Amazon is growing on-demand services after reporting a 20% sales increase in 2015.
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If retailers sell soft goods that can be shipped in mailer bags without risking damage, they may be able to mitigate the price difference, as bags are less expensive per unit than corrugated boxes, Toner says. There's been enough demand from retailers that want to incorporate mailer bags into their shipping that Innotrac built a belt sorter at its newest center in Groveport, Ohio, that can handle both bags and small boxes. Previously, bags couldn't flow through a belt conveyer. Now they are processed on a belt conveyer just like boxes, including in-line weighing and scanning that automatically sends them to their proper shipping lanes.
The rise of mailers in the warehouse has also led Innotrac to add automated machines that print and insert packing slips, invoices or shipping labels for mailers on demand, Toner says. The machines help save on labor costs, he says—staffers can finish 12-15 packages per minute with the auto-printing machine.
Big fulfillment providers like Innotrac may have efficiency down to a technological finesse, but retailers who manage their own warehouses also have tricks to save time, space and money, while still making sure products arrive intact.
With more than one million boxes shipped out of a Rochester, N.Y., warehouse each year, QCI Direct needs to do all it can both to save on packing materials and make sure no space is wasted. To that end, the retailer, which sells home, health and outdoor products online and via mail order, recycles, says vice president of operations Donna Ciccarelli. QCI uses cardboard boxes made with 65% recycled materials, which are cheaper than new ones because they aren't imported, she says, and fills the space around items with excess newsprint and magazine paper bought from printing houses. Employees do all the packing by hand.
About 25% of the 3,000 to 4,000 items QCI ships in a typical day go out in poly-bubble, non-bubble or Kraft paper bags, which take up less space in the warehouse than boxes do, Ciccarelli says. "My mind works in length, width, depth per square inch," she says. "It's constant and it's always changing."
QCI also buys boxes and bags as locally as possible and recycles all excess packaging including paper, peanuts and cardboard, all of which leads to savings of more than $20,000 annually, she says. Wooden pallets that materials and goods arrive on are either resold or sold to local garden centers for mulch, she says. What she can't recycle or reuse, Ciccarelli sells back into the packaging marketplace. "Why not sell it?" she says. "All of these things are a commodity."
She gets $80 to $90 per ton for resold cardbard, three to four times what she was able to sell it for 14 years ago when she joined QCI; she attributes the higher price to there being fewer paper mills in the United States today. Between 1997 and 2008, at least 10 U.S. mills closed each year in all but two years, according to the American Forest & Paper Association.
QCI Direct and Big Dot of Happiness have already seen their efforts pay off in customer feedback and savings. Karbon Speed will have to wait to see if the six months spent making the perfect container was worth it. In the meantime, Li knows his wheels will arrive intact and make the right impression. He's betting that in the race for loyalty among competitive cyclists, his specialized packaging will give him an edge.
Packaging inserts pay off for an e-retailer For Internet and mail order retailer
For Internet and mail order retailer QCI Direct, tossing a little something extra into shipping boxes is helping it win over customers, while also generating new revenue.
QCI Direct puts free samples of small items from various brands, such as a small box of Honey Nut Cheerios, a Schick razor or a 5-Hour Energy drink, in the boxes it sends to consumers. Middleman marketing firm IDR Online connects QCI with brands whose target demographics match the retailer's clientele. QCI pays nothing for the samples and gets paid based on the size or weight of the samples and the number it ships; IDR also gets a cut.
In the more than three years since it began including samples, QCI has found it can offset most of its annual packaging budget—between $300,000 and $500,000—with the funds it gets by adding the samples, says vice president of operations Donna Ciccarelli. Not only is the merchant making significant incremental income, she says, but customers love it. "People call up and say 'we didn't order this.' The operator says 'it's a gift sample' and customers are thrilled," she says. "They think they're getting a present."
To date, QCI's most successful insert campaign has been with Honey Nut Cheerios, Ciccarelli says. Cheerios, like many brands that offer inserts, includes coupons on its samples to track campaign results.