Packaging is the first thing consumers notice when purchasing a product. Therefore, it plays an important role especially in the consumer goods industry. Packaging not only secures the goods and makes handling and transportation easier, but also impacts consumer’s choice for a product. In India, the industry has seen constant, sustainable growth in recent years due to an increase in packaged food consumption, awareness and desire for quality products. The Packaging Industry is expected to grow from $32 billion in FY 2015 to $73 billion in 2020. The industry is forecasted to grow at 18% annually – flexible packaging growing at 25% and rigid packaging at 15%. Increasing organized retail and the boom in E-Commerce are also major growth drivers for the Indian Packaging Industry. Its exponential growth has resulted in thousands of packets being delivered every day across the country and this demands quality packaging of the products. How is E-Commerce contributing to the growth of the Indian Packaging Industry?
Packaging for E-Commerce products delivered from one place to another need to consider more factors like product safety, ease of storage & transportation, etc. and so has to be different from the usual retail industry. Receiving an E-Commerce package is almost like receiving a gift that one bought for oneself and this brings challenges and opportunities for the Packaging Industry.
Within E-Commerce, the retail category penetration has increased to 65 million unique visitors a month registering an annual growth of 55%. India’s E-Commerce revenue is expected to jump from $30 billion in 2016 to $120 billion in 2020, growing at an annual rate of 51%, the highest in the world, according to a joint ASSOCHAM-Forrester study paper. Retail category penetration is registering an annual growth of 55%. Majority of the online shoppers are between the ages of 15-24 years and as it is well known, the younger generation comparatively pay more attention to appearance and are additionally more cautious about the quality of packaging of the products they buy.
At the moment, mostly plastic is the material used for Packaging in a variety of industries, e.g. in the FMCG and Pharmaceutical industries. Changing consumer lifestyles towards ready-to-eat products are driving growth of flexible Packaging, with food already accounting for 38% of the flexible Packaging market. If food or drinks are ordered online, the packaging should ensure no loss in quality. Conventionally, home-delivered food products in India are simply packed, but the increasing awareness of hygiene and demand for good quality food is now bringing about change in the packaging of food deliveries. Similarly, for products like apparel, which do not require rigid boxes for protection, E-Commerce offers possibilities for flexible Packaging with advantages, such as lightweight, energy saving due to less energy consumption of package production, possibilities to adjust it different products, small pack size and an ease of storage and disposal as compared to rigid packaging.
But with a growth in E-Commerce, the demand for rigid Packaging, such as cartons or corrugated boxes is also increasing as these are especially used when products such as electronics require firm packaging for protection – also considering poor road infrastructure in many parts of the country. Rigid packaging accounts for 80% of the Indian Packaging market.
When people order products online, they expect it to be delivered without any damage. For this, the retailers have to design qualitative Packaging that is easy to transport and not too heavy or spacious. With the increasing penetration of E-Commerce among traditional retailers, like groceries & pharmacies, Packaging becomes an important aspect for them as well.
Visually appealing Packaging is another factor that positively affects online sales. If a package is designed attractively, the product is assumed to be of high quality, the same way as premium products are expected to be packaged in an attractive and consumer friendly manner. According to a research, about 60% of consumers share the product image on social media if they liked it and this group may also recommend the product to others which consecutively improves sales. Sellers have to be aware that improper Packaging can lead to negative brand perception. Along with quality, the cost of Packaging is important for an online seller, thus the demand for good quality and economic Packaging is ever increasing. Adaptations and innovations in Packaging improve the economy in terms of preservation, maintenance of quality and prolonged shelf life. In a nutshell, packaging for E-Commerce products should secure the product, be easy to handle & transport, should enhance the brand image and must be cost effective.
On the other hand, an increase in Packaging also results in an increase of waste. In India, only a minority of waste gets recycled. But according to a survey, 94% of respondents would be willing to be part of E-Commerce Packaging recycling and reuse under the “Swachh Bharat” (Clean India) Mission in return of a small incentive. Some suggestions by respondents mentioned that online retailers should accept the return of their Packaging material in return for some discounts or for some reward points on the next purchase.
To overcome the labour shortage in the Packaging industry and train more qualified manpower, the Indian Institute of Packaging (IIP) plans to set up new campuses, e.g. in Gujarat. If the Institute gets its recognition to be ‘an institution of national importance’, NC Saha, Director of IIP, said, and added that it plans to introduce degree courses in Packaging Technology and Management in the academic year of 2017. The new academic workers could meet the challenges of rising product packaging needs due to the rise in E-Commerce.
The Indian Packaging Industry has grown tremendously in recent years and is set to become the 4th largest worldwide with a revenue of $24.6 billion in 2016. There is great potential for companies in the sector as India’s per capita consumption of Packaging is comparatively quite low. An increase in E-Commerce, higher disposable incomes and an affinity for online shopping will give the Indian Packaging industry the impetus to become one of the largest in the world.
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