In terms of ecommerce packing materials and costs, two recent experiences point out the importance of looking at packing and shipping functions together.
To help with Hurricane Florence relief efforts our church was given a gift of 50 tarps worth $800 to help plug leaky roofs. The order was placed using Amazon Prime, and shipped from a single supplier via FedEx Ground in 23 separate cartons over a three-week timeframe. While tarps aren’t breakable, most boxes were far larger than needed and stuffed with inflated air pillows. Because of the long delivery, the tarps were not much help with initial response efforts.
The second example involves a client study of packing and shipping costs. One conclusion was that didn’t take into account the total cost of labor, packing supplies and oversize and DIM weight shipping for the signature items in their assortment. This ecommerce company started out in apparel and expanded into home décor and accessories.
As you consider your ecommerce packing supply requirements, it’s important to look beyond just buying boxes and dunnage. The larger issues of dimensional weight and shipping costs, increasing labor costs, brand perception and environmental impact are important, too.
Here are 7 recommendations to consider as you review your packing and shipping processes and the materials used:
Perform Packing Process and Materials Review
What do your customer service and operations reports show about damages from improper packing or packing materials? What recommendations should be considered?
From analyzing your shipping station data, how does total weight, dimensional weight, oversize charges, special handling and the number of cartons shipped per order affect shipping cost? What improvements can be made in carton consolidation? How much dunnage is used – are you shipping air? Small changes in carton size reduce costs dramatically.
What percentage of your assortment and shipped cartons are oversized items and ship-alones? What is the average labor cost on oversized items requiring special labor and materials to pack? How can this be improved?
Large and dimensional weight products may be received by pallet load but are not consolidated with other items. Don’t assume the external carton is strong enough to survive shipping and protect the product. Consider the tensile strength and any protective materials needed in each carton. Determine this by product and specify it on your purchase order and in your vendor compliance manual.
Can you reduce costs with carrier supplied materials such as flat-rate USPS boxes or envelopes? What will provide to reduce costs (e.g. supplies, shipping stations, etc.)? Taking this holistic approach to the process and materials should bring the most benefit and savings.
Bulk Packing Material Purchases and Space
To get the lowest cost, bulk purchases are necessary. Materials often take up large amounts of pallet rack and floor space. Will your suppliers hold packing materials for you and provide just-in-time delivery to save space?
Product Selection and Fulfillment
As your company’s merchandising team makes product selections, are some difficult to pack due to fragility, oversize and DIM or their ship-alone nature? We recommend the head of operations review the options before the final decision. This is not so much to eliminate a product but to make everyone aware of concerns and to give fulfillment a heads up on ordering supplies and planning packing. It will also give them time to plan any special item packing required and order materials.
If your company has a green initiative, the amount of materials used is a big factor. In the second example above, what kind of message does your packaging give the customer?
Consider Branding in the Decision
Are you carrying your brand’s messaging on print and packing materials, sealing tape and cartons? Are you doing something that confuses the customer because of your practices?
In the second case above, the brand message was consistent; the care in packing of signature items was excellent with low damage and great appearance at unboxing. However, it was expensive in terms of labor, packing material and shipping costs. The signature items were best sellers too. The company decided that for the next couple years these home décor items and how they appeared was an important part of their growth strategy.
Considering the increasing cost of labor and shipping, is there an opportunity to apply automation? This may include on-demand box sizing and production, cartonization and enterprise shipping systems.
Automated box-making equipment does represent a considerable investment. However, the objective is to reduce material inventories, optimize shipping costs, increase packing and shipping productivity and minimize damage resulting in returns. You will need a holistic picture of your packing labor, materials and shipping costs to justify this automation. Considering how these costs are accelerating, it may be a good strategy to investigate.
Involve Outside Experts
We recommend using packaging engineers to add skills and experience you may not have internally. They may be available from a packing materials distributor, carrier, automation company or consultant. Make them part of your assessment team.
It’s not just about buying boxes and packing materials. To become more efficient and address environmental and brand concerns, understand your overall packing and shipping processes, labor use, materials and shipping costs.
Brian Barry is President of F. Curtis Barry & Company