4 Ways Connected Packaging Provides Operational and Shopper Benefits
The traditional package journey is quite complex, with many stops from manufacturing to the supply chain, in-store displays to consumer’s home, and recycling. Connected packaging is the new frontier where design and technology come together to improve consumer experiences and store operations.
Here are a few types of valuable content connected packaging can provide customers both in-store and at home:
- Brand-authenticated content
- Product recommendations / re-ordering
- Inspiration and how-to videos
- Product transparency information (SmartLabel or GMO disclosure)
- Social networks
- Corporate responsibility
Here is how connected packaging is broken down:
Active Packaging: allows consumers or computing devices to discover and engage with products for product content, inventory management, retail operations, and more.
EX: Image recognition, QR codes
Interactive Packaging: includes specialty substrates and technologically advanced materials that are capable of communicating information.
EX: temperature sensors, conductive inks
Intelligent Packaging: send and receive information for dynamic interaction with sensors across the supply chain.
EX: RFID, NFC
All three of these types can be characterized as the Internet of Things (IoT), with always on, 24/7 network capability.
Here are four ways connected packaging can provide operational and shopper benefits:
Improve supply chain.
During manufacturing, there might be three labels coming together on a product. How does the manufacturer ensure they are the right labels? Machine-vision cameras examine these components as they come together — scanning for what may be a single, small, data matrix code on the artwork. When the item cannot be scanned, the product may be kicked off the line to be destroyed, for which the manufacturer pays a disposal fee, or is moved to an area that requires manual handling.
For a large brand with many SKUs and components, the waste can run upwards to tens of millions of dollars or more. 79% of CPGs report negative consequences or inadequately label or mislabel products resulting to stopped shipments and loss of business. Every manufacturer knows its cost and waste and can determine the ROI of improved packaging accuracy fairly quickly. Improved supply chain is so compelling, it is a main driver of connected packaging.
What about blockchain?
Another type of supply chain is blockchain, which is a digital ledger tracking potentially every touchpoint of the product from source to sale. How do we validate the physical goods with a digital ledger? In a proactive approach, now is the ideal time for manufacturers to begin to look at how a connected package that is efficient and reliable can add more robustness to their supply chain implementations. By sharing the data, manufacturers also have insights about inventory and compliance.
Streamline retailer efficiency.
To perform an in-store inventory, retailers must remove the package from the shelf, scan the UPC code and replace the package on-shelf. Connected packaging can mitigate the speed of handling, and when applied to every product, every day, this adds up — reducing the cost of labor.
The number of items per minute scanned at checkout is a few retailer metrics for operational efficiency. Scanning more items per minute could result in less check-out lanes, which opens up more selling space for the store merchants and puts prime selling space at the front of the store.
In an attempt to gain scanning efficiency, some retailers are forcing brands to cover their packages with more UPC codes, which means brands are losing precious packaging real estate for their brand trust and marketing claims. However, when brands and retailers work together with more connected packaging solutions, these visual intrusions on packaging are not necessarily needed.
Communicate brand messages.
Through the shopper’s smartphone, connected packaging becomes a digital narrator for the brand — linking the shopper to all the brand messages in-aisle with minimal limitations or restraints to the packaging design. Not only in the aisle, the package can continue to communicate these messages once the product is purchased and can even deliver content based on geo-location. It’s only natural for packaging to act at the digital narrator since packaging is the most salient touchpoint between the brand and the consumer.
Connected packaging may also provide hidden ROI toward corporate initiatives, both that of manufacturers and retailers. Leading brands like Pepsico, Unilever, and P&G have publicized their high level efforts from sustainability development to health and well-being goals.
Better customer experience.
In a culture of high customer interaction, connected packaging can help alleviate time cashiers would traditionally spend stocking or scanning products, allowing more time to engage with the shopper — turning the cashiers into educators of the brand. The Net Promoter Score index shows the willingness of customers to recommend a company’s product or services to others and reflects the customer’s loyalty to the brand. When store staff create positive experiences throughout the customer journey, even through friendly greetings and product knowledge, customers are left feeling better about the brand.
In the past, customers have avoided the self-service checkout line due to a previous bad experience. Connected packaging helps to guide easy and fast checkout with minimal effort from the consumer. Long lines also contribute to lost revenue when consumers get frustrated and abandon their cart to take their business elsewhere. After walking out on a retailer, many customers won’t return.
There are marketing data gaps to be filled across the consumer experience journey — connected packaging can help answer the question of ROI.
- Drives high levels of engagement by targeting buyers/users
- Delivers a click through rate that dramatically exceeds digital category averages
- Impacts in the most time relevant way at the point of consumption
- Creates higher levels of brand engagement than other channels – at high return rates and greater depth
- Promotes increased purchase incentive engagement
- Is more creatively impactful than other channels
From inspiration and ideas for creating brand activation campaigns to increase loyalty, to delivering voluntary and mandatory product transparency content, connected packaging turns the brand into its own media network. This gives the brand greater control over the dollars spent and delivers greater efficiency in campaigns, and unified ecommerce, re-ordering, and one-to-one personalization.