Revenue increased 11.9% in Q1 of 2015, to $17.26 billion compared with $15.42 billion in the year-ago period.
Proper packaging ensures a product arrives intact while minimizing shipping cost. Too much can be as costly as too little, says the vice president of e-commerce for Sealed Air, a provider of packaging technology.
The nearly exponential growth of e-commerce has forced many businesses to modify elements of their operations to remain successful. In the potential rush to fulfill growing order volumes and address immediate needs, it can be easy for retail decision-makers to overlook the impact of potentially inefficient operations on their bottom line.
Without the right packaging in place, online businesses risk greater damage during the fulfillment and delivery process—and subsequently additional labor and material costs to repair and resend items. If too much packaging is used, online businesses risk spending more than necessary on materials and shipping, and again elevate the likelihood of damage before an order reaches a customer.
As the retail industry evolves into a more digital marketplace, it’s a great time for online businesses to evaluate how to evolve their packaging approaches as well. The rise in free shipping and accelerated delivery guarantees, along with personalized and customized order fulfillment, have already forced e-retailers to work beyond traditional “one size fits all” packaging and shipping strategies. Factoring in these modern customer promises, e-retailers are more challenged than ever to deliver orders accurately and safely within a quality package—all while trying to remain profitable!
Although there is no packaging solution or approach that can solve every retailer’s needs, a closer look at how packaging can prevent damage, improve the customer experience, drive operational efficiency and reduce costs can better position online retailers to meet changing customer and industry demands.
Optimize your operations
Just because online orders are processed and filled within tight timeframes does not mean these operations are completed efficiently. While many online retailers devote significant resources to staffing and training, including overtime labor during busy seasons, there is no guarantee that manual packaging procedures will be consistent and uniform within the same facility.
In any operation, finding opportunities to eliminate timely manual tasks through automated or streamlined processes can reduce expenses and generate improved accuracy, consistency and speed. For instance, creating packaging materials on-site rather than importing them from outside sources can save money otherwise spent on transportation and storage. From a labor standpoint, establishing an automated routine that enables batching of packaging materials allows managers to reassign employees to other tasks and operate with a more flexible workforce.
When it comes to designing packaging workflows, each retailer should choose between a centralized or decentralized packaging model. Centralized packaging, or an “assembly line” format in which individuals complete steps and move products down the line, may be appropriate for high-volume shippers of standardized products facing minimal time between receiving and sending orders. Decentralized packaging, in which one packer is accountable for the entire process, may offer value for retailers that feature a wide product catalog or specialize in personalized, high-value or fragile goods.
Serve your customers
Regardless of a retailer’s industry or catalog, customers tend to evaluate packaging along the same criteria—overall look and presentation, user-friendly features and product accessibility. The packaging used to protect products during shipping thus becomes an extension of retailers’ brands in the e-commerce space.
Delivering a more customized packaging experience begins with evaluating products and customer bases and assigning materials, formats and fulfillment practices to each. For instance, a customer who orders expensive jewelry online will expect a more formal packaging presentation than one who orders a pack of pens. Similarly, retailers with environmentally conscious customers may want to explore opportunities to offer renewable, biodegradable, compostable or recyclable protective packaging materials. While these considerations do not make any product categories more or less worthy of fully protective packaging, understanding customers’ mindsets and delivering suitable packaging can provide a personalized element that competitors may not offer.
Though efficient packaging can minimize their frequency, it is understood that some level of product returns will occur for any business. Industries that drive significant sales from refurbished or remanufactured goods, such as high-tech products and automotive parts, will benefit from packaging that is more conducive to round-trip shipping.
As a result, e-retailers are tasked with making the returns process easier for customers—and ultimately themselves. This includes implementing packaging materials durable enough to survive multiple trips. By enabling consumers to return items in the same packaging that surrounded the original order, e-retailers can prevent further damage while driving a more consumer-friendly returns process. Another popular retail practice is including instructions to show customers how to repack and return retail items. Through these measures, retailers can save additional time and materials potentially required to fix returned items damaged by insufficient packaging.
Improve your customer’s experience
For online businesses, using the most affordable or most sustainable package on the market is worthless if it doesn’t serve its primary function—protecting its contents. Damaged orders not only threaten customer trust, but can accumulate unforeseen material, labor, customer service, shipping and even repair and re-manufacturing costs—not to mention the product’s carbon footprint.
Quality preservation strategies begin with evaluating the materials best suited for a customer’s product mix. As a general practice, multi-ply paper and inflatable cushioning materials work best for smaller, light-duty applications, while foam cushioning is typically more effective for larger, heavier-duty and higher value goods. Retention and suspension packaging is ideal for high-tech products, securing them firmly in place beneath highly resilient film and away from potential impact areas. In any case, customers can avoid overpackaging and reduce packaging costs by understanding the importance of finding the right solution for their products, even if it means using multiple types of materials.
Regardless of product line, many online retailers have room to downsize packages to ensure a more secure, protected and low-cost delivery. In fact, overpackaging can be just as, if not more, destructive than underpackaging. Filling void and protecting contents with excessive material can harm sensitive and fragile items. Additionally, customers may not be able to locate ordered items or necessary parts within an overfilled package and could unintentionally throw them away with the packaging materials. For some less fragile products, a mailer or padded envelope can provide sufficient protection in lieu of a box and is less expensive to ship based on dimensional weight pricing.