Don’t look now, but retail’s fiercest competition is taking place right on your doorstep.
In 2022 the e-commerce industry grew to $900 billion in the United States. Estimates say it could top $1.7 trillion by 2027.1 Many of these retail deliveries are being dropped on doorsteps as consistently as the 7 a.m. rush at Starbucks, thanks to the rapid expansion of direct-to-consumer (DTC) retail subscriptions.
The modern-day version of this retail category went mainstream when Birchbox began delivering beauty product samples to subscribers in 2010. Since then, DTC retail subscriptions have exploded in every category—pet toys/treats, makeup, flavored coffee, nutritional supplements, recipe ingredients for this week’s dinners and more.
According to statistics reported by PipeCandy in a 2022 industry report, the facts of the DTC subscription retail sector are astounding:
- DTC companies fulfilling subscriptions make up 4% of U.S. e-commerce, and there is room for growth.
- More than 7,000 DTC subscription retailers operate in the U.S., servicing 225 million subscriptions and 61 million subscribers. That’s nearly four subscriptions for each buyer.
- The biggest retailer subscription spenders are Millennials and Gen-Zs. Combined they make up 42% of the U.S. population, and they value convenience, selection and personalization of automated purchasing.
How can subscription box retailers keep consumers coming back for more? Think packaging. It is the most important opportunity to personally connect with online customers.
Here are three opportunities to optimize packaging for DTC subscription retail:
1. Create an unforgettable experience.
With thousands of retail subscription services competing for attention, first impressions matter. Successful DTC subscription retailers know this and use packaging to physically close the online retail loop. These companies don’t rely on third-party delivery services (UPS, FedEx or USPS) to have the final interaction with their customers.
Instead, they use packaging to carry through brand messaging and experiences customers remember. Successful subscription retailers understand that delivering an exceptional experience—rather than just another brown package—creates lasting memories. This is supported by research:2
- 40% of subscription buyers share great packaging online.
- 90% of retail box subscribers keep brand packaging and reuse it.
- More than half of Gen Alpha parents say their kids watch shopping content on social media, including unboxing videos or big hauls.3
Custom, interactive packaging wows subscribers and differentiates your company or subscription box theme. Think of packaging as a personal experience. PCA designers offer a variety of substrates and printing methods for DTC packaging to stand out—from printed QR codes that connect your customer to a more immersive digital experience to high-tech innovations that monitor package contents until they arrive safely.
2. Deliver what customers demand—sustainable packaging.
Today, consumers expect companies they do business with to be committed to sustainability. That can be challenging for online retailers:
- Home delivery is expensive and relies heavily on fossil fuel-dependent transportation to deliver products.
- 87% of consumers believe online retailers need to reduce the amount of plastic packaging used in shipping products.4
Corrugated has a leg up when it comes to sustainable packaging. DTC subscription brands can meet this customer expectation by sourcing materials from certified managed forests and packaging that is renewable and recyclable. On average, newly manufactured corrugated products industry-wide contain about 50% recycled fiber, which includes both post-consumer fiber and material recovered and recycled within the manufacturing process.
What’s inside the delivery box counts too. Plastic protective wraps and fillers are difficult to dispose of and are not recyclable, so they end up in landfills. More sustainable interior packaging options are growing in popularity, such as PCA’s Hexacomb®. This packaging material provides protection and stability during transport. It’s also 100% recyclable, meeting subscribers’ expectations of less plastic shipping materials.
3. Avoid rising shipping costs.
Moving products from point A to point B is costing online retailers a fortune. There isn’t a package carrier that hasn’t increased pricing due to the pandemic, supply chain issues or inflationary costs. This puts the squeeze on DTC subscription retailers.
What can be done to combat increasing shipping costs? To start, online retailers should work with their package providers to:
- Ensure right-sized packaging. This will save online retailers both material costs and shipping costs. Many delivery companies have announced increased shipping costs in 2023, with large or oversized packages impacted the most. Every little bit helps, especially in volume businesses like online subscription retail.
- Avoid low-density packages. Both FedEx and UPS increased the prices of light shipments that travel in larger packaging. They’re sending a clear message to online retailers—dense packages taking up less space in delivery vehicles are preferred.
- Understand “dim weight” shipping costs. Here’s where it gets interesting. All online retailers are facing increasing costs from both UPS and FedEx for packages with contents lighter than expected for the size of the box being shipped. This is called dimensional weight or “dim weight.” If the size of the package is larger than expected for the weight inside, the higher “dim weight” price will be charged. That adds up quickly.
As DTC subscription retailers face fiercer competition and rising shipping costs, packaging innovation can be an easy solution to meet these challenges. Plus, it will enhance the overall customer experience and keep subscription buyers returning for more.
Contact PCA for e-commerce solutions. PCA designs direct-to-consumer solutions that meet your shipping needs and enhance the customer experience. We’ll rethink your package with a focus on protecting your product, reducing costs, generating sales and building a unique brand that stands out. Our solutions include:
- Ships-in-Own-Container (SIOC) packaging
- Performance testing (ISTA 6-Amazon certified)
- Assistance with SKU optimization, inventory management and process improvement
Fill out the contact form below to find out how you can make direct-to-consumer packaging work smarter for your e-commerce business.
Sources:
- PipeCandy, 2022
- Understanding eCommerce, eCommerce Packaging 8 Trends
- Retail Dive Over Half of Gen Alpha Watch Shopping Content
- Forbes, Customers Hate Plastic Packaging, So Why Do Companies Keep Using It?
- Oceana, Opting Out: Amazon Shoppers Would Choose Plastic-Free Packaging if They Had a Choice
