Why are we still awaiting the first knockout use of smart packaging? – Econsultancy

That’s a good gauge of adoption thus far – you, the reader, are unlikely to engage with smart packaging on a regular basis.

The technology encompasses – to pick just a few examples – RFID, NFC, QR, mass serialisation and visual search. So why employ some of this tech?

There are four main reasons that might be on the radar of marketers in CPG and retail:

• consumer engagement
• improving the supply chain through track and trace technology
• authentication
• improving sustainability via reuse or recycling

This tech has been around for some time, and implementations involving the web first appeared over a decade ago.

For example, in 2008, food company Del Campo Supreme used a solution from YottaMark called ‘HarvestMark’ which gave cases, trays and pallets a unique identity that linked to harvest, packing and supply-chain information. A portal provided traceback ability and information about distribution, quality and food-safety. Consumers could access this traceability information and the Del Campo brand story via the internet.

For those who regularly read the marketing press, the consumer engagement angle is the one you may have seen most frequently. It’s fair to say that if you can recall a smart packaging case study it was likely part of a PR campaign (pretty obvious logic) – perhaps a brand of alcoholic drink with an NFC tag attached, allowing those with compatible smartphones to tap to access some relevant content, or maybe the 2013 McDonald’s “Track My Macca” AR app in Australia, which enabled consumers to scan their box and view an origin story.

There are, however, challenges to this neat idea of packaging that unlocks a world of information in the cloud.

Consumer engagement is tricky

For a start, tech like NFC is a fairly expensive addition to mass production. But even if a cheaper technology is factored in, consider the following:

• Brands are not great at content – partnerships aside, brands simply find it difficult to compete with, well, the rest of the internet. Think of a common-sense implementation – scanning a packet for a bonus recipe: sounds great, but why would a user not consult an existing recipe app or website on their phone (especially if the product in question requires the user to download a brand app)?
• People don’t like ads. Agencies may trumpet the line that packaging is owned media, but they shouldn’t forget that consumers don’t particularly like adverts and the most impactful model (TV ads) is interruptive (consumers rarely ask to engage with brands).
• Smartphones may be an enabler but they’re also a distraction – the mobile is often the connection between product and web, but unfortunately it’s also the device that ensures people are never bored. Remember the days of reading the back of the cereal box as a kid? Those days are gone.
• Should it be on the packet? It sounds stupidly simple, but anything that is incredibly useful or interesting to the buyer should likely be on the packaging and not in the cloud.

There are, though, use cases that jump out. Provenance is very important in some markets, such as baby milk in China – connected packaging has been used to reassure parents they are buying an authentic product (via QR codes on Friso milk, for example).

The emergence of ‘New Retail’ in China, most notably pioneered by Alibaba’s Freshippo, has also seen shoppers using a store app to scan products to find out more about their provenance and ingredients.

And though enticing content can be hard to design, both games for kids and competitions are two effective ways of increasing engagement in CPG. Unique codes are often used that allow customers to participate in contests, so this doesn’t need the ‘smartest’ of packaging, nor do games if the packaging itself is not to be activated – but ‘smarter’ activations are appealing.

In the beauty sector, a 2016 survey by Mindshare found 54% of women want access to video guides for cosmetic products. And though social platforms are catering for this need, quickly finding a specific video could be an interesting prospect. So, too, could some element of gamification or loyalty, such as SharpEnd’s work with Boen wines in which super fans can ‘tap the cap’ to build their virtual wine cellar. 

Elegant tech is yet to take off

One of the frustrations for marketers is that QR codes, perhaps one of the most elegant solutions for connected packaging, has yet to take off in most markets.

In China, users are familiar with QR codes for quick payment and app download on WeChat, but in the west, QR may be implemented into loyalty apps, but is seldom seen anywhere but a smartphone screen. Implementations in the UK have ranged from the ridiculous (codes on the back of buses) to the uninspired – such as codes on KitKat packages that link to ad-style videos on YouTube.

Though QR codes are used by the likes of Amazon to handle returns, consumer-facing case studies have not been successful yet. Poor ideas have been compounded by the lack of a well-known and universally installed QR scanner app. But as the Friso infant formula example shows, there are strategic wins with QR if the context is right.

Recycling could be the key issue (but might smart packaging be a hindrance?)

The most pressing concern for consumers (and therefore CPG brands) may yet be sustainability. And beyond the provenance and distribution of a product, recycling is a big part of this issue.

There are plenty of projects in this space. For example, IoT agency SharpEnd collaborated with the European Horizon 2020 consortium to “identify and develop a localised app, connected to packaging, that empowered residents to take control of their recycling.”

The app “incentivised recycling through gamification but also served to educate through informing people how and where to recycle in a clear fashion.”

In this example, scanning involved barcodes – easy enough. But there are instances where motivations for smart packaging have been a hindrance for recycling.

As the Guardian reports, tech firm Thinfilm used tiny chips that interacted with an app to allow consumers to check the provenance of olive oil (an industry apparently rife with fake products). But, Dustin Benton, policy director at environmental thinktank Green Alliance, tells the paper that “The challenge with packaging made from multiple materials is that it’s really difficult to separate and recover it – it’s a very energy intensive process.”

Though Benton wasn’t commenting specifically on the olive oil example, it’s clear that tech such as RFID is problematic. A 2012 report from the RAND Corporation says that “the aluminium antennas of RFID tags can reduce the amount and/or quality of recycled glass if they cannot be separated within the process. …In suitable instances, the problem could be avoided by reengineering tag application or composition (for instance by incorporating them in removable labels and bottle caps rather than in the bottles or jars themselves).”

The report also suggests that one specific issue for policy is “Mandating the tag-based or on-line accessibility of environmental information: identifiers stored on tags could promote environmental and privacy-conscious informed consumer choice and thus encourage better recycling of certain materials or objects. It may be necessary to make this mandatory (in the spirit of the Energy-related Products Directive) in order to minimise distortion and to align market incentives (e.g. competition on the basis of recyclability) with environmental objectives by reaching the required level of prevalence.”

Awaiting the plateau of productivity?

Smart packaging is technology that at first glance is easy to be sceptical about but, like many emerging examples of tech that are yet to hit the ‘plateau of productivity’, strategy and execution have to be perfectly realised for the proposition to be compelling. New Retail shows how notions of the physical and the digital can be academic when the infrastructure is right.

It’s entirely possible that consumer engagement and, crucially, sustainability could be revitalised by tech such as QR codes, but it may be another few years before tech platforms standardise and regulation offers a helping hand.

A Marketer’s Guide to the Internet of Things