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How Smurfit Kappa is growing its e-commerce business

Alissa Demorest

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How Smurfit Kappa is growing its e-commerce business

As the health crisis continues to impact shopping habits and e-commerce takes the lead, the demand for shipping boxes is seeing a clear acceleration. Smurfit Kappa is positioning itself to meet the market’s needs by building its e-commerce ranges for the wine, spirits and fashion markets, among others, while keeping a concerted focus on consumer needs in the channel.

As for many suppliers, the year 2020 was one of adjustments for Smurfit Kappa, manufacturer of paper-based secondary packaging solutions. “Our sales dropped by just a few percentage points, but this was less than we were expecting in light of the context,” explains Jean-Christophe Bougeon, CEO of Smurfit Kappa France. Given the burgeoning demand for paper-based packaging, spurred on by the steady growth in e-commerce sales, the market has experienced a spike in raw material prices. Indeed, as demand currently outstrips supply, paper costs have gone up by 23% since September 2020, according to Smurfit Kappa.

Industry federation FEVAD puts e-commerce sales growth in France at +8.5% in 2020, with product sales (as opposed to services) rising by 32%. While Smurfit Kappa claims some 27% of the country’s e-commerce packaging market, globally the segment only represents 5% of the group’s corrugated cardboard business.

For Smurfit Kappa, growing its share of the increasingly competitive e-commerce market goes hand in hand with understanding the needs of the end consumer. Earlier this month it released a study that gauged consumer expectations (across 10 countries) when it came to product protection and environmental concerns. The study found that 6% of all e-commerce packs are damaged upon arrival, with 48% resulting in a “broken” product. Some 10% of consumers polled said they would be dissuaded from making a second purchase from the same retailer following the reception of a damaged item.

From an environmental standpoint, 70% of consumers said that they would pay up to 20 cents more for a plastic-free shipping box.  

To better understand its end consumer, Smurfit Kappa inaugurated its UX Lab last year in Holland to assess their reactions to different unboxing experiences; the lab's findings are applied when designing e-commerce packs for different market segments.

Wine and spirits is one key area for R&D at the company, given that online alcohol sales in Europe have grown by 34% since the beginning of the health crisis—in France wine accounts for 0.7% of e-commerce sales overall, with red wine taking a 64% share. In Europe, wine accounts for 45% of e-commerce sales of alcohol, versus 44% for beer.

Given the complexity of the e-commerce alcohol market, notably in the various different formats and the need for product protection, Smurfit Kappa’s eBottle portfolio comprises a dozen different formats ranging from single bottles to packs of three, with a multitude of different opening gestures to suit a variety of unboxing experiences.

The company’s eFashion offer, also with a dozen different formats — from “envelopes” to boxes with designs suited to a myriad of products from handbags and shoes to lingerie — Smurfit Kappa is looking to seize on the growing e-commerce channel that currently makes up nearly 15% of the fashion market’s sales.

This month, the supplier is launching a patented insert system for home appliance group Seb Calor that was developed to replace the use of polystyrene via a combination of corrugated and honeycomb cardboard — an innovation in line with consumers’ growing environmental concerns.

 

 

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