Effects of E-commerce on Packaging Industry


The Packaging Industry might not have the glamour attached to it similar to the Retail Industry, but according to Economic Times it is currently valued at Rs 78000cr. Packaging is done for a product to protect it from damage due to external weather conditions, transportation, human errors and also to display important information without having to open the box. That was the sole purpose of packaging until the emergence and growth of e-commerce.

The e-commerce companies such as Flipkart, Myntra, Amazon etc. have transformed the simple cardboard box into an object of desire. In one of the advertisements of Amazon they only show the product i.e. a cricket ball at the start and end of the ad and for the rest of the advertisement it is the cardboard box which is being displayed. Some people use the cardboard boxes for various purposes after the product is delivered to them in it. This helps companies to have a constant presence in the vicinity of the customer. Apart from Card Board boxes, plastic bags are also used for packaging a product. They are generally used for non-brittle products such as clothes, bags etc. The cost of production of a plastic bag varies from Rs 3 to Rs 20 depending on the size and quality of the bag. A card box is generally preferred over a plastic bag due to its ability to protect the product inside.

Inside the box or bag the product is wrapped in bubble wrap as it protects the product from any damage that might occur during transportation. To protect against water the product is wrapped in a sheet of transparent plastic wrap.

The Major share of the packaging industry comes from e-retailers. Dynaflex is the leading supplier of packaging material to various e-retailers such as Flipkart, Myntra, Amazon etc. It is a Gujarat based company. Before providing services to various e-retailers they manufactured polymer envelopes for collecting evidences from crime scenes. Earlier the annual growth rate was around 20% but after providing their services to e-retailers their annual growth rate has increased to around 35-40%. Flipkart alone ships around 50lakh shipments a month and Dynaflex claims that they provide packaging for 50% of those shipments.

 

Currently the E-retailing industry in India is around Rs 18,000cr but according to a report by CRISIL it is expected to reach around Rs 50,000cr by 2017. The huge growth of this industry will definitely influence the growth of the packaging industry in the near future. 

(This article has been written by Sanket Chitnis, a first year management student at SIMSREE)

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