A fascinating look into the technology and engagement that await us
Imagine a shipment of salmon on its way to retail through multiple distribution points. Upon arrival at its first destination, an alert is transmitted by sensors attached to a case in the shipment – and that alert notes that temperatures have exceeded safe storage conditions for salmon. Thankfully, because each case of salmon was equipped with temperature sensors, the warehouse could confirm that only a small portion of the overall shipment had exceeded safe temperatures. Damaged product is removed and the remaining product makes its way to grocery stores around the world. As each grocery store receives its shipment of salmon, each case is automatically scanned, verified and logged. Meanwhile at the salmon brand headquarters, information about each shipment is received and processed in real time as it passes through each distribution point. The operations team uses this data to improve shipping efficiencies. The brand protection team uses this same data to identify potential sources of counterfeiting or instances where the salmon is distributed through illegitimate channels (grey market diversion).
Now imagine a consumer walking into a grocery store to purchase this salmon. This consumer taps his or her smartphone on the salmon’s product label, and is presented with provenance information (e.g., where the salmon was caught or how it travelled through distribution), product quality information (e.g. confirmation that the salmon never exceeded allowable temperatures), and a recipe for salmon tartare, as well as a grocery store map indicating locations for the recipe’s ingredients, along with discount coupons for those ingredients.
This is but a snapshot of a world enabled by connected packaging technologies. Not only do all the technologies required to execute the above scenario exist today, but in many cases these are technologies that most of us have interacted with in non-packaging forms for the better part of the last decade! What makes connected packaging so exciting as we enter 2020 is that these maturing technologies have not only steadily decreased in cost, but have also drastically improved in functionality, resulting in ROI potential for consumer-packaged goods reaching an entirely new level. Consider that at the end of 2019, Kraft (in conjunction with Walmart, NXP and TPG rewards) executed one of the largest NFC-based connected packaging campaigns of all time, by embedding NFC tags into 3 million packages of Kraft Singles, which retail for a mere $3 U.S. each.
Connected packaging – what does it really mean?
“Smart” or “intelligent” packaging refers to packaging with technologies that either improve traditional packaging functions (e.g. to protect, preserve or promote) and/or enable completely new packaging functionalities (e.g. perceive or predict). “Connected packaging” is a subset of smart packaging, which aims to improve or extend packaging’s value by connecting physical packaging forms to helpful digital information.
Connected packaging and the internet of things (IoT)
Beyond packaging, connected packaging also belongs to an evolving ecosystem called the “internet of things (IoT).” IoT describes the convergence of technologies, real-time analytics, machine learning, sensors and systems used to track and control physical objects. With IoT, not only can individual items be tracked in real time, but each individual item can also gather and communicate information. IoT opens up an entirely new way of doing business, making it possible to track individual components and products as they travel on ships, planes or trucks. For example, sensors can weigh all of the parts in an inventory bin in a factory, or all of the sweaters in a store’s stockroom, enabling new levels of supply-chain efficiency and inventory management.
In the consumer market, IoT technology is synonymous with the “smart home,” where a range of devices and appliances (such as lighting fixtures, thermostats, home security systems and cameras) are connected and can be controlled via devices such as smartphones and smart speakers. Amazon for example, recently partnered with Giant Eagle Pharmacy to provide its customers the option to broadcast medication reminders for their prescriptions to prompt participants to take their medicine at a particular time of the day. Patients can also request prescription refills through Amazon’s Alexa. As the IoT ecosystem expands, so too do the potential connection points for IoT products, which further increases the potential applications for connected packaging, as well as the value that connected packaging creates for brands, manufacturers, distributors, retailers, consumers and others.
Connected packaging’s massive market potential
Gartner, a research and advisory company, predicts the number of connected products will increase from 5.2 billion today to 20.4 billion by the end of 2020. Smithers, another market research leader, predicts the intelligent packaging market will exceed $7.8 billion U.S. by 2021. These numbers pale in comparison to research from McKinsey & Company, which predicts IoT applications will have an $11 trillion (USD) impact, with billions of packaged products that could be connected by 2025. Based on an impartial analysis, IDTechEx expects almost 39 billion packages sold in 2029 will feature an electronic feature of some sort to enhance the package.
These huge numbers are supported by connected packaging applications that address macro-level trends such as an aging population, a requirement for more data related to products purchased, the increasing importance of entertainment value, a need to distinguish products amidst greater competition, and tougher government legislation. On the micro level, consumer purchasing decisions will be increasingly influenced by digital information. In 2019, Google reported 76% of people who conducted a local search with their smartphones, visit that business within 24 hours – and 28% of those visits resulted in a purchase! Consumers are also becoming more familiar with using smartphones to connect with the physical world. Mobile NFC payment platforms like Google Pay and Apple Pay, which allow consumers to pay for products by tapping a smartphone on a POS system, exceeded $745 billion (USD) in 2019. This value is expected to exceed $2.139 trillion (USD) by 2023. NFC, as we’ll discuss, is a connected packaging technology in the market today that can connect consumers to influential digital information before, during and after the moment of purchase.
