Greetings,
Happy belated Prime Day. I trust you and your families enjoyed this most treasured consumer holiday.
In a time of economic unknowns, including low consumer sentiment and recession fears, the results from this annual parade of digital deals ran counter to the prevailing winds of market negativity.
While we’ve seen general consumer spending take a downward swing across many economies, with a similarly negative impact on the packaging market, this year’s record-setting Prime Day gave us some interesting insight into the consumer’s mindset.
With over $12.7 billion spent on over 375 million items, Prime Day was, thanks to an increase of 6.1% over the same event last year, the largest ever.
With consumers pulling back on spending more generally, I surmise that the hunt for deals and bargains was a major source of the energy delivering these results, with Prime members saving more than $2.5bn on millions of deals across the Amazon store. Even when times are tough, consumers love a bargain!
After its precipitous growth during the COVID pandemic, e-commerce shipments have flattened at around 15% of total retail sales in the US.
I I recall in years past, “30% by 2030” was the forecast for the changing landscape of retail but, over recent quarters, it's tough to see what will drive the next big expansion of e-commerce. After a high peak in Q2 2020, e-commerce shipments have declined during the last few years, though they remain well ahead of earlier long-term projections.
We have all acclimated to our current level of e-commerce usage, but there remains a disparity in service, and therefore differing levels of convenience, which can also drive how widely it is used. While I can get next or even same-day deliveries on some Prime items to my house, I have family members who wait several days or a week before they can receive their shipment of paper towels.
Grocery stores have seen the greatest short-term gains in e-commerce recently as “buy online, pick-up in-store”, a convenient hybrid approach that combines local stock points with digital convenience, has grown in popularity.
For inks and coatings, e-commerce is a mixed bag (or box). In some higher-end applications and differentiated brands, e-commerce presents new market opportunities for high-quality inks and coatings. The need to provide an exceptional brand experience becomes important. For example, shipments where a plain exterior gives way to vibrant brand colors and personalization on the inside of the box.
In other applications, including when consumers are purely picking up a pre-prepared order at a brick-and-mortar store, the outside of consumer packaging doesn’t matter as much since the purchasing decision has been made well before they physically interact with the product. Furthermore, the rise in Amazon’s frustration-free packaging may mean that e-commerce shipments will be packaged more simply in future.
Whether AirPods or Tide PODS, I hope you found everything you were looking for.
Prime Day wishes.
-Simon
Read more print and packaging insights from our Head of Global Marketing, Resins for Paper, Simon Foster.