We now live in a digital culture.
And it has fundamentally shifted the shopping and packaging experience from the corner store (1900’s) to the store and the door (1990’s). Key examples include companies that have embraced the change – Warby Parker (once Lenscrafters), Third Love (once Victoria Secret, now For Love and Lemons ), Everlane (once Gap), and Casper (once Serta). Companies are using digital to create a brand, and a brand experience, rather than push products. For example, Casper, which doesn’t promote itself as merely a mattress company, but rather a digital-first brand focused around the concept of sleep. Jonathan Ringan noted, in Fast Company:
“Casper sees itself less as a simple mattress company and more as a lifestyle-driven enterprise that looks at sleep as a unique, optimizable category comparable to exercise or cooking or travel.”
With increased clickable convenience, online shopping continued to gain momentum. According to a 2016 Pew Research Center study, by desktop or mobile, 79 percent of Americans made purchases online – compared with 22 percent in 2000. In addition, 15 percent of adult shoppers made an online purchase once per week and 28 percent made multiple monthly online purchases. In 2017, 5 billion items worldwide shipped with Amazon Prime (63 percent of Amazon customers).
Further still, momentum propelled ecommerce forward as the pandemic kept people inside and shifted retail away from brick and mortar, seeing a 25% spike in March 2020 alone. The digital age transformed the supply chain over the years, but the future of ecommerce is here. Therefore, designing for an ecommerce economy, for a circular economy, requires retail and ecommerce retailers to think outside the current systems still designed for the corner store, from point of order to delivery. If not, we’ll see a widening post-purchase gap, rising unsustainable costs to people and the planet, and a continuing shift in global relations and processes.
Post Purchase Gap
First, it is important to look at the experiential economy or specifically in this case, the post-purchase gap and how it relates to future generations. Millennials crave a new experience both in store and at the door. Gen Z, at 60 million strong in the United States, demand it. “Compared to any generation that has come before, they are less trusting of brands. Authenticity and transparency are two ideals that they value highly,” says Emerson Spartz, CEO of the digital media company Dose.
Today, when a customer makes a purchase online, there’s an “experience gap” from the time the customer checks out to when the product arrives. This is the new experiential moment for digital shoppers. According to Amit Sharma at HBR,
“Providing a positive experience at this time of anticipation is a tremendous opportunity for retailers to deepen their relationships with customers and build loyalty for their brands. Surprisingly, only 16% of companies are focused on customer retention, even though it costs at least five times more to acquire a new customer than to keep an existing one.”
More than ever, customers want personalized shopping experiences from point of order to delivery and beyond. And with customer LTV becoming more and more important as the ecommerce momentum continues to push the boundaries of what’s possible, retailers find themselves paying higher and higher costs while the gap between consumer and retailer continues to widen. When is enough, enough?
UNSUSTAINABLE COSTS
Ecommerce customers, today, receive their products in a cardboard box, most likely in an OCC (old corrugated cardboard). The continued growth of online shopping and retail closings (70 million sq ft to close in 2018) have created a massive transition in the OCC (old corrugated containers) recovery market.
“There is a shift taking place and it’s more from the consumers. It’s a question of where that packaging material is going to end up and is it going to be as easy for us to capture,?” said Ben Harvey of Massachusetts hauler.
The United States designed its current recycling program over 50 years ago to take on cardboard consumption from retailers. While effective in its day, recycling centers and the planet can’t keep up with the ecommerce influx. And, the world is changing more in 10 years now than it used to change in 100 years, including rates and ways each generation consumes.
To keep up with the rapid change, innovative recycling companies are revamping their current systems. For example, Recology, a San Francisco serviced recycling center, is investing over $11 million dollars to add new processing equipment and supporting citywide taxes (15%) to account for the massive shift in receiving recycling from consumers versus retailers. While Recology is revamping to create temporary solutions, we must consider if the rest of the country can keep up with the rising cost and the impact to the environment we live in.
Today, humans are currently consuming nature 1.7 times faster than ecosystems can regenerate. The average American consumes its weight in trash each month and 165 billion packages and envelopes are shipped each year. Sixty-five billion parcel packages are shipped worldwide. 178 million parcel packages are shipped daily. This is a daily consumption of 1.2 million trees, 242 million gallons of water, and 5 million gallons of oil.
With the future of retail, we must consider the triple-bottom line – people, planet, and profit – as we build out more sustainable systems and collectively work to reduce and reuse what’s in circulation already, rather than just recycle.
SHIFT IN GLOBAL RELATIONS
To top it off, a recent shift in global policy will continue to impact the current supply chain systems in place. For example, the U.S. exports about one-third of its recycling, and nearly half goes to China. For decades, China has used recyclables from around the world to supply its manufacturing boom. But last year, it declared that this “foreign waste” includes too many other non recyclable materials that are “dirty,” even “hazardous.” In a filing with the World Trade Organization the country listed 24 kinds of solid wastes it would ban “to protect China’s environmental interests and people’s health.”
With e-commerce on the rise, the question becomes, do we revamp outdated systems or design a new one to solve for the growing costs to people and the planet? At LimeLoop we are designing a new one for the digital culture. Specifically, we are reimagining the packaging experience. First, by replacing recycled packaging with reusable packaging. Second, with sensored packaging to complete the brand experience loop. Packages that are received and sent back and reused, over and over again. With insights in where your package is and its state at all times, too boot. In return, is a high integrity system and experience for an environmentally sound world for many generations to come.