If you’re looking to reduce your overall shipping costs, take a look at how your products are packaged. It’s often an overlooked place where brands can make slight changes and see significant cost savings. The top things to consider include: product protection, branding and design, package size and weight.
Before making any significant changes to your packaging, ensure you’ve thoroughly vetted new packaging in all the places it will affect your bottom line, fulfillment flow, and customer experience.
But Isn’t Branding More Important?
A current trend, especially for CPG (consumer packaged goods), is emphasizing the unboxing experience to delight the end-customer. Sellers have particular desires when it comes to branding their packaging to stand out from the rest of the brown boxes on doorsteps.
“We are seeing a lot of brands these days looking for lightweight, low cost packaging and shipping, however they may have designed a shipping carton that requires hand folding and manual insertion of sheets or filler. Consult with your 3PL; pick, pack and ship should flow through a warehouse, handling shipping cartons and dunnage can be automated to capitalize on accuracy, efficiency and potential cost savings.”
Having branded packaging is usually at complete odds with having a low cost shipping strategy. Why? Not only do branded materials cost more, they also incur costs at assembly, and shipping.
One thing companies often overlook are the costs for storage, assembly, packaging, and shipping. No matter if you outsource these or do them in-house, specialized packing materials will add the time, effort, and money to the process of packing and fulfillment. Custom boxes require special storage, they require manual folding, and hand taping. They may or may not fit within an automation system, like a tape machine, meaning they’ll require manual taping and labeling as well. Custom boxes and packaging can be especially cumbersome during promotional periods or peak shopping season and may inhibit your ability to get orders out quickly.
While branding is important, the costs incurred may be larger than the importance of having specialized packaging. It’s an important consideration to make at any stage of business.
Paying Too Much for Shipping?
Learn how Willow saved 50% on shipping and labor costs by reformatting their packaging and kitting.
Change What's Inside The Box
The space within your box matters for a few very big reasons.
1. Calculating the Dimensional Weight
Most major carriers use volumetric weight, known as Dimensional weight or DIM, as the base pricing for your shipping costs. This is calculated by multiplying a package’s length, width, and height, then dividing by a DIM factor (typically 166, though this can vary by carrier, service, or negotiated contract) to extract the exact cost of shipping a parcel.
Depending on how a package’s DIM weight compares to its actual weight, carriers may charge based on whichever is higher, making this pricing model especially impactful for large, lightweight items or small, dense shipments.
Knowing this, it’s imperative to choose boxes that are right sized for your products to eliminate extra fees due to dimensional weight rates.
2. Cost of Overpack with Multiple Units
When you have multiple units within a single box, the ideal scenario is to overpack the box in order to optimize for dimensional weight. If a box is overpacked (versus with only one product per box) this will also inform the type of packing materials you use.
A good options is to invest in a thicker box, stronger or wider tape to ensure product safety. Instead of overpacking the box with tissue, air pillows, or other dunnage, which may increase the DIM cost, but still leave your products damaged in transit.
DCL Logistics customer Willow recently reduced their shipping and labor costs by 50% by re-evaluating their packaging strategy. We helped them re-kit multiple unit shipments so that they saved money on both fulfillment fees, and overall shipping costs.
3. Track the Damage Rate
If your products aren’t packaged correctly you may see your goods get damaged on the way to your end-customer. This will incur revenue loss, both from replacing damaged goods and potentially losing customers.
It’s important to provide a package that shows up in a quality state and keeps your product intact. It happens quite frequently that a seller may not think of changing their packaging if they are seeing returned and damaged items. Especially if they are set on using branded packaging.
If you start to see damaged products and an uptick in returns items, it may be time to reassess your packing materials.
Product Protection Affects Your Overall COGs
The type of product you sell is very important when it comes to packaging. A camera will require much different packing materials than boxes of cereal. There are a few reasons this distinction is important:
- Damages—heavier materials, more dunnage, or special sized boxes may be needed for items that are more expensive. Any damage that is incurred along the shipping path may result in a returned item and disgruntled customers (who won’t come back for more purchases).
- Value—the retail cost of goods should fall in line with the type of packing material used. A premium product will not seem as premium if it arrives in a flimsy shipping carton and is damaged at the time of delivery.
Bottom Line
Ultimately, packaging decisions have a direct and often underestimated impact on your total shipping and fulfillment costs. By striking the right balance between protection, branding, and efficiency, businesses can reduce expenses while still delivering a positive customer experience.
Taking the time to evaluate and optimize your packaging strategy can lead to meaningful savings and a more scalable, streamlined operation.
Tags: Packaging
