What's The ROI Of Sustainable Packaging?


by Sarah Quirk  • updated September 28, 2022 • 11 minute read
Most eCommerce businesses focus on customer acquisition and retention, constantly looking for ways to raise brand awareness, decrease customer acquisition costs, and maximize loyalty and long-term retention. But many brands overlook a critical strategy in their toolbox: their packaging.
Here we discuss the impact of your product packaging on your business.

We’re often asked - how much does packaging, and shipping packaging in particular, really matter to the consumer? Do customers care about the sustainability of that packaging? Is there data to help me understand if my investments in better, more eco-friendly packaging will impact my bottom line?
Typically these questions are prerequisites for brands assessing the risks and rewards of redesigning their packaging suite towards sustainability goals and internal CSR/ESG initiatives. While the interest in moving eCommerce and retail packaging to more sustainable materials and design is high - among consumers and brands - it’s less clear to many how this interest and emotional response to packaging translates into a brand’s return on investment for making the transition.
Is switching vendors, redesigning dielines and artwork, or rethinking a procurement strategy going to be worth the time and effort it takes your team? Will packaging with a catchy marketing or environmental slogan make much difference in the nuts and bolts of customer retention?
As consumers demand more responsible sourcing and packaging for the products they choose to purchase, how do these warm fuzzies translate to a consumer’s willingness to also pay more for a product produced in this way? Does sustainable packaging change a consumer’s buying strategy or lifetime value with your brand?
These are fair questions.
For years, there was little data to help quantitatively answer these questions. Although there is still much to learn about the impact of sustainable packaging on buying habits and decisions, the last five years have accelerated the amount of eCommerce packaging received by consumers and have led to much more research in this arena.
Whether you’re a small brand, wondering how and whether to pivot your packaging, a change-maker in a large brand, or somewhere in between, the recent data is clear:
Sustainable and thoughtfully designed packaging helps values-centric businesses in customer retention and acquisition.

Acquisition, Retention, And Loyalty Matter In Our Increasingly Competitive Landscape

Consumers have never been more willing to try new products and brands in the post-pandemic world. However, for many brands, this is a double-edged sword: not only does it mean consumers may be much more willing to give their products and services a shot, but also that they may be hard to retain for consistent and ongoing purchases.

According to a 2020 article from McKinsey and Company, “brand loyalty is on the decline, as 73% to 80% of U.S. consumers plan to stick with brand loyalty-eroding behaviors post-pandemic (i.e., an overall increase in consumers trying new shopping brands and therefore decrease in the percent of purchases that are made due to loyalty towards a particular brand).”

This trend is a good reminder for companies to pursue all strategies that can make their brand more appealing to potential new customers and stickier for existing customers.

Online Customers Care About Their Packaging - A Lot

Packaging matters in the retail world. It’s the first impression of a product and often what separates one product from whatever is sitting next to it on the shelf! The big brands know this, which is why they spend billions of dollars on packaging.

But eCommerce brands also have much to gain from their packaging. Any quick search for unboxing videos is a good reminder of how much customers care about the delivery experience (and how much brands have to gain from an exceptional, share-worthy packaging strategy).

Online companies only have two touchpoints with customers- their digital presence and their physical product with its packaging. While significant resources are often spent on elevating a brand’s digital presence through website experience, digital marketing, and branding strategies, the secondary touchpoint of the physical goods and their packaging - the more tangible and arguably impactful touchpoint - can be left as an afterthought.

As an eCommerce company, it is easy to think – “our customers have already ordered from us by the time they see our shipping packaging” or “our customers don’t care as long as their order arrives in good shape.”

But the truth is that online shoppers do notice how you ship products to them. It influences their perception of your brand, their likelihood of ordering again, and whether (and what!) they tell their friends about you.

A 2018 article found that consumers “formulate a first impression of a company within the first seven seconds of interaction” - for consumers who interact with a brand only through eCommerce, this means that your packaging has the most immediate impact on a consumer’s first impression of your brand, value, and product. Not to mention whether or not the consumer is likely to return or send back a product to you.

The top three things customers notice about their eCommerce packaging are:

  1. Whether or not their items were delivered in good condition.
  2. Custom branding and design.
  3. How environmentally conscious the packaging is.

The digital presence, brand, and sustainability marketing are the talk, and your packaging is the walk. Consumers pay close attention to how these two brand aspects align, whether the tangible goods they receive match their perception of your brand - its ethos and integrity, and your product's fiscal value.

Five Reasons Thoughtful Packaging Benefits Your Bottom Line

Sustainability Matters to Consumers and Employees

Nearly six in ten consumers surveyed are willing to change their shopping habits to reduce environmental impact. Almost eight in ten respondents indicate sustainability is vital for them. (Source)

44% of customers* chose to buy from brands with a clear commitment to sustainability, while 41% chose to buy from brands with a clear commitment to social causes. (Source)

74% of employees are more fulfilled at work when they are provided with opportunities to positively impact social and environmental issues, and 70% would be more loyal to a company that helps them contribute to important issues. (Source)

Your Packaging Reflects Your Product's Value and Your Customer's Feelings

48% of consumers feel that packaging reflects the value of the shipment – the better the packaging, the better the product inside. (Source)

Brands who spend considerable resources to optimize the consumer’s path to purchase, only to have products arrive unceremoniously on the doorstep in a battered cardboard box, damage their brand reputation. (Source)

Because the time between purchase and product arrival builds consumers’ expectations, packaging that fails to meet the brand’s promise [e.g., by arriving in a cheap, plain box with unattractive cushioning] severely detracts from a customer’s impression of the brand. (Source)

Sustainable Packaging and Eco Commitments Drive Traffic to Your Brand ...

