Traditional postal organizations are headed towards inexorable change. How they react to the era of digitization and the dynamic consumer behavior will determine their profit in the future.
While it is evident that commerce has fundamentally changed, only a handful has grasped its impact on reshaping retail competition and supply chain. Transparency Market Research’ (TMR’s) analysis projects that in the near future a significant section of ecommerce purchases will be delivered to their destinations via local inventory.
A key factor impelling this is consumer inclination for same-day delivery instead of waiting for standard shipping, which can take from three to five days to reach them. Last mile delivery has therefore emerged as a key differentiator.
There is no going back for retailers hence there is immense focus on reinventing delivery experience to suit consumer preferences. Post and parcel organizations are quickly responding to the ongoing changes by reinventing their packaging.
TMR projects the volume of parcel and packages demanded in the industry will stand at above 7 billion. Ecommerce boon witnessed in the last few years has been the agent of significant changes in the industry. It has compelled institutions to rethink postal packaging solutions to make it more sustainable and convenient.
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Demand to Pick Up in Response to Booming Online Sales
The demand for postal packaging is expected to rise significantly in the coming years. Thanks to rising online sales, the market is no longer dependent on traditional post organization, instead it is operating in a more dynamic environment.
Studies suggest that ecommerce express and parcel capacities have surged by more than 5% in the last couple of years. Coupled with this, new designs and cutting-back on paper use have been significantly driving the postal packaging market.
Novel technologies and changing consumer preference are causing monumental shifts in strategic priorities of postal packaging. Digital transformation has been impacting delivery and supply trends. Advent of cross-border ecommerce is further compelling postal organizations to improve their delivery experience.
Consequently, there is immense focus on new business models that will help these organizations to reduce cost incurred and realize growth. Many of them are pivoting towards advanced methods of packaging.
From simple yet practical bamboo plastic packaging to biodegradable cosmetic packaging, several trends have paved their way into the market, enabling growth since the last few years.
Convenience, Sustainability, Traceability, and Flexibility
Certain elements that consumers expect from postal packaging include convenience, sustainability, traceability, efficiency and flexibility and other associating parameters at a pocket-friendly cost.
Changing consumer preferences and advent of novel technologies are reasons behind tectonic shifts in strategic priorities of postal packaging. Digital transformation, as discussed, is a key driver and its impact in felt in deliveries, supply, and returns, impelling postal organizations to adopt novel methods of packaging.
The demand for more sustainable packaging is driving their efforts to minimize wastage and promote the use of eco-friendly materials. Industry veterans are stressing on the need for recyclable and robust packaging for the market to stay relevant.
Evidently, researches into green alternatives to single-use envelops and plastic shrunk wrap are picking up pace. Also market players are ramping up sustainable groceries packaging while trying to achieve the perfect balance between cost and convenience for consumers.
These trends are expected to leave a significant impact on the market, altering its dynamics to suit contemporary paradigms. The demand and supply forces can manifest into lucrative prospects, given the market players are quick to respond.
Some of the leading players have adopted value engineering to redesign packaging from the ground up with an aim of saving money. Biodegradable materials such as cardboard and paper, bubble wrap, which is made from recycled polyethene and is completely biodegradable, and corn starch are often used to produce these packages
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Waste Generated from Postal Packaging Poses Threat to Market
Postal packaging is widely used for packaging of various products. Despite gaining momentum, waste generated from postal packaging is inhibiting growth in the market. Additionally, improving digital connectivity is expected to restrain growth in the coming years.
According to recent studies, the number of global internet users grew to 3.9 billion in 2018. They represent nearly 51.2% of the global population. The rising penetration of the internet and faster broadband network have made digital content increasingly accessible to consumers.
Transporting physical letter by air, land, and sea is no longer a prevalent method, which has greatly hampered the growth of the postal industry. As a result, the market has been witnessing a drastic fall in the use of postal envelops.
Demand from Emerging Nations to Seal Asia Pacific’s Dominance
Asia Pacific currently holds the leading share in the postal packaging market. Certain pockets within the region still offers a conducive environment for growth of postal services. Consequently, the postal packaging market will record an impressive growth in Asia Pacific through the course of the forecast period.
With this, prospects for postal packaging also is expected to get better. A key point to consider here is that parcel logistics, from pickup to delivery, has emerged as a key growth enabler, considering that majority of ecommerce purchases are delivered via networks and not picked up from stores.
Spurred by these factors, growth will particularly be dynamic in the Asia Pacific market, wherein both market players and retailers are at the forefront of innovations witnessed in the postal services industry, eco-friendly packaging being one of them.
Also thanks to massive investment towards research and development activities by ecommerce giants, the postal packaging market in Asia is easily the most lucrative one in the world. For instance, Alibaba has already pledged to invest US$ 15 bn in technology and research between 2019 and 2021.
Spurred by increasing focus on product redesigning and sustainable packaging, the postal services market in Asia Pacific will rise at 7% CAGR between 2024 and 2028, finds TMR in its recent study.
Demand in Tyvek Segment Forecast to Rise
Among materials, the demand for sustainable packaging is skyrocketing in the market. TMR also has highlighted consumer preference for Tyvek in manufacturing of envelopes and other postal packages.
The material is cost effect, water resistant, and light weight, which significantly aids to its rising popularity. In the coming years the material-based segment comprising of Tyvek is expected to create a sizeable incremental opportunity.
However, the paper and paperboard segment will outpace other materials, accounting for the lion’s share of the market through the forecast period.
