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Packaging and e-commerce in operations management

19 January, 2016 - 17:08

Every year Internet-based companies ship millions of packages throughout the world1   

Online shopping influences packaging and its interactions with industrial function, mainly with marketing. The more people shop online, the more the role and the function of packaging change, since the shelf presentation of the product becomes less important2. Visser3 stated that it is difficult to translate the existing packaging design used for the traditional way of buying in a real shop and marketing tactics into online retailing. E-commerce requires a new paradigm for the entire product packaging system. For example, in real shop the traditional primary package is a good agent for any products, not only because of the text descriptions, but also for its visual communication. It can effectively deliver product information and brand identity, and is a good cognitive agent for recognition. In an online shop, users cannot directly see the package nor touch the product, but other characteristics such as protection and re-usability for efficient take-back of products take on great importance 4. The direct feeling with customers is less important since the contact is mediated by the computer.

The Internet does not determine the design of packages. However, if online shopping is becoming more common, packaging design must be reconsidered5 . The changing role of packaging in the purchase of a product makes it desirable and possible to give more attention to the consumer’s perception of a brand while the user is using it, and less attention to its shelf presentation. Retailers that sell online have to consider packages as a means of marketing and disseminating information instead of a mere covering for a product6  .

Block and Segev7 suggest the following e-commerce impacts on marketing:

  • Product promotion: e-commerce enhances the promotion of products and services through direct information and interactive contact with customers;
  • New sales channels: e-commerce creates a new distribution channel for existing products, owing to its direct support of research on customers and the bidirectional nature of communication;
  • Direct savings: the cost of delivering information to customers by Internet results in substantial savings. Greater savings are also made in the direct delivery of digitized products compared to the costs of traditional delivery;
  • Reduced cycle time: the delivery time for digitized products and services can be reduced. Also, the administrative work related to physical delivery, especially across international borders, can be reduced significantly;
  • Customer service: it can be greatly enhanced for customers to find detailed information online. In addition, intelligent agents can answer standard e-mail questions in few seconds.

The advent of e-commerce has also had several implications on logistics and the environment. From the logistics point of view, packaging has to increase its function of protection and covering of products, since products have to be transported to reach the customer. The theme of reverse logistics takes on great importance since customers can return wrong and/or unsuitable products. The advent of Internet distribution produces significant savings in shipping, and can facilitate delivery. Even those who use transportations can use Internet-based tools to increase customer service. Web-based order tracking has become commonplace. It allows customers to trace the shipment of their orders without having to contact the shipper directly8. Several electronic tools, like Electronic Data Interchange (i.e. the structured transmission of data between organizations by electronic means, EDI) can have a significant impact on the management of online packaging. EDI enables minimal stocks to be held with the consequent saving in storage, insurance, warehousing and labour costs (reduction in manual processing reduces the need for people)9  . The packaging system must ensure secure shipping, reduce the possibility of theft, increase security and identify where the products are in real time.

From the environmental point of view, packaging in e-commerce has very similar requirements to traditional shopping, such as the use of recyclable materials, reduction of the amount of materials used, possibility to re-use packages in case of returned products from customers, disposal of damaged packages with the minimum production of pollution.

Table 8.6 shows the main interactions between packaging and other industrial issues in both real and online shopping.

Table 8.6 Packaging and industrial issues in real and online shops
Real shop Online shop
Marketing:   Sell, differentiate, promote, value, inform, shelf presentation, visual communication Marketing:   Brand identity, means of disseminating information, product promotion,
Logistics:   Handle, transport, store, distribution Logistics:   Protection and covering the products, transport, reverse logistics, security
Environment:   Reduction of materials used, re-use, recover, disposal Environment:   Reduction of materials, recyclable materials, re-use, disposal