of view,” said Sumit Mukherjee, vice president of Advanced Engineering Services at Ohio-based Plastic Technologies, a designer and manufacturer of plastic packaging.
The answer, experts agree, lies in packaging designed and tested for heavy handling – and computerized simulation does the job better, faster and less expensively than physical prototypes. Until recently, however, most packaging has been tested by creating and moving physical prototypes – a time and cost-intensive process.
“For us, this involves testing a small number of containers in controlled and consistent environments following defined procedures,” said Hansong Huang, head of Advanced Engineering at Amcor Rigid Plastics, a packaging solutions company based in Detroit. “However, the product validation is defined entirely on the behavior of tens of thousands of containers in their filling lines, supply chain and customers’ hands in pilot production, sometimes done by the customers of our customer.”
The problem with that process, Huang said, is that “the validation phase, in most cases, is not in our control, has large variations and is very costly and time consuming if something goes wrong.”
The cost of replacing an item destroyed by shipping can be up to 17 times the cost of shipping
Recent advances in computerized simulation and testing technology remove the guesswork.
“Simulation techniques will help us answer the ‘how?’ and ‘how much?’ questions in a scientifically iterative and innovative process,” Mukherjee said. “Identifying a robust design, coupled with accurate material properties, will allow simulation of the different scenarios of transportation with possible exposure to high temperatures and pressures. The entire solution space can be skimmed for optimal points, where best performance can be had.”
Amcor is already leveraging the technology, to great effect.
“By building simulation specifically for e-commerce, we can rapidly gain understanding of the physics and actual requirements for the containers to pass,” Huang said. “We already use simulation to design for robustness and testing extreme conditions that are difficult to replicate reliably in physical testing. I expect it to play an even more important role for e-commerce situations in the years ahead.”
A WORTHWHILE INVESTMENT
The benefits are clear. “By using simulation to lead the design and testing method development, instead of developing simulation to replace existing testing as in the past, advantage is gained through not only shortening the timeline but also developing better methodologies at the end that can be widely applied,” Huang said. “At Amcor, we have already built and validated the technical foundations and most of the components needed for accurate simulation for e-commerce requirements – the thickness distribution prediction, material properties, numerical methods, verification and validation, workflow, etc. We now need to extend this to include a full set of new loading conditions and, perhaps more importantly, adapt our methodology to live up to a new level of uncertainty in the new journey.”
A PROMISING FUTURE
Hiser believes that in the future this progress will enable CPG companies to more rapidly adopt new innovative delivery methods. “They can take existing packaging designs and simulate their performance using new channels such as curbside pickup, drones, robots…all manner of future scenarios,” he said.
“The benefits will be huge,” Mukherjee added. “Firms that do not take advantage of these digital tools will ultimately be left behind.”