40% of consumers are more likely to share a purchase on social media if it arrived in thoughtful packaging. (Source)

Nearly half of customers chose to buy from brands with a clear commitment to sustainability in the past year. Studies have shown a 71% rise in online searches for “sustainable goods” globally since 2016. (Source)

One in five consumers surveyed watched unboxing videos as part of their purchasing journey according to a 2014 Google Consumer Survey of 1,500 people. (Source)

... And Increases Conversion and Willingness to Pay

73% of consumers are more likely to buy a product packaged sustainably. Many will also pay a premium. (Source)

46% of customers* are more likely to purchase a product online if they’re able to recycle the product packaging. This is part of why 40% of brands* highlight more sustainable packaging as an area of investment. (Source)

75% of customers emphasize their desire to receive products in eco-friendly packaging in a study commissioned by Pro Carton. (Source)

41% of consumers say a significant influence on their purchasing decisions is when a brand makes it “easy to understand the actions they are taking to achieve their environmental and/or social impact goals.” (Source)

83% of consumers under 44 years of age are willing to pay more for products that come in reusable or recyclable packaging. (Source)

70% of consumers are willing to pay, on average, 30% more for eco-friendly brands. (Source)

Thoughtful Packaging Retains Customers and Increases Their Lifetime Value

Customers are most likely to return to a brand for the product’s quality, but sustainable business practices come a close second. (Source)

73% of respondents are less likely to cancel a purpose-driven brand. (Source)

90% of consumers would stop purchasing from a company if they learned about irresponsible practices. (Source)

52% of consumers are likely to make repeat purchases from an online merchant that delivers in “thoughtful packaging.” (Source)

48% of all consumers would consider switching away from a brand if a product they received contains excessive or unsustainable packaging. (Source)

68% of consumers say that their loyalty to a brand is strengthened if they share the same values. (Source)

42% of respondents credited sustainable packaging as the packaging feature most likely to make them want to shop with a brand again. (Source)

Sustainable practices have been proven to help customers maintain more emotional relationships with brands, resulting in a 306% higher lifetime value. (Source)

68% of consumers say that their loyalty to a brand is strengthened if they share the same values. (Source)

What Does “Green” or “Eco-Friendly Packaging” Mean To Customers?

Customer answers vary when asked what they mean by “environmentally friendly” packaging.

Recycled Content and Recyclability

Recyclability and recycled content emerged as most important. Over 75% of Pro Carton survey respondents indicate that “environmentally friendly” means packaging that can be easily recycled and is made from recycled materials. Shopify’s “The Future of Ecommerce” report echoed this, suggesting that consumers’ primary focus is on zero-waste packaging, where all materials are used, reused, or recycled.

Reusability and Biodegradability

Reusability and biodegradability followed suit, ranking both features crucial to over 50% of those surveyed.

Excessive Packaging

47% felt that over-packaging was a pet peeve, given how harmful it is to the environment.

What Does All Of This Mean For My Business?

We don’t know your exact business. However, we think it makes sense to at least evaluate the cost/benefit of earth-friendly packaging for your business.

4 Questions to Determine if Green Packaging Good for Your Business

1) Do you produce or sell high-end items, items that intend to be durable, long-lasting or uniquely high quality, health and wellness items, unique jewelry, quality apparel, or home goods?

2) Are your customers millennials, moms, outdoor enthusiasts, adventurers, naturalists?

3) Is your brand essential to your company’s growth and success?

4) Does your brand stand for ethical or environmental values? Are you focused on building your strong social media strategy and presence?

Did you answer YES to any of the above questions? If so, going green in your packaging could:

  1. Lead to a measurable improvement in your brand, sales, and revenue.
  2. Provide some easy protection against negative publicity.

A Scenario To See How The Numbers Play Out

Baseline Scenario: Let’s say that with your current, conventional packaging, an average customer buys $50 worth of stuff. This week, you acquired 100 new customers. Of those customers:

  • 25% never order again
  • 50% order one more time
  • 25% order two more times

You just acquired $10,000 this week – right on!

Eco-Friendly Packaging Scenario: Remember: 48% of customers may decide not to reorder from a company for using un-ecofriendly packaging, and 52% of customers would be more likely to consider reordering from a company that uses eco-friendly packaging. So, let’s just cut those numbers back and say that only 5% (vs. ~50%) take action. Then, with eco-friendly packaging, you find that:

  • 20% of your customers never order again
  • 45% order one more time
  • 35% order two more times
  • Moreover, your eco-friendly packaging has inspired three of these customers to post on social media, generating five new referred customers.

In this scenario, you just acquired $11,288 this week!

That represents a 13% increase in sales due to eco-friendly packaging. And that 13% improvement happens every week – just by continuing with the eco-friendly packaging.

Is that what will happen to your company? It might be higher; it might be lower. It depends on countless factors, of course. But the point is that exploring eco-friendly packaging is largely a branding and marketing decision. Moving to more thoughtful packaging, primarily if your company is already rooted in ethics and sustainability, can strengthen your reputation and brand. This drives more sales and genuine long-term value.

Showcasing your Eco-Friendly Packaging Commitment

Once you’ve committed to eco-friendly packaging, don’t forget to showcase it to your community!

EcoEnclose has an extensive library of digital assets that any brand in our EcoAlly community can use to communicate their investments and help customers understand what makes their packaging unique.

Check out our Marketing Assets, chock full of GIFs, videos, badges, photos, and recommended language when communicating your brand’s packaging strategy.