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As coronavirus gripped the world last year, people were compelled to stay, learn and work from home. But staying at home also meant that people were unable to visit physical stores for shopping and this is where online shopping, an already growing phenomenon, took center stage. People could shop freely from the comforts of their homes, choosing from a wide catalog of products and have the goods delivered at their doorsteps. This in turn, also bolstered the demand for e-commerce packaging.
The goods ordered online had to be delivered to consumers in proper condition. Moreover, a Smithers article published on Oct 29 stated that in 2020, the e-commerce market increased with high volumes of shipping witnessed in “groceries, sports equipment, cosmetics and personal care items.” The article stated that this created demand for new packaging solutions that could “protect goods in shipment, and provide a connection to the at-home consumer.”
Notably, lockdown restrictions are gradually being lifted across major economies as vaccination drives are progressing but the popularity of e-commerce seems far from over, thanks to the many conveniences it provides over shopping at brick-and-mortar stores. Other factors like the increasing penetration of the Internet and the rising usage of smartphones across the globe are also contributing to this rising demand for e-commerce. In fact, market research company IMARC stated in a report that the global e-commerce market is estimated to witness a CAGR of around 16% from 2021 to 2026. This means that the demand for e-commerce packaging should continue unabated.
Notably, the importance of packaging in e-commerce goes beyond that of simply delivering the goods ordered without any damage. Interestingly, packaging also has an aesthetic value in the sense that the consumer interacts at first with the packaging itself. Markedly, another Smithers article stated that packaging design is important since unboxing of a product is also part of the experience and instrumental in setting the “tone for how the consumer feels about the product and its maker.”
Meanwhile, with environmental concerns coming to the forefront, e-commerce players are looking at sustainable packaging options. Toward that end, the Smithers article stated that strategies such as reusable packaging is being rapidly used while single-use plastic continues to face heavy criticism. The article stated that in the future, there is likely to be more usage of bioplastics and expanded polystyrene alternatives.
E-commerce Packaging Market Poised to Grow
Reflective of the continued popularity that e-commerce is witnessing, it doesn’t come as a surprise that the e-commerce packaging market will also grow in the future. Notably, a report by Facts and Factors stated that the global e-commerce packaging market is expected to witness a CAGR of 15% from 2021 to 2026, as mentioned in a GlobeNewswire article.
3 Stocks to Buy
The global e-commerce packaging market seems ready to continue its good run, thanks to the booming demand for online shopping as consumers continue to shift to this convenient form of shopping. This seems then to be an opportune moment to consider packaging stocks that can make the most of this continued upswing. Notably, we have selected three such stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
International Paper Company IP operates as a paper and packaging company and provides packaging solutions to the e-commerce market. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 20.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 73.2%.
Packaging Corporation of America PKG provide e-commerce packaging solutions that include e-commerce-ready designs delivering optimum protection and positive unboxing experiences as well as environment-friendly cold shipping solutions, and so on. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 8.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 29.1%.
Sealed Air Corporation’s SEE protective segment provides foam, corrugated, molded pulp, and wood packaging solutions to protect goods in shipping for the e-commerce, consumer goods, pharmaceutical and medical devices, and industrial manufacturing markets. Moreover, the company stated in 2018 that by 2025, it would design and advance their innovative packaging solutions to be 100% recyclable or reusable. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 5.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 10%.
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International Paper Company (IP) : Free Stock Analysis Report
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Packaging Corporation of America (PKG) : Free Stock Analysis Report
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