Will Ads on Shipping Boxes Be the Key to Amazon’s Profitability?

The space could be effective if used judiciously, analysts say

Some Amazon.com consumers came home last week to find tiny, yellow, chaos-loving creatures on their doorstep. Well, sort of: They were characters from the movie Minions, printed on shipping boxes as part of the e-commerce giant's latest move in its quest for revenue.

Placing advertisements on boxes is a smart step, say analysts who see this relatively untapped market as a way for the brand to generate revenue and to get consumers talking. Whether it will become a trend within the e-commerce space or buoy Amazon's profitability is yet to been seen. 

"People used to go to their mailbox and [brands] could write to them," said Allen Adamson, North American chairman at brand consulting firm Landor. "Now you can't reach them at the mailboxes unless they get a package of something they've ordered digitally. [Shipping boxes] end up in customers' hands. It's mail that customers look for and want and it's unused space, so it's a really smart move by Amazon to capitalize on a powerful media touch point." 

Amazon has also been promoting streaming music and TV offerings, a component of its Amazon Prime program. "The film ad placement furthers Amazon's reputation as a media business," said Joanna Franchini, cultural strategist at Added Value, a marketing consultancy. 

The approach also allows Amazon to generate revenue—though the brand has declined to disclose financial details of the deal—that could offset shipping costs on the millions of free-delivery packages it sends to Prime members each day. Analysts also said they could see other e-commerce companies as well as mail carriers like UPS, USPS and FedEx considering the option. 

"We know consumers are obsessed with free shipping and that it's become nearly an expectation of online businesses," said Franchini. "But it's obvious Amazon can't sustain the free-shipping model that's kept consumers so devotedly in their pocket. So this is definitely an experiment to mitigate the loss they're taking on that front." 

But even if the ads prove to be profitable, analysts said they should be used sparingly since consumers could quickly grow weary of them. 

"I can see Amazon doing this with special events, of which Minions is one. I think the effect would wear thin if Amazon did this regularly," said Rob Carll, chief marketing officer of DME, a direct marketing agency. 

"Less is more," Adamson agreed. "If their boxes start to look like Nascar race cars, they will shoot themselves in the foot. No advertisers will find value in that, or it will polarize consumers, who might then learn to ignore the box."