Amazon’s Whole Foods Acquisition Underlines Digital Transformation & Disruption in Retail

We are all aware of the disruption occurring in the retail space and the digital transformation the sector is currently undergoing, underlined by Amazon’s acquisition of Whole Foods and bringing its supply chain, e-commerce, and big data expertise to bear. In fact, big data played a role in the selection of the acquisition target; Amazon was able to identify the retailer with the largest overlap with their Amazon Prime customer base.

At Jabil Packaging Solutions, we recently commissioned Dimensional Research to conduct a survey entitled ‘Trends in E-Commerce Packaging’ and the results serve to underline the importance packaging plays in the brand and retail experience. Packaging’s increasingly important role in retail is not just because it helps a product’s shelf appeal, but often because it is the first physical and tactile experience a consumer has with an online brand. Everyone loves unwrapping gifts on a special occasion; which brand wouldn’t want to deliver that joy every time a consumer receives its product? 

In the survey, almost all (95%) agreed that packaging impacts the purchase experience, citing the condition of the package on arrival, lack of waste, and ease of opening as the key factors. Most (over 70%) agreed that bad packaging can ruin a customer experience, whilst good packaging creates a memorable customer experience, enhancing the brand in the eyes of the consumer. It seems certain that competition in this area will only increase, particularly as Amazon leverages Alexa and the smart algorithms that influence purchasing decisions and drive product adoption. Brands are going to have to respond quickly to this disruption with innovative solutions of their own. Smart packaging that delivers information like spoilage, replenishment or expiry dates to the consumer as well as data on usage to the brand is a great place to start.

Huge numbers of consumers enjoy the frictionless convenience of shopping with Amazon, with its simple purchasing and delivery process, but many businesses underestimate the role of packaging in this experience. Our survey participants, drawn from both the online and physical retail space, were divided on where the role of packaging was most important, but most (73%) agreed that it was a brand’s responsibility to deliver good packaging to all channels.

Amazon is an innovator and bringing this innovation to grocery shopping is a likely disruptor for the entire sector, so what do online and in-store retailers need to consider to stay up-to-date with technology in packaging?

Smart packaging plays an increasingly important role in retail. The ability to highlight the need to replenish, and connect that need with a simple route to reorder offers great potential for brand loyalty as well as real time data that can influence marketing and of course improve the supply chain. RFiD is also playing a greater role as tag costs reduce, which in turn drives adoption. Packaging that can self-report problems in the shipment process is possible, and smart tags or labels can also help drive new models for auto-replenishment. Imagine being at the store and being able to check remaining volumes, or getting a low-level warning on your smartphone, or perhaps being able to review the use by dates of your refrigerator’s contents. In the survey, 92% said that they see opportunities for packaging innovation with modern technology. 

What’s more, as packaging plays a greater role, we need to be more cognoscente of the need for a sustainable approach. Packaging needs to be simple and have as little environmental impact as possible. This might mean selecting different materials, all while driving costs down and ensuring the product reaches the consumer in good condition and delivers a good brand experience. This will become even more important as the convenience of seamless home delivery encourages consumers to buy smaller quantities more often.

 While we all try to assess the result of such a disruption in the retail space we can be sure of one thing, this will not be the last change we see. Brands are going to need to be more agile, adapting to change as it occurs, leveraging partners to drive more value and more innovation of their own, bringing new solutions to the market faster than ever before. The world has moved to one of instant gratification and every brand will need to improve their speed to market in response.

We believe that good packaging drives brand brilliance and can be the difference between also-ran packaging and brand leadership.  We also believe that packaging will be a key battleground for retail brands as they seek to win the mindshare of an increasingly tech-savvy consumer.

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