The Packaging Journey in Ecommerce
How can companies optimize their packaging at every link in the global supply chain?
For customers, the ecommerce journey starts when they tap “buy now” and ends days later when the box is delivered to their home or business. Most online shoppers are unaware of the journey the package undertakes from origin to its destination, and that they are driving a global retail market that is expected to surpass $25 trillion this year.
These skyrocketing sales numbers are creating new packaging challenges in the online world, where roughly 40% of the packaging used to transport those goods will be too large. These unnecessary materials equal 5.8 million tons of paper (98 million trees) and will require 24 million additional trucks and 1.7 billion gallons of diesel to transport within the U.S. alone.
These statistics reflect unnecessary waste, and the “take and dispose” packaging model is losing popularity in both B2C and B2B buyers. To minimize environmental impacts while saving resources, more companies are assessing the packaging journey in ecommerce to find opportunities to optimize throughout their supply chains.
5 supply chain components that benefit from packaging optimization
1. Product design
The packaging supply chain starts at the product design phase, where engineers and designers join forces to innovate. In many cases, product design once took place in a vacuum, but today, the process is much more collaborative. This step requires input from the logistics, fulfillment and supply chain teams responsible for shipping orders to customers. One example of a design change is fitting product into smaller, reusable packaging that minimizes waste.
2. Picking and packing
If you have ever received a single pair of jeans in a huge cardboard box or a kitchen knife in a flat package that could have fit an entire set of knives, then you have witnessed the “over packaging” trend. This also happens with packaging materials, which are overused in order to prevent product damage. In many cases, the individual warehouse or distribution center employee (or, the automated packaging machinery that they are using) is to blame. To reduce material overuse, operation standards and processes should be implemented to ensure the right-sizing for the right products to achieve cost savings at scale.
3. In transit
Once a truck leaves the loading dock and heads out onto the road, control of the packaging supply chain is handed off to the driver. To ensure the best customer experience, packaging must protect the product from damage while also meeting that buyer’s environmental mindfulness. Companies can achieve this balance by following the rules on right-sizing while using durable packaging that can withstand manual or mechanical loading and unloading; bumpy roads that can move the product during transit; and the return logistics process (if necessary).
In general, ecommerce has many more touchpoints than standard retail, and its transit flow is much more complicated. While brick and mortar retail transit involves a journey from a supplier to a distribution center to a storefront, ecommerce has many more stops along the way. According to a whitepaper from the American Institude for Packaging and the Environment, ecommerce products are handled an average of five times in a traditional retail supply chain, and may be handled 20 times or more. In ecommerce, the package usually travels from supplier to a fulfillment center, then to a parcel carrier origin hub, to a parcel carrier consolidation center, and, finally, to the consumer. This contrasts with brick and mortar’s touchpoints at seven to nine, and direct to consumer at 10 to 15.
4. The point of delivery
This is the point of the supply chain where you deliver your company’s brand, so you want your boxes, packages, or envelopes to land on the customer’s doorstep or desk on time and in good condition. You also want customers to have a positive “unboxing” experience—not one where they wade through tons of popcorn, foam, polybags or other packaging materials to find a small, single item buried in the corner of a huge box. Focus on simple packaging designs, incorporate reuse opportunities and use personalization to your advantage. Many organizations include recycle logos on the packaging to inform the consumer of sustainable disposal methods.
5. After the sale
In the U.S. alone, return delivery costs total $381 billion and are expected to reach $550 billion by 2020. All of those returns require packaging design and/or padding materials that customers can easily repack and return. Bags with resealable features, for instance, can be quickly reconstituted as returns packaging.
Larger, bulkier items will require more sturdy packaging that can withstand both the forward and reverse logistics process. Thoughtful foresight into packaging design helps companies minimize product damage, save on transportation costs and please their customers.
A focus on optimization and sustainability
As ecommerce continues to expand, the need for optimized packaging strategies will increase exponentially. A critical aspect of the shipping process, packaging and packing materials that are optimized for the channel may contribute to lower costs, lower labor requirements and happier customers.
More complex than brick-and-mortar logistics, the ecommerce supply chain requires special attention at every step in the process, where a focus on optimization and sustainability can pay off at scale.
For more insights into ecommerce packaging strategies, download our eBook, From Concepts to Reality: 5 Critical Steps in the Strategic Packaging Development Process.