The main objective of this master’s thesis was to gain an understanding of the drivers impacting the future containerboard demand in e-commerce packaging. To learn the current state of e-commerce packaging market, 42 people were reached through interviews and online survey. The participants included people from containerboard, corrugated board and packaging producers, retailers, brand owners, associations and few other stakeholders in the field. The geographical coverage focus was on the largest e-commerce markets in Europe. To conclude the research findings, answers to the research questions are presented. The main research question was following:
RQ1: What are the most important drivers impacting the demand of containerboard used in e-commerce packaging?
The drivers impacting containerboard demand in e-commerce packaging are divided into market trends, packaging material decision making factors and containerboard specific trends. Market drivers are:
Economic situation
E-commerce development
Substitution and competition
Sustainability concerns
Power of big retailers
Policies.
The biggest drivers considering the future containerboard demand in e-commerce packaging are the development of e-commerce market and overall economic situation.
As products cannot be delivered to the consumer without packaging, the demand of e-commerce packaging is created, when consumers order online rather than buy the same product in physical store. For this reason, it is essential to understand and follow the e-commerce diffusion in Europe. Economic situation is often the biggest factor driving new
innovation adoption, so it is driving both e-commerce development and containerboard demand in e-commerce packaging.
Due to increasing sustainability concerns, consumers are requiring more sustainable and recyclable packaging solutions. Price competition and substitution are always big drivers, as materials are competing in the market, and the most cost-efficient packaging solution providing safe delivery and needed functionality is preferred. Policies can act both as drivers and inhibitors for containerboard demand in e-commerce packaging. Currently, there is no regulation for e-commerce packaging, but there are discussion about material recyclability and aim to reduce packaging waste. Big retailers have impact on containerboard demand, as their packaging decisions and development are followed in the market.
Packaging decision making factors are as well important drivers for containerboard demand in e-commerce packaging. By presenting the drivers, it is possible to investigate the answer to the second research question, which was following:
RQ2: What are the most important variables affecting the packaging decisions in e-commerce?
The packaging material decision making factors are:
Need of protection
Perceived sustainability
Cost
Compatibility
Brand image.
The main function of e-commerce packaging is protection, as products need to be delivered undamaged. Product damage is the worst scenario when it comes to cost, sustainability and brand image. As corrugated packaging have relative advantage over its substitute materials in terms of protection, it is often the option when protection is needed. For example, electronics, furniture and food require high protection. However, not all products are requiring the same degree of protection. For example, fashion business and books are needing low protection. Flexible plastics are an attractive alternative in e-commerce packaging when protection is not needed, as it is light weight, flexible, durable, takes less space and it is often cheaper.
The impact of perceived sustainability on packaging material decision helps to answer the third research question which was:
RQ3: How sustainability issues are impacting containerboard demand in e-commerce packaging?
Consumer perceptions about packaging materials’ sustainability impact the packaging material decision. Currently perceived sustainability is benefitting corrugated packaging and other fibre-based packaging solutions due to recyclability. Plastics are often perceived less sustainable due to littering problems, and this may drive the demand of fibre-based substitutes for plastics. This means that the competition in the future would not only be between corrugated board and plastics but also new more sustainable packaging solutions with similar characteristics to polybags. Sustainability and cost-effectiveness are driving towards overpackaging reduction. Generally, this means less containerboard demand as less packaging material is required. On the other hand, it could boost the demand of corrugated packaging, when overpackaging is reduced and it is perceived more environmentally friendly.
Packaging should be cost-efficient in order to compete in the market, as cost is one of the major attributes impacting packaging material decision. Often higher material costs and additional costs caused by warehousing and logistics could be seen as challenges for corrugated packaging compared to its substitutes. Still, there is no competition when protective packaging is needed, and corrugated packaging is the preferred packaging solution. Sometimes also brand communication is valued over costs, so more convenient, sustainable and good-looking packaging is needed. Currently, more sustainable packaging solutions are often more expensive, so balance between reasonable cost and required sustainability should be evaluated. Packaging needs to be also compatible with the requirements of the supply chain, i.e. automated processes or with intelligent packaging solutions.
Containerboard and corrugated packaging development drivers impacting the demand are:
Overpackaging reduction
Favour of recycled fibre-based containerboard
Printability & surface properties
Lighter but stronger material
Convenience, i.e. opening experience and returnability.
Recycled fibre-based containerboard is favoured in e-commerce packaging, mainly because it provides needed functionalities with lower cost than virgin fibre-based alternative. Printability, appearance, opening experience and overall convenience are increasingly demanded from e-commerce packaging, and the packaging may act as tool
of brand communication. Need of surface properties may increase in end uses in which humidity resistance is required, i.e. food. Finally, need lighter but stronger material is a minor trend that has been seen impacting containerboard demand.
As part of market research, the last research question was:
RQ4: How much containerboard is used in e-commerce packaging?
Currently, the e-commerce packaging represents approximately 10% of the total containerboard demand in Europe. As the market demand of containerboard in Europe was approximately 32 Mt in 2018, it can be estimated that 3.2 Mt of this demand was e-commerce packaging. Approximately, 85% of this demand is recycled fibre-based containerboard and rest is virgin fibre-based. This would mean that 2.7 Mt of containerboard demand in e-commerce packaging is recycled fibre-based containerboard and rest 0.5 Mt is virgin fibre-based.
To conclude, growth of e-commerce and overall consumption, as well as need of protective packaging creates the need for demand of containerboard. Drivers may enhance the demand of more sustainable, good-looking, convenient and smaller corrugated box. Still, some end uses are requiring just a plain, simple and low-cost box.
Wide variety of businesses, end uses, brands and needs make e-commerce packaging a broad concept.