Alien Mulyk, packaging and returns expert at the German E-Commerce and Distance Selling Trade Association (bevh), sees a gap among consumers between the desire for more sustainability and the willingness to pay more for it.
Online retail has boomed since the pandemic. How do you see it developing in the future?
Alien Mulyk: During the lockdowns, online retail has literally “kept the store running.” This applies both to the supply of people, who have switched to ordering more everyday goods, and to many stationary retailers, who were only able to stay afloat thanks to an additional digital distribution channel due to closed stores. By the middle of this year at the latest, however, it was clear that the online retailer would not be able to simply continue the high double-digit growth of the Corona years. However, the problem is not homemade, i.e. it is not specific to e-commerce. The industry is caught up in the waters of external influences, first and foremost rampant inflation and fears of recession, which are clearly having an impact on the buying mood of customers. No one can predict today how these external factors will change.
What impact do supply bottlenecks and inflation have on online retailing?
Mulyk: The two things are closely related, but the supply chain problems, especially with raw materials such as packaging materials, have been weighing on online retailers since last year. The fact that this has hardly had an impact so far is due to the greater data transparency of digital retailers, who have been able to assess their requirements very well and replenish supplies when bottlenecks become apparent or get them on their way. Let’s remember that online retailers were still able to deliver over the Christmas period despite stressed supply chains. Online retailers, on the other hand, are completely powerless when it comes to inflation. This problem can only be cushioned politically, if at all. And it remains to be seen to what extent the German government’s planned support measures for private households can lift consumer sentiment again.
A recent survey by DS Smith says that too much packaging can be detrimental to business for online retailers. How do you see that?
Mulyk: In fact, our own surveys show that for around 43 percent of customers, packaging is the important sustainability aspect. They are not alone in this, because for cost reasons alone, retailers have a great interest in saving on packaging. The rule is: as little as possible, but as much as necessary. Online retailers are always working on optimizing the shipping packaging for their products, i.e., reducing volume and thus filling material or eliminating it altogether. For example, package sizes can be better adapted to the product by using cost-intensive packaging machines or consist of materials that are as pure as possible for better recyclability. However, online retailers are also dependent on the cooperation of end customers. However, this often reveals an “attitude-behavior gap” – in other words, a gap between customers’ desire for more sustainability and their willingness to make their own contribution, such as paying more for more sustainable packaging.
If retailers want to save on packaging, how come many small order goods – contact lenses, for example – arrive in packages that are far too large to fit through the mailbox?
Mulyk: This has to do with a dilemma in logistics: Of course, it would be better to have a package size that is individually adapted to the contents, or that the contents are rolled or folded beforehand so that they also fit into small packages. But logistics in particular relies on a high degree of standardization. This applies to standardized carton sizes, which can be purchased more cheaply in large quantities and are easier to stack during transport. But it also applies to standardized processes in the shipping warehouses. Things often have to move very quickly there, which is why packers have hardly any leeway to think about how contents could also fit into smaller packages.
Especially with fragile goods, however, air can also act as a safety buffer to protect the contents and prevent returns. In this respect, packages that appear oversized also have their good points, because the most sustainable product is always the one that reaches the customer in one piece.
How does the air get out of the package?
Mulyk: The best way is not to use any shipping packaging at all. Many goods are already protected by robust product packaging that is also suitable for shipping. Another option is product packaging already optimized for shipping, which eliminates the need for additional outer packaging, padding and filler material. However, even this is not so easy to implement. For many customers, product packaging is part of the actual content and how one “experiences” the product – although packaging is usually torn open immediately and then never seen again. It is not uncommon for customers to return perfectly good goods simply because they came with a dent in the product packaging. As a rule, product packaging is therefore not designed as shipping packaging, but only for display in the store.
Plastic is increasingly being replaced by paper: Even the bubble cushions in shipping packaging – Amazon wants to replace this plastic filling material. Is that really the more sustainable solution?
Mulyk: Paper is not always more sustainable than plastic. In individual cases, it always depends on what I’m shipping. Sometimes products cannot tolerate moisture, for example spices, or react sensitively to bad weather conditions. It is also important that the paper is actually 100 percent recycled and recyclable. To do this, it must not have an outer layer of plastic. Conversely, research is already being carried out on plastic that decomposes by itself, at least in parts, after a few days. But it will still be some time before this biodegradable plastic can be widely used.
Apart from that, innovative shipping packaging other than plastic, cardboard and paper could play a role in the future. Grass-paper packaging is still a niche product, but retailers are increasingly experimenting with packaging made from sustainable materials such as jute and straw.
What else can and must online retailers do to become more sustainable?
Mulyk: Online retail and logistics can continuously try to optimize packaging and delivery processes, but at some point the optimization possibilities for packaging will be exhausted. At this point, we have to remind ourselves that environmental and climate protection are the responsibility of society as a whole, not just the duty of companies. The idea of reusable packaging, for example, is excellent, but it is of no use if customers do not throw old habits overboard and find that the return process involves too much extra effort. Another example is the allocation of additional costs for more sustainable shipping methods or returns. While customers appreciate more sustainability, not all of them are willing to pay more and thus make their contribution to the associated higher costs.
How can e-commerce support stationary retail?
Mulyk: Every brick-and-mortar retailer, even if they may not profess to do so, uses digital technology. In marketing, stationary retailers also reach their customers primarily on the Internet. In-store payments are increasingly being made digitally, and customers are also being met digitally at the point of sale, for example, when it comes to displaying goods. Today, e-commerce and bricks-and-mortar retailing merge seamlessly. This is true at least where retailers have been willing to open up to digital channels and adapt their processes accordingly over the past 25 years. For some time now, significant growth in the broad brick-and-mortar sector has only taken place via and with the help of a second digital “pillar”. However, it is not always quite so clear-cut. It’s a paradox: on the one hand, entry into e-commerce has never been as technologically and organizationally low-threshold as it is today; on the other hand, there is a hard core in brick-and-mortar retailing that resists any digital transformation or sees itself unable to do so. So the door is open, you just have to walk through it.
by Anna Ntemiris