The following is the second in a three-part series from Edge by Ascential on e-commerce packaging optimization and the challenges and opportunities of translating packaging strategies to the digital shelf. The first part examined Amazon’s frustration-free packaging requirements.
I recently visited an olive oil bar for the first time. A quick online search shows that shops like these have popped up all over the U.S. The walls were lined with barrels of olive oil of different intensities and dozens of flavor infusions. I noticed that most shoppers arrived with empty bottles of various sizes that they would refill with whichever flavor they wanted.
My first thought was how this business took full advantage of the unique capabilities of the storefront. But the more I thought about it, the more I realized that even e-commerce brands can learn a lot from this model. These businesses offer shoppers a customizable experience while leveraging the unique strengths of their retail environment to drive loyalty and experimentation.
On the digital shelf, brands can leverage pack size to similar effect. Pack size can impact brand perception, engagement and profit margins in more ways than are immediately obvious. But to do so effectively, brands need to find balance: pack size optimization is an effort to find the sweet spot between “too small” and “too big” while also balancing functionality and sustainability.
The Psychology of the Shopper The most common mistake product manufacturers make is to treat the digital shelf the same way they would treat a physical shelf. Their packaging follows best practices for in-store retail, then is photographed for the website and over-boxed for shipping.
But imagine the reverse: putting a plain cardboard shipping box on a shelf in a store. These two examples are equivalent — and equally ineffective.
Brands need to deconstruct their preconceived notions about packaging and build them back up for the digital shelf. This allows the online environment to inform every part of design and may even lead to new, novel solutions for some of the biggest problems in packaging today.
When shopping online, consumers tend to gravitate towards larger pack sizes than they do in store. There are two reasons:
Consumers have developed implicit associations with pack sizes, even if they are often subconscious. Large pack sizes signal good value while small pack sizes signal high quality. Today, consumers tend to associate e-commerce with bargain-hunting while reserving more quality-centric purchases for brick-and-mortar stores (although this is gradually changing). This skews e-commerce in favor of high-volume, low-cost products.
Online shoppers have been trained to make their orders count. Even though free shipping is now very common, most consumers see it as wasteful to buy only one or two items online, so they're more likely to try to fill the cart. The irony is that, in looking for a good deal online, most shoppers end up spending more than they would have in a store.
Larger pack sizes are also known to increase consumption in food products, and I think it's safe to extrapolate that trend to any consumable products: abundance leads to less careful usage. Consequently, it seems logical that if brands sell larger volumes to consumers, they'll end up buying more in the long term and generate more profit for the brand.
But that's where price comes in. People want the convenience and lower unit prices of buying in bulk, but there's a limit to how much they're willing to spend at one time.
Innovation as Opportunity Optimizing pack sizes is an issue of balance. Nobody wants to buy one tube of toothpaste online, but neither do they want to buy a hundred. The sweet spot between size and price is going to vary by product and depend on numerous factors including the specific retail channel, the target audience and the level of brand recognition.
If you search online for toothpaste or household cleaning products, you'll find the results dominated by multipacks. Many emerging brands model their assortments after those of more established brands that, presumably, have done the studies to prove that 3-packs sell better than 4-packs (for instance). This is not necessarily wrong, but brands should be carefully not to fall victim to pack mentality (pun intended).
For example, coffee pods are a huge business on Amazon, but before 2018 none of the leading brands offered any variety packs. So a number of third parties began selling their own variety packs containing these brands' products — and stealing some of their market share as a result.
Hewing too closely to established best practices is a poor way to stand out on the digital shelf. There is so much opportunity for innovation in e-commerce packaging, and novel approaches can double as very effective marketing tools. Huge brands like Tide, Crest and Häagen Dazs are experimenting with closed-loop, zero-waste platforms. You can now buy household cleaners in milk cartons. One company has designed flat wine bottles that can fit through mail slots.
When optimizing packaging for the digital shelf, don't make guesses and don't make assumptions. Brands should take a scientific approach and let the sales decide. A/B test different sizes, variety packs, packing materials and price points.
And don't be afraid to innovate. E-commerce makes it easy to try new designs risk-free, putting them alongside traditional packages to see how shoppers react in real time. Leverage the unique feedback loop of the digital shelf to zero in on the perfect balance of price, size, sustainability and functionality. Don't guess — test!
About the Author Pete Andrews is the director of insights at Edge by Ascential, where he is focused on driving clients’ e-commerce business forward through data. He has spent more than eight years in retail, working at both Amazon and Sears Holdings in both vendor management and analytics roles.