Stora Enso's line of industry is often perceived as a victim of the online business. What is your view on that?
There has been astonishing development in a very short time concerning digitalisation. Today, around 40% of the global population is on the internet. Among the developed countries that number is quickly approaching 90%. So does this mean that Stora Enso and the packaging business are suffering? On the contrary - the answer is in online retail.
Let's go back a bit in history. When the concept of e-commerce first came about, somewhere in the late 90s, it proved challenging for early market movers to build a business momentum. There were several hurdles, such as security and consumer behavior, but one significant profitability obstacle was linked to the packaging. For those of you that dared to buy things online back then, try to remember what the packaging looked like.
Bulky boxes with awkward design come to mind. Why was that?
Well, the main purpose was to protect the product. The box weight alone could often generate postage costs that exceeded the price of the item ordered. Today these issues have been addressed. Still, packaging remains one of the most under-utilized opportunities for online retailers to engage customers. This is where we come in.
What is the advantage to brand owners in sending out their products in a more attractive packaging?
Research shows that so called 'premium packaging' significantly increases the chances of repeat customers – a dream come true for any retailer. This is especially interesting for luxury goods. Premium packaging also holds the biggest potential for what we refer to as 'intelligent packaging'. Using advanced contactless chip technology, product information can be stored in the package while also ensuring that the box has not been tampered with. The data in the chip can easily be accessed by simply using a mobile phone.
Does it have to be a cutting-edge technology that drives the packaging business case?
No, there are other issues to be considered as well. Online grocery shopping is one of the fastest growing e-commerce segments, but also one that struggles with profitability. Here, studies show that a more effective use of packaging space can as much as double margins - a tremendous opportunity in a high-growth segment.
Think about it. The billions of online retail transactions - whether it's a TV, groceries or clothes – all have one thing in common; they need to arrive in a box. Ideally one that is sustainable, user-friendly and innovative. The market is here and it's growing fast. Now it's up to us to deliver the package.