The packaging business has had to contend with challenges from COVID-19 and economic conditions that have caused a decline in consumers' purchasing power. Demand for packaging in downstream industries is likely to drop, in line with a slowdown in the manufacturing sector. The overall packaging business is set to see a slowing trend in 2020. However, the business of packaging for last-mile delivery services is likely to witness growth, stimulated by social distancing measures to control the spread of COVID-19, a development which has triggered exponential growth in the number of consumers who have switched to purchasing goods online. Going forward, this new trend is expected to become part of consumers' 'New Normal' for at least one to two more years, depending on the amount of time it takes to develop a cure or vaccine for COVID-19.
KResearch assesses that the value of the last-mile delivery packaging business (business turnover) in 2020 will likely be around THB 14.4-15 billion, growth of 15-18 percent from 2019 which saw a 20 percent expansion (YoY). Between February and April when semi-lockdown measures were in place, consumers increasingly made their purchases online, exceeding expectation under normal-case scenario where there was no COVID-19 outbreak. As a result, the value of last-mile delivery packaging business over the most recent three-month period has grown by 8.8 percent from the normal case scenario, and surged by 38.3 percent compared to the same period of the preceding year. Since consumers remain cautious in their spending due to their weakened purchasing power, the last-mile delivery packaging business is projected to grow at a sluggish pace in the remaining period of 2020 compared to normal circumstances, but with over-year growth of 11.2 percent (YoY)– which corresponds to the overall business of e-commerce and last-mile delivery at present.
Given the sheer number of players in the market, the packaging business will still see intense competition, particularly in terms of price competition, since production of packaging for last-mile delivery is largely simplistic and highly substitutable. In order to counter the highly volatile nature of market competition and manage the potential rise in demand, businesses must learn to adjust themselves proactively and implement flexible strategies to better engage with a wider range of marketing opportunities, as follows: 1) Development of packaging to satisfy the demand for product customization in regard to the shapes and qualities that are suited to each specific product; and 2) Provision of comprehensive service that ranges from packaging printing, label printing to providing of protective packaging materials, as well as acting as an intermediary between small operators and logistics business.
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