How connected packaging actually connects
Connected packaging uses an embedded mechanism to trigger a digital action or experience that’s powered by a digital back-end platform. These embedded mechanisms cover a wide range, from complex electronic components to simple printed codes. These actions or experiences are activated in two ways:
1. User activated: Requires a physical action by user (e.g. tap smartphone on an NFC-enabled package, scan printed code, etc.)
2. Automatically activated: Action automatically occurs based on preset rules (e.g. time, proximity, open/close status of package, etc.)
It’s entirely possible to have one connected package that contains both user activated and automatically activated experiences. The ability for one connected package to drive a multitude of experiences vastly expands the value creation potential of connected packaging.
Electronic connected packaging technologies
The technologies in this group communicate by wirelessly emitting information that’s read by a compatible device (e.g. smartphone, proprietary scanner, etc.). These technologies don’t require a battery to operate and can passively harvest power from the same wireless frequencies used for communication – although an active power source can be added to boost communication ranges. RFID and NFC are examples of electronic connected packaging technologies. They’re commonly manufactured as a label or a tag that contains an integrated circuit (computer chip), connected to onboard memory and a flexible antenna. These tag inlays can be embedded into almost any packaging format.
- RFID (Radio Frequency Identification). RFID can communicate over long distances and through obstructions via radio frequency, but requires specialty scanning devices compatible with the type of RFID tag used. Maximum scanning distance is dependent on the RFID tag’s antenna, as well as power emitted by the scanning device. Despite the need for specialty scanners, RFID tagging has become the most commonly and widely used wireless technology after mobile phones. RFID’s advantages for inventory tracking have led to major adoption by the apparel industry.
- NFC (Near-Field Communication). NFC is an ultra-short-range (within a few centimetres) form of RFID that can be read natively (no app required) by most mobile phones. In 2019, almost 90% of all cellular phones manufactured were able to read NFC, compared to under 50% in 2017. Consumers are also becoming more familiar with tapping mobile phones on NFC tags to activate experiences, thanks to proliferation of NFC applications like mobile transactions (e.g. Apple Pay and Google Pay). NFC’s short-range interaction (e.g. tap smartphone onto NFC tag to activate) along with the rapid proliferation of NFC-capable smartphones, makes it an ideal method to deliver dynamically targeted experiences to a wide range of audiences. Google “Malibu Coconut NFC” to see how Pernot Ricard utilized NFC on “Connected Bottles” of Malibu Coconut to initiate an interactive mobile game that delivered time-specific and location-specific promotions to consumers.
Optical connected packaging technologies
The technologies in this group are based on a printed pattern (e.g. barcode, watermark, image, etc.), that’s scanned by an optical scanner (e.g. smartphone camera). Because these codes only require the application of ink or varnishes, they’re generally low cost and can be easily executed on traditional printed packaging lines, although their lack of electronic components may limit functionality.
- Printed Codes. QR codes are what most people think of when describing printed codes that can connect with digital platforms. There are, however, a whole variety of codes that can accomplish the same task. In fact, any type of barcode or graphic has the potential to initiate an experience. Some codes like Digimarc, for example, can be hidden within graphic images and can be invisible to the human eye!
- Taggants. These are microscopic particles that are embedded into varnishes, inks, or even the packaging materials themselves. Although a scanner is required to read these taggants, certain taggants like “TruTag” or “Arylla” are designed to be detected by any smartphone camera and processed through a proprietary app.
Connected packaging as a portal to other technologies
As costs of components like electronic sensors drop over time, the increasing feasibility for integrating additional technologies into one package greatly increases its value potential. Connecting a Time Temperature Indicator (TTI) to an NFC tag, for example, allows a consumer to verify that a product has never exceeded allowable temperature ranges during transport and storage. At Jones Packaging, for example, we’re currently pilot-testing an intelligent blister pack, designed to track medication adherence. By applying conductive ink traces on the top of each blister cavity and connecting these traces to an integrated device, this blister pack is able to monitor when a patient takes (or more importantly forgets to take) their medication. Notifications are configured based on a patient’s medication schedule and can be sent to anyone involved in a patient’s wellbeing (e.g. the patients themselves, family members, caregivers, or to the monitoring physician in a clinical trial).
Creating experiences for connected packaging
It’s important to remember that connected packaging technologies are the vehicles for information and experiences. Those experiences can range from simple mobile landing pages to complex data-exchange nodes that connect multiple stakeholders with on-board sensors, external databases and more. From an execution standpoint, there are a variety of self-serve digital platforms that make it easy to create connected packaging experiences. For example, imagine a SquareSpace-like content creation interface, with a rules engine for delivering contextual content, combined with a data-collection module to measure engagement for each connected item. An increasing number of creative agencies are becoming familiar with connected packaging as well. There are also end-to-end solution providers that can facilitate the entire process – from packaging integration to experience creation. There’s no ‘one-size-fits-all’ solution and the choice for execution will depend heavily on the problem that one hopes to solve through connected packaging.
