Transform supply chains, product packaging and data requirements
The acceleration of e-commerce across the globe in 2020 was hard to ignore. From an increase in direct-to-consumer models, to experience-based home e-commerce and subscription boxes, online retail innovation has taken things to another level. And, with Q4 2021 online sales expected to increase further year over year, this is a trend that should continue.
New e-commerce strategies have transformed supply chains and required new approaches to product packaging and labeling, and the management of the product data that underpins them – both to ensure that the right product or the right combination of products is delivered to the right person at the right time, and to enable direct communication between the brand and the consumer.
As explained by Lee Metters, Group Business Development Director, Domino Printing Sciences, the changes the COVID-19 pandemic has brought to consumer buying behavior have irrevocably altered the e-commerce models of retailers and brands, with the data behind product barcodes at the center of a far more flexible, agile and individualized strategy.
Online shopping platforms have seen a huge surge in demand since the onset of the COVID-19 pandemic, driven by global lockdowns and the closure of non-essential stores in many parts of the world. Out of necessity, some retailers and brands have been forced to set up or expand their e-commerce businesses in order to stay in business.
Indeed, new research from Adobe shows that online retail sales in the UK reached £10 billion in the month of July 2021, the highest e-commerce sales on record for the month of July, as well as the highest figure reported so far since 2020. Elsewhere, Facebook and Bain & Company’s SYNC’s latest Southeast Asia annual report said e-commerce penetration in Southeast Asia is expected to increase by 85% by the end of 2021, with almost 80% of people aged 15 and over becoming digital consumers by the end of the year.
This is a fundamental change in behavior that seems set to continue. According to data from eShopWorld, some 39% of millennials globally have not missed their in-person purchases, while Adobe also suggests that up to 40% of shoppers still avoid shopping in physical environments despite the lifting of restrictions.
However, despite the overall increase in e-commerce sales, competition for the £ (or €/$) consumer has also increased. In order to stand out, retailers and brands have adopted new innovative strategies – global FMCG brands (e.g. PepsiCo) have adopted direct-to-consumer (DTC) platforms for the first time, and there are had an explosion of experience-based e-commerce like [meal kitshttps://www.thisismoney.co.uk/money/markets/article-9409469/HelloFreshs-UK-boss-says-Ill-taking-Deliveroo.html]letterbox deliveries and subscription boxes.
For brands in particular, the DTC model has proven to be a catalyst for growth: providing the ability to engage directly with their consumers, build personal relationships, and improve the overall customer experience.
Supply Chain Transformation
Embracing these new e-commerce models has required many brands and retailers to rethink their supply chains, particularly the ability to provide product traceability at a much more granular level. A recent Smithers report also suggests that packaging requirements have changed, with the emphasis now on getting products safely to consumers the first time and minimizing loss or damage to products to reduce the risk of financial loss and returns.
This requirement to effectively manage much more data downstream, after the initial production process, has in turn fundamentally impacted production environments.
In the past, manufacturers produced batches of the same product that was stacked on pallets and sent to distribution warehouses. The distribution warehouse would then break down these pallets and send them to retailers, where consumers picked up what they wanted.
With DTC models, the picking process essentially happens two or three steps further down the production path on behalf of the consumer – this requires a whole new distribution model, with shipments sent to individual households, rather than to retail environments. Consumers increasingly expect to be able to see how their products move through supply chains – with information on when and where a product is packaged, and when they can expect what happens at their doorstep. This has resulted in an explosion of variable data that needs to be managed and controlled.
Supply chains become even more complicated when considering meal box deliveries or other platforms where consumers can choose different items or customize the contents of their box. These platforms are based on convenience and make it easy for consumers to create things at home – so it’s important to make sure you get the box contents right.
Organizations need data, control and visibility to ensure the right item ends up in the right box; that each individual item can be identified and tracked within the production facility; and that they have the ability to verify the accuracy of the final product. This is where the role of product barcodes, including 2D codes, becomes critical: not only to ensure control, accuracy and traceability, but, combined with production line automation, to ensure operational agility to maximize productivity and profitability.
The data connection
In addition to requiring more data exchange from brands, new e-commerce and DTC models can also provide more information to brands. The type of information collected through e-commerce and DTC models can present a huge competitive advantage – the ability to take ownership of the customer journey and interact with consumers on a much more individualized level.
Some brands choose to embrace digital printing technology to create highly decorated e-commerce boxes and packaging to provide an “out of the box” experience; others seek to personalize the experience by adding the customer’s name or other personalized messages to the packaging, either by digitally printing the product packaging itself or by adding a label as part of the packaging process. production.
The same digital printing processes that personalize a product can also be used to add unique tracking via 2D barcodes to facilitate shipping and returns without requiring an additional production step – making for a closed-loop experience much easier to maintain.
Product packaging printed with 2D codes can also increasingly serve as a vehicle to connect and interact with consumers at home. Brands use such methods to gather valuable consumer information by encouraging product reviews and reviews, and offering repeat purchase initiatives, the information from which can be used to drive other marketing activities and inform the product strategy.
Additionally, the rise of digital printing is making this type of engagement more affordable, allowing smaller brands to operate in a space where only high-end consumer goods could previously.
COVID-19 has fundamentally changed consumer shopping habits, but it has also irrevocably altered organizations’ e-commerce strategies. Having embraced automation to better manage data and provide greater control and agility, organizations now seem fully poised to take advantage of new consumer engagement models through the evolution of product labeling and solutions. coding and marking, including the use of 2D codes.
For those who haven’t yet, it’s time to act.