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Smart packaging: The latest frontier for retailers

illustration of two cardboard packages with circuit boards

We live in a world of smart objects. Smart TVs, smart fridges, smart lightbulbs, the list goes on. But we’re now seeing non-electronic items being imbued with advanced capabilities that bring them into an extensive network of insights – even the humble cardboard container.

The idea that packaging can do more than just transporting something from place to place may sound wildly futuristic, but it’s fast become the reality. As technology advances, smart packaging is set to become an irreplaceable part of IoT-driven supply chains – and the customer experience.

What is smart packaging?

Smart packaging is an umbrella term for product packaging designs that offer additional functionalities besides protecting a product or enhancing its appearance. 

By combining digital technologies with physical containers, smart packaging becomes a tool to communicate valuable information both to the supply chain and the end customer.

The purpose of smart packaging is two-fold. It helps to promote trust in a product and creates more positive brand experiences while making it easier for logistics personnel to identify issues in the supply chain.

Smart packaging solutions can be broken down into several different types, depending on the information it’s trying to communicate. Some packaging technologies focus on supply chain traceability, while others are used to enhance consumer engagement.

How does smart packaging work?

Packaging is made ‘smart’ by integrating an array of advanced technologies that turn it into more than just a container for a product. These additions enable immersive digital experiences, connectivity with a wider supply chain, and even the ability for packaging systems to make changes to the product within.

Some technologies are applied physically to the packaging itself, in the case of RFID and NFC tags or QR codes. These allow for real-time tracking of a product from manufacturing to the store shelf, connecting packaging to the greater ‘Internet of Things’ (IoT) to exchange data more effectively.

When combined with new technologies such as blockchain and digital ledgers, smart packaging can also provide methods of authentication to combat counterfeiting. 

Adding certain substances to packaging materials can create smart packaging which alerts staff to quality problems or makes active changes to maintain product integrity and prevent waste.

Types of smart packaging

Intelligent packaging

Intelligent packaging is designed to communicate information about the product, usually for quality control for perishable items. This includes cosmetics, food, or pharmaceutical products. Sensors or smart labels monitor whether a food product is being kept within optimum conditions. For example, Time Temperature Indicators (TTI) improve food safety by signaling when a product has exceeded its shelf life and/or been kept at the incorrect temperature for too long.

Active packaging

Active packaging designs differ from intelligent packaging in they don’t just signal for adverse situations, but work to combat them. Excess light, moisture, bacteria, or oxygen can void a product from sale, which can get extremely costly for businesses. Active packaging incorporates substances including oxygen absorbers, additives, or antimicrobial agents to prevent spoilage, thus maintaining product integrity.

Connected packaging

This might be last on the list, but connected packaging has by far the biggest implications for retailers at large. Instead of just being suited to merchants selling perishable products, connected packaging can find a home in just about any product category. 

Put simply, connected packaging is all about the customer and enhancing their experience with a brand and product. 

If we think about regular product packaging, there’s a finite amount of space available. Most is given over to key brand details and product information. This leaves little room to dedicate to content that deepens your customers’ relationship with your brand. 

This is a missed opportunity, given that product packaging garners some of the highest levels of consumer engagement. 71% of consumers want product packaging to provide information that’s honest and transparent, so extending the amount of available space is the key to fostering brand trust.

Through the use of QR codes and Augmented Reality, brands gain the ability to talk to their customer in more creative and engaging ways. Instead of printing a minuscule recycling symbol on the bottom of a carton, you could include a QR code that directs consumers to an interactive video on how to dispose of packaging correctly. Not only does this boost sustainability; it also offers another valuable channel to build a rapport with your customer.

The challenges of smart packaging adoption

Changing how we think about packaging 

Smart packaging requires a big shift in mindset, for both businesses and customers.

We’re used to thinking about packaging as providing value during the transit and delivery process. Not a strategic asset for the wider post-purchase experience. Even as unboxing experiences grow more popular as a way to enhance customer satisfaction, product packaging is still habitually thrown in the trash the moment the product is unveiled. 

Full-fledged AR experiences are still an emerging technology in retail. For older age groups, in particular, the impulse to scan a QR code isn’t developed enough to rely on inclusion alone. Brands will need to put effort into building a narrative around smart packaging via their marketing channels. If customers aren’t educated and informed about what this can offer them, your efforts to improve the customer experience will likely go unnoticed.

Cost

As with any emerging technology, the adoption of smart packaging is being hindered by both the cost of components and the difficulty of achieving economies of scale. While the technology behind QR codes is free, the cost of custom printed packaging is often out of reach for smaller retailers due to high MOQs (minimum order quantities). 

IoT technologies also struggle with a lack of standard operating systems, which puts a lot of pressure on businesses to create their own ecosystems for smart packaging at a high cost.

Collaboration 

Smart packaging involves far more than just the packaging industry that implements the necessary technology. For smart packaging to accomplish its role, it requires a broad variety of teams and partners across manufacturing, technology providers, logistics, distribution, and even marketing and sales. If all parties aren’t on board or don’t understand the implications of smart packaging for customer care or fulfillment, this can result in a disconnect that makes it extremely difficult to create effective workflows.

The future of smart packaging

As consumers expect increasingly personalized and omnichannel experiences, we can expect to see smart packaging utilized by a growing number of retailers. Product packaging is already a cost that businesses need to absorb, as well as a tactile moment of engagement in the post-purchase stage. This makes it a ripe area for further investment that helps to solve a variety of pain points in the supply chain, from inventory visibility to consumer education. 

As competition in the retail space heats up after the pandemic, it’s safe to say that the winners are going to be those who take advantage of emerging technologies to give themselves an edge in a saturated market. Whether it’s faster fulfillment or more interactive experiences, the next era of retail will belong to the brands that embrace innovation the fastest.

Get in touch to see what we can do for you.

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