The Protective Packaging Balance Act
- Aug 18, 2017 -
When selecting protective packaging, such as inflatable airbag packaging , air pillows or void fill, companies tend to make decisions based solely on material cost. But purchasing the least expensive protective solution can ultimately become a very costly decision .
“We recently worked with an e-commerce retailer who was re-evaluating their secondary packaging to reduce dimensional weight charges,” Germann recalls. “During that process, we discovered that when they experienced a damaged shipment, it actually impacted their bottom line by more than $300.”
That $300 includes the cost to replace the products, as well as customer service time, warehouse labor (to process the return and pick the item again), parcel shipping and additional packaging supplies. And, those are just the quantifiable costs.
“Although more difficult to quantify, this retailer’s marketing team noted that a negative customer experience—such as receiving a damaged product—results in lower customer lifetime value,” he adds. How much lower? “Our research found that 73% of consumers who receive a damaged shipment are unlikely to order from the same retailer again.”
“The key to picking protective packaging is balance,” he concludes. “Companies need to balance their shipping and packaging costs with customer experience. If an e-commerce retailer shipping more than 1 million orders a year can reduce their damage ratio from 2% to 1%—and a damaged shipment costs more than $300 each and risks a customer relationship as well—then the packaging is ultimately just a fraction of that overall cost.