Pilot involving 15,000 parcel deliveries shows reusable packaging is commercially viable for e-commerce: WWF-Singapore

SINGAPORE — A pilot study here has found that reusable packaging is commercially viable for e-commerce with three out of 12 participating retailers pursuing the option after identifying potential cost savings.

The six-month study was done by World Wide Fund for Nature (WWF) Singapore along with United Overseas Bank (UOB), DHL Consulting, SingPost and Better Packaging Co.

In all, 15,000 customer transactions were processed during the pilot, with one in three of them choosing reusable packaging.

The pilot found that customers made a sustainable choice by opting for reusable packaging because they were concerned about the environment and not based on supporting eco-friendly brands.

Another key finding was that incentives alone were not a large enough factor in a customer's decision to opt in for reusable packaging, though they said that the right incentive can further motivate them.

WHY REUSABLE PACKAGING MATTERS

A study done by the Massachusetts Institute of Technology found that boxes and plastic packaging account for 45 per cent of carbon emissions in the e-commerce supply chain.

Every year, e-commerce contributes a total of 17.7 million kilogrammes of packaging waste. In 2021, it was reported that at least 200,000 e-commerce parcels were shipped daily in Singapore. 

The growing waste problem prompted WWF-Singapore to conduct a feasibility study in 2021 before launching the reusable e-commerce packaging pilot last year. 

The pilot ran from April to September 2022 with 12 retailers here such as footwear retailers, book sellers, second-hand clothing sellers and bulk food sellers involved in a programme to test the reusable packaging concept.

In the pilot, customers who opted for reusable packaging for their order were invited to drop off the reusable packaging at any SingPost post box at their convenience after they had received their order.

WHY CUSTOMERS CHOSE REUSABLE PACKAGING

The overall opt-in rate for reusable packaging of one in three customers varied across the retailers from just 6 per cent to 62 per cent.

The clarity of communication was given as a likely reason for this variation.

Retailers with a higher uptake of opt-ins attributed this to their own marketing and education efforts on reusable packaging on their websites and social media, as well as the ease of opting-in at the point of checkout.

Of those who did not opt-in, 58 per cent of customers surveyed said that they were not fully aware of the concept and option, while 27 per cent thought that the return process was a hassle.

Of the customers who opted in, only about one in two returned the packaging.

On average, it took customers at least 16 days to return the packaging, with the fastest being an immediate return and the slowest taking more than three months.

To help with this problem, some retailers included reminders when they mailed out an order, which helped cut the average time taken for the packaging to be returned by five days. 

The findings also showed that there was a handful of customers who reported that returning the reusable packaging was not a priority and that they wanted to keep the packaging for their personal reuse. 

WWF-Singapore said that efforts are needed to boost the return rate from about one in two in the pilot to 75 to 83 per cent — at which point the economics of reusable packaging are more compelling.

That equates to reusing the packaging at least four to six times.

OPERATIONALLY FEASIBLE FOR RETAILERS

WWF-Singapore said that the reusable packing option will help retailers reduce the use of paper boxes and poly mailers and save more in the long run since one item of reusable packaging can be used at least 10 to 20 times. 

Retailers are also required to make only minimal information technology changes, which can be easily updated with the opt-in function and a link to a frequently asked questions page with instructions on the packaging return process.

About 90 per cent of retailers in the programme also found that their efficiency had improved, because the simple sealing format on the reusable packaging helped reduce the overall packing time.

Some retailers also identified the potential for cost savings with the cost for each use of an item of reusable packaging averaging below S$2, based on an average return rate of 50 to 83 per cent.

This compares to the current upfront price of S$3 for reusable packaging and a normal parcel return via SingPost at S$1.50.

With implementation on a larger scale, reusable packaging may be supplied at even lower costs, which could mean that the cost for each use of reusable packaging falling below S$1, WWF-Singapore said.

REUSABLE PACKAGING IN SINGAPORE

WWF-Singapore recommends making reusable packaging "the norm" for online buyers in Singapore.

It said that this can be done through:

• Communicating and educating customers on how reusable packaging works, with clear, localised instructions on how to return it after use
• Creating various packaging sizes to facilitate more fulfilment of opt-in order, since the pilot programme only offered off-the-shelf packaging
• Optimising return logistics by expanding more drop-off points, preferably locations that are part of a customer's daily route so that they can drop off the packaging "on the way" to their next location
• Having a deposit system where customers pay a minimum deposit that will be refunded upon the packaging return
• Charging a maximum fee of 50 cents for the reusable packaging option