News Release

Amazon’s packaging transition boost for U.S. flexible plastics industry

Amazon’s decision to move towards lightweight flexible plastic mailers over its traditional cardboard boxes will likely set a trend for the rest of the industry, according to Wood Mackenzie Chemicals’ recent ‘Q1 2019 Flexible Packaging Global Market Overview’.

Commenting on Amazon’s announcement, Wood Mackenzie Chemicals Research Associate, Brendan Connell-French, said: “As the market leader in the U.S. e-commerce sector, Amazon is in a particularly powerful position to shape decisions on packaging preferences. The company currently controls just over 49% of the U.S. e-commerce market and nearly 5% of the total U.S. retail market, generating sales of over $250 billion in 2018. Few other companies have such industry influence to impact large-scale packaging trends and demand. Putting this into context, the U.S. e-commerce market accounts for 12% of all retail sales and is expected to grow to around 17% by 2022.

“Amazon, by far the largest shipper of packaged goods in North America, will likely set a trend for the rest of the industry; although one that will probably be adopted slowly and steadily. Crucially, the move signals a departure from a traditionally conservative packaging industry in North America that is often hesitant to adopt wider and more varied flexible packaging applications,” added Mr. Connell-French.

Flexible plastics packaging – what are the benefits?

Amazon cite a number of environmental benefits to back their decision, including a reduced consumption of energy and natural resources during production, reduced CO2 emissions, and fewer vehicles required during transportation. “The usage of lightweight materials results in less end-of-life waste and even with low recycling rates, flexible packaging often generates less material losses than alternatives,” continued Mr. Connell-French.

As highlighted in the Wood Mackenzie Chemicals report, Amazon is also currently working on a cushioned mailer (typically a paper//PE laminate) that is fully recyclable in paper recycling streams, reinforcing its new direction away from carton board. The company confirmed that, after continually working to improve packaging options, it reduced global packaging waste by 20% in 2018.

What does the future hold for Amazon’s packaging solutions?

“In terms of converted primary packaging, Amazon represents a major potential vehicle for growth in flexible packaging for food. With both its $13.7 billion acquisition of Whole Foods in 2017 and subsequent sustained push into online grocery sales, the company has signalled its intention to ramp up its involvement in the U.S. food retail market as it has with other sectors. Amazon currently controls 30% of online grocery spending in the U.S. - accounting for around 5.5% of all grocery sales.

“In addition to the estimated 2% market share of in-store sales that Amazon controls through Whole Foods, the company is also planning to establish a new chain of retail options as it diversifies its options in the market. All of these avenues will rely upon an increasing consumption of flexible packaging within the U.S. as Amazon pushes further into food applications, with its food and beverage category expected to grow more than 40% this year.

“Wood Mackenzie Chemicals estimates the U.S. converted flexible packaging for all food end-use sectors is valued at approximately $16 billion for 2018, so the opportunity for Amazon to lead the way is massive,” said Mr. Connell-French.