How Packaging Can Help Companies Deal with Heightened E-Commerce Demands

Every day, the number of purchases being made online is rising, and so are consumers’ expectations of what the e-commerce delivery experience should be.

• More than 78% of Americans think retailers should ship their online orders in 24 hours or less. 
• Only 4% think that 48 hours is an acceptable timeframe for starting the shipping process. 
• Some two-thirds of Americans (66%) believe the packaging of their shipment shows how much the retailer cares about them and their order.
• More than 80% of consumers aged 18-35 would consider taking their business to another retailer if they received a damaged item.

To deliver on these demands, companies are looking for new ways to boost supply chain efficiency and get product out the door faster and cheaper—without sacrificing protective performance.

Materials Handling & Logistics recently caught up with Ken Chrisman, president of Sealed Air Product Care, at the MODEX 2016 show, and asked him for his perspective on how companies are dealing with escalating freight costs and what they can do to pack smarter, smaller and faster.

MH&L: At the start of 2016, major carriers introduced significant shipping rate increases. What kind of reaction to these changes are you seeing with the customers you serve?

Chrisman: We spent a great deal of 2015 helping educate companies on these changes to dimensional weight pricing—or dim weight—and helping them prepare and adapt their operations to limit their impact. And we do know that they’re feeling it.

Our survey of 150 customers of varying sizes and industries found that an overwhelming majority—nearly 89%—say they are already seeing an increase in shipping costs due to changes in dimensional weight shipping policies. Of those, 41% report seeing increases of 10% or more.

Now, with more recent shipping rate increases from major carriers, businesses are seeing an even more substantial spike in shipping costs.

But this isn’t a case of freight carriers looking to nickel-and-dime shippers; these changes are emblematic of the overall growth in e-commerce.

Consumer demand for delivered goods is high and getting higher. The expectations consumers have for low-cost or free and fast delivery also continue to increase.

But what’s even more interesting is the growth in what types of items consumers expect to be able to buy and receive via e-commerce. Large items, fragile electronics, food—there’s no limit to what people can and will buy online.

Carriers are having to accommodate higher volume and a much greater variety of items. But there’s only so much space on a truck or aircraft and so many hours in a day. If they’re going to meet demand, something has to give, and that something is size.

Freight carriers are incenting retailers and fulfillment companies to pack smaller—and that’s a good thing. It’s less wasteful—in terms of material needed to pack, but also in the overall energy and carbon footprint required to deliver each order.

Can decreasing the size of a package actually save companies that much money?

Chrisman: Yes, reducing package size, even by a few centimeters or ounces, makes a big difference. We know that because we've been increasing the efficiency of small parcel shippers for more than 50 years, dating back to the invention of Bubble Wrap.

When you invest in packaging solutions that are specially designed to deliver maximum performance with minimal size, each pack will cost less to ship, but you’ll also be reducing the cost of materials over time.

You’d think we wouldn’t want to be in the business of reducing the amount of packaging materials that companies buy, but we are. We want them to use less of what we make because helping companies manage freight costs is really just the beginning.

Real, profitable, top-line growth doesn’t come from cutting down your monthly freight costs or saving a few pennies per pack. That matters in the short term, but top-line growth happens when you are able to add significant speed to your fulfillment operation and grow volume, significantly reduce the risk of damage, and meaningfully enhance the experience customers are having with your brand.

Ultimately, companies should look at packaging not as a cost, but as an investment in growth and in their brand. Integrating flexible automation that can scale up or down to meet demand, bringing the branded polish of primary packaging to the secondary packaging experience, creating custom-designed protective solutions that are rigorously tested under ISTA standards—these are the kinds of packaging strategies that can grow your business—and save on freight cost.

Earlier you mentioned “flexible automation.” What is that and what makes it a worthwhile investment for many companies and industries? 

Chrisman: Flexible automation systems are those that offer customizable levels of automation that can be ramped up or down depending on the need. These types of systems are great for businesses seeing high-volume and high-demand, as they offer significantly faster fulfillment than manual operations.

Flexible automation is a great option for e-commerce, apparel, 3PL/4PL and many other industries looking to minimize labor costs while speeding up order fulfillment so customers receive the perfect package quickly and damage-free.

Can you offer any other tips for companies related to packaging best practices?

Chrisman: Here are some other ways companies can look to bring their shipping costs down:

1. Blocking and Bracing—If your item is stationary and unable to move during shipping, it will be less likely to sustain damage.
2. Carrier Labels—Keep in mind that “Fragile” and “Handle with Care” labels cannot replace protective packaging materials.
3. Measure It—Consider measuring the actual outside length, width and height of the container after packaging when determining dim weight, as the measurements provided by a box manufacturer are inside dimensions of the container and do not reflect the exterior dimensions of a package.
4. Think Outside The Box—For smaller items, don’t forget that mailers are a great alternative to boxes, especially for companies shipping light-weight, hard-to-break items.
5. Connect with Your Carrier—Your shipping carrier representative can examine your agreement to help you better understand your particular dimensional weight pricing.
6. Consider Your Customer—Think about your end-user. For example, customers who purchase luxury cosmetics online may care most about receiving a box that reflects the value of the shipment and extends the brick and mortar shopping experience to their front doorstep. Others, however, may see higher value in maximizing the speed and minimizing the cost of delivery. 
7. Keep Track of Costs—By recording total shipping charges on a monthly basis, you can make sure you’re never being charged incorrectly.
8. Pick a Partner—Choosing the right packaging partner is an essential step in approaching these price hikes correctly over the long-term; the costs of getting it wrong can be significant.