Applications for connected packaging
The potential applications for connected packaging are limitless, and it’s more than likely that the best applications have yet to be created. The applications available today, however, are best described by Deloitte Insights’ report titled Capturing Value from the Smart Packaging Revolution:
- Inventory and lifecycle management
– Traceability: Real-time ability to track and trace exact product location in production and distribution cycles.
– Agility: Optimizes supply-chain processes, including predictive planning and inventory management.
– Sustainability: Reduces environmental footprint throughout the product lifecycle and ensures more sustainable disposal or reuse.
- Product integrity
– Authenticity: Ensures that the customer knows the product is exactly what was promised, and from where and from whom it was promised.
– Security: Defends against product theft or unauthorized product access to control product exposure, use and distribution.
– Quality and safety: Monitors or controls the product environment to protect customers form anything but the optimal product experience (e.g. cold chain).
- User experience interaction and satisfaction: Communicates with the customer to entertain, instruct or inform, and encourages deeper interaction with the physical product and/or digital brand presence.
– Usage: Makes product use easier – from delivery, preparation and dosage to disposal – and intimately understands customer usage behaviours with connected technologies
– Access: Makes user ordering, replenishing and return more seamless and enhanced.
How to maximize the value of connected packaging
Data is the currency of connected packaging. The ability for each connected package to gather real-time, item-level data at every interaction point, can fuel the generation of valuable insights. The immense value of this data, however, sometimes belies the many functional benefits that one single connected package can offer. Each connected package can contain experiences spanning multiple application categories mentioned above, and can also initiate experiences targeted to each person interacting with that specific package. For example, the scenario outlined in the opening section of this article outlines a connected package that provides an operations team with distribution and storage data, brand protection with diversion information, and allows a brand owner to connect directly with consumers and influence their decision making. The versatility of connected packaging quickly increases ROI, as benefits can generate returns across multiple functional areas.
Considerations for implementation
While the types of technologies and potential applications for connected packaging can seem daunting, ultimately, connected packaging is a potential solution to a problem. Once the problem is identified, there are a variety of implementation partners that can aid in execution. Answering these four questions can quickly identify potential connected packaging solutions:
- Identify the problem(s). What are you looking to achieve? If your goals fit into the nine application areas mentioned in this article, connected packaging may be the solution.
- What are the considerations for interaction with the connected packaging? Are user-activated or automatically activated experiences ideal? Is a mixture of both required? Understanding interaction will guide which connected packaging technology to use.
- What are the considerations for information exchange? What types of information are required to be transmitted or collected? Where should this data flow? Information exchange requirements will decide which digital platform is appropriate.
- What existing resources can be leveraged for execution? Can internal teams or agencies of record execute connected packaging experiences? Can existing systems (e.g. CRM, ERP, etc.) connect with the connected packaging’s information flow? Can connected packaging launch existing mobile assets (e.g. YouTube videos, mobile apps, etc.)? Leveraging existing resources not only reduces costs, but reduces implementation issues.
- Are there other benefits that we can uncover with this solution? Once the core issue is addressed and a connected packaging solution is identified, it may be beneficial to explore additional benefits and applications outlined in this article that can be achieved. Connected packaging solutions are incredibly versatile, and one solution can open up a variety of tertiary benefits with little to no additional cost. For example, a major issue in pharmaceuticals is counterfeiting. According to the WHO (World Health Organization), counterfeit drugs represent 8%-15% of all medicines. Not only does this result in lost revenue for the manufacturer, but it also erodes trust in their brand. Enabling a consumer to verify a product’s authenticity before purchase can help reduce counterfeiting and increase consumer trust. In this instance, an organization may work with a partner to determine that a tamper-evident NFC tag embedded in the current packaging, combined with a product authentication platform, is a great solution.
This organization may discover that their existing infrastructure is sufficient to drive this solution and no additional digital platforms are required. Their existing Agency Of Record (AOR) may be familiar with creating mobile-first experiences and may able to craft the front-end interface that delivers product authenticity information to the consumer. A few months after launch, their marketing team may be encouraged by the engagement metrics from this NFC-connected packaging solution, and work alongside their AOR to add a promotion to be delivered alongside the product authenticity information. After a year in market, the data analytics department may find that most NFC interactions for this product happen at 6 pm in August, and marketing can utilize these insights to craft time and date specific promotions to maximize this interaction trend. This is one of many examples of how connected packaging can be utilized to solve one problem, and quickly expand to create additional benefits. If recent trends continue, we’ll see even more connected packaging success stories emerge in this upcoming decade.