E-commerce is booming. It represented more than 16% of total sales in Q2, according to the Census. Retailers from Amazon to Walmart have highlighted surging sales in their digital channels. Logistics companies are struggling to keep up.
Packaging companies, another critical link in the e-commerce supply chain, have similarly spoken of an e-commerce-driven boost to business in recent earnings calls.
Sealed Air has seen business with consumer companies, retailers and third-party logistics providers increase from 13% of its business in Q1 2020 to 14% of its business in Q3, according to slides the company presented during its earnings call last week. Executives on the call credited the growth to e-commerce and businesses' need for packaging to ship to consumers.
"We continue to shift our portfolio to address the ever-changing needs of the e-commerce channel, which will be a key element of our protective growth strategy," Sealed Air CEO Edward Doheny said on the company's earnings call. A company spokesperson declined to comment on what this shift would entail.
A trend across verticals
The trend toward e-commerce is happening across Sealed Air's verticals, including food and industrial, which is a move that has been accelerated as a result of the pandemic, a Sealed Air spokesperson said in an email.
Sealed Air's earnings and desire to shift toward e-commerce sales highlight the multiple partners involved in getting a package from seller to buyer as digital sales growth continues. And Sealed Air is not the only packaging company to recognize this area of potential expansion.
At least one packaging company has already provided some insight into what a greater shift toward e-commerce might look like.
"The e-commerce channel has been an order of magnitude different than it has been. We think some of that will stay."
Mark Sutton
Chairman and CEO of International Paper Company
"We developed the e-box, a software platform that enables our teams of experts to work with our e-commerce customers to determine the optimal design and suite of boxes to minimize packaging waste and reduce their freight costs," International Paper Company's Chief Finance Officer Tim Nicholls said on the company's earnings call on Thursday.
At Sealed Air, e-commerce customers have been specifically interested in the company's mailers and its automated solutions for mailer packing, according to comments on the earnings call and the company spokesperson.
It's not just the companies making the packaging seeing business increase — so are companies enabling better visibility of the package.
"Similar to apparel, the migration to e-commerce for food delivery is strengthening the use case for RFID in this market. Overall, we continue to expand our RFID product pipeline," Avery Dennison CEO Mitch Butier said last month.
Sticky sales
As Sealed Air heightens its focus on e-commerce, other packaging executives agree that increased e-commerce sales are expected to stick into the future.
"On a year-over-year basis, the e-commerce channel has been an order of magnitude different than it has been. We think some of that will stay," International Paper Company Chairman and CEO Mark Sutton said on the company's earnings call.
Myers Industries similarly called e-commerce one of the four areas it is targeting for growth. And Packaging Corporation of America executives said its e-commerce channel was "up significantly." Mondi credited "much" of the company's growth in its corrugated business on e-commerce, and CEO Andrew King called the market "a really big opportunity." Smurfit Kappa Group CEO Anthony Smurfit referred to e-commerce in July as a "mega trend" that its corrugated business would benefit from.
"EBay needed rapidly 5 million boxes in the UK within 10 days to meet their surge in demand," Smurfit said on the company's earnings call. "No other company was able to supply their needs in the lead time except Smurfit Kappa Group, due to our network of operations."
