In these times of social media and internet based retail businesses, packaging has changed. Flexibility is key and fixed high volumes are being replaced by small volume runs. Karen Wardell reports.
In the past five years the manufacturing and packaging industry landscape has changed significantly with respect to fast moving consumer goods.
The union between popular culture and internet technology, specifically online retail, blogging and social media, has had big implications for branding and marketing initiatives and has presented a huge businesses opportunity.
Nathan Wardell, Managing Director of packaging equipment hire company Packserv, sheds some light on the relevance of these for SME manufacturers and packers.
“Australian packaging businesses are certainly utilising the marriage of technology and social media to propel business growth. The focus has shifted away from traditional reporting factors such as global social and economic factors, particularly with respect to costs associated with offshore manufacturing and packing,” explained Wardell.
Wardell is often described by his customers as the ‘go to man’ when it comes to short or long term hire packaging machinery. He explained that he is always surprised at how many manufacturers and packers engineer new strategies that are having a positive impact on their business growth.
“In the packaging industry I have found that my clients who have experienced the most positive growth are those that are very flexible,” Wardell said.
Wardell explains that in the past fifteen years - since the rise of the internet and social media - he has noticed a clear shift in the way manufacturers approach packaging.
Packserv’s clients are finding new opportunities and have evolved in two key areas, contract manufacturing and internet retail.
Whereas in the past they were used to fixed high volumes, many well-established, traditional contract manufacturers and packers have become flexible and started to accept small volume runs.
Manufacturers that produce and package their own brand are now offering contract packaging services for external businesses. This has allowed them to not only continue to produce their own product but to also maximise their output and revenue by offering smaller volume runs to other labels.
Over the past eighteen months, Wardell has seen many of these contract packing outfits spring up. As a consequence, these unassuming contract packers are in high demand and are hiring packaging equipment from Wardell to cope with the extra work.
These manufacturers are also on a steep learning curve. Production staff are discovering that existing equipment and packaging processes may not be suitable for all incoming work.
“Many small to medium manufacturers have been quick to see and act on this opportunity. They do need to have the versatility to trouble-shoot and solve packaging issues quickly to be successful with this transition,” Wardell said.
Contract packers who offer flexibility in line with customer needs are having a positive impact on niche businesses which can introduce small volume to market and not lose the ability to develop the product at a risk-free pace.
Brand owners are taking on the manufacturing and packing of their own products. They are opting to do the manual work themselves and hiring relatively slow speed, small, bench-top machines.
These businesses are not only concerned with tight cost and quality control processes but are also focused on social media and ecommerce strategies to build their brand and sell product.
Wardell pointed out that his client base is becoming more and more diverse.
“You would be surprised at which businesses have adopted changes. Established businesses that are household names are definitely moving with the times and using our services as are many new businesses that are quick to get established in such a short period of time,” he said.
Many of Wardell’s new clients are solely internet based retail businesses. He deals with many clients that have an idea, turn it into a product and sell them online.
“They hire in the equipment to package their product to keep the overheads down and their sales are global,” he explained.
He cited two manufacturers who recently built businesses in Sydney and then adapted their websites from essentially marketing tools to interactive online stores in order to gain a solid global audience.
Their US market grew so fast in terms of internet sales that they had to open a US distribution centre.