A Package Deal

Why e-retailers are well positioned to wrap up savings and ‘green’ credentials with new packaging

Styrofoam packing peanuts combined with dogs that devour everything in sight can be a recipe for disaster. And so, when Gordon Magee, Internet marketing and media manager for pet supplies e-retailer Drs. Foster and Smith, heard about a pet-friendly version of packing peanuts, he wanted to learn more.

“We were looking for something safer for pets,” Magee says. “Our company is owned by vets and so it’s a top priority to offer the best and safest products for animals.”

The new type of packing peanut, Magee discovered, is made from cornstarch, so it’s safe for animals to consume and biodegradable. It protects products just as well as Styrofoam pellets, and it comes with an added bonus: It can save Magee’s company money.

Peanuts for Rover

The peanuts are shipped in tiny pellets about a quarter-inch in diameter and then run through a special machine at Drs. Foster and Smith’s warehouse where they expand into packing peanuts. That means they take up less space on delivery trucks than traditional peanuts, saving the retailer on delivery fees.

“Where before we may have five delivery trucks, we now might only have one,” Magee says. Magee adds his company switched to the new peanuts, which dissolve upon contact with water, about two years ago, and so far they’ve been just as effective as the Styrofoam version.

Drs. Foster and Smith inserts a note in each shipment to consumers explaining the benefits of the mysterious green-colored peanuts, and Magee says he’s received positive feedback from customers about the switch.

New packaging methods offer e-retailers ways to reduce packaging and use more eco-friendly materials, thus saving cost and helping retailers present themselves as environmentally aware. And that makes merchants and their customers happy.

What’s more, online retailers are well positioned to take advantage of these advances in packaging because they don’t need a splashy box to catch a consumer’s attention, and don’t have to add security layers to keep shoplifters from removing an item from its packaging or slipping it in their pockets.

If the ski fits

Sports equipment e-retailer evo is using telescoping boxes to ship skis, aiming to save money and create less waste. Telescoping boxes adjust to fit irregularly shaped items like skis. The boxes fit perfectly snug to the ski, reducing dimensional weight charges that shippers add on when a box of a given weight is unusually long or wide. That reduces shipping costs, says Nathan Decker, head of e-commerce for evo.

Evo also has trained its warehouse staff to package products so the retailer will benefit from the best rates for each type of package. Express is based on dimensional weight—which means a lightweight box that is unusually large will incur extra charges—while ground shipment fees are based on physical weight, Decker explains.

“Express and international packages are primarily billed according to a package’s dimensions. So, if for example you have a wakeboard that comes with bindings attached, it can be more economical to ship in two separate packages instead of one big package because the sum nets at less volume,” Decker says. “Our warehouse folks are quite aware of these realities and package items accordingly.”

Online superstore Buy.com Inc. also is saving money on packaging while being kinder to Mother Earth. Consumers can choose a Go Green option when they purchase Kingston brand USB Flash drives and SD cards from the e-retailer. The Go Green version uses much less packaging.

Buy.com saves 27% to 55% on shipping costs with more compact packaging for the Kingston products. And customers save 5% to 10%, CEO Neel Grover says. For example, the Go Green version of the 16GB DataTraveler USB 2.0 Flash Drive sells for $31.99, while the version with traditional packaging costs $33.74.

Grover says bricks-and-mortar e-retailers still receive Kingston products in their traditional, more bulky packaging. Extra packaging, such as plastic casings called “clamshells” for small products, can offer advantages in stores, Grover says. A bulkier pack is easier to hang on a hook, stands out more in store displays and can combat shoplifting, as larger packages are harder to slip into a pocket, Grover adds.

E-retailers have the advantage that they don’t have to worry about theft or prominently displaying boxed merchandise, Grover says. What’s more, he adds, online sellers have unlimited space on their web sites to provide details and product specs, whereas the packaging has to incorporate that information in a physical store.

Fighting ‘wrap rage’

Like Buy.com, No. 1 online retailer Amazon.com Inc. is paying more attention to packaging, aiming to turn it into yet another competitive advantage. Amazon.com has slimmed down the packaging on many products as part of an initiative launched in November called Frustration-Free Packaging, which Amazon describes as “a multi-year initiative designed to alleviate ‘wrap rage,’ featuring recyclable boxes that are easy to open and free of excess materials.”

As part of the program, a spokeswoman says, Amazon works with suppliers to package products in a more user-friendly and cost-effective way, eliminating extra layers and security features that are not essential for a web retailer.

“For example,” she says, “memory cards can come in very small plastic cases—not clamshells—that are just slightly larger than the item itself, and ship in a flat, cardboard envelope which is 100% recyclable.”

Amazon is using the system for small products such as memory cards for cameras, and for products secured with plastic-coated wire ties, commonly used in toy packaging. Products from manufacturers including Fisher-Price, Mattel, Microsoft and electronics manufacturer Transcend now ship in Frustration-Free packages.

The switch can make a big impact. Fisher Price says its products sold on Amazon.com that are part of this initiative do away with blisters, window film and wire ties. And, they also swap 6-color printing in favor of less expensive 1-color using corrugated boxes made in part with recycled materials, Fisher Price says. For 2009 Fisher Price is adding 10 new items to Amazon’s Frustration-Free packaging program.

Other merchants, like PC manufacturer and online retailer Dell, are playing to consumers’ environmental concerns by announcing grand initiatives to reduce the amount of waste they create from packaging. Dell, in fact, says it aims to be the “Greenest Technology Company on the Planet.”

Dell is working toward that objective by using recycled materials, including newspapers, milk jugs and laundry detergent bottles, to create cushions for PC packages.

$8 million in savings

Dell’s goal is to reduce its packaging material by 20 million pounds over four years and increase by 40% its use of recycled material for packaging and cushioning products. Dell also has a goal of reducing its carbon emissions by 15% by 2012. Dell undertook a packaging reduction initiative in 2007 and reports that in that year it exceeded by nearly 10% its goal of reducing outbound packaging by 10 million pounds.

Dell, which worked with sustainability consulting agency Saatchi & Saatchi to develop the program, expects to save $8 million over four years with the initiative. It’s also planning for 75% of its packaging material to be recyclable in residential curbside recycling programs.

With the growing concern about the environment in recent years, there are many new materials and techniques coming to market that can help e-retailers whittle down their shipping and packaging costs—and build brand loyalty among eco-conscious consumers. E-retailers who do a little digging just might come up with a winning package.