Is Package Damage Impacting Your Bottom Line?
E-commerce retailers and manufacturers put in a significant amount of effort and investment making sure the products they produce meet quality and performance goals. However, if insufficient packaging protection results in customers receiving your product in damaged, broken and/or non-functioning condition, the impact to your brand's profit margin can be significant.
A single return can easily incur hundreds of dollars in added costs, and the loss of future orders based on unhappy customers’ negative experience can add up to thousands of dollars per customer.
Why does this happen? When reviewing their protective packaging options, many companies tend to focus only on the cost of the packaging itself, missing the big picture. But price isn't the only factor. Here are six key areas that product manufacturers and fulfillment operations need to understand when trying to minimize product damage and its resulting impact on your profits.
The hidden costs of damage
When a consumer receives a damaged item, the company must absorb the cost of not only shipping the product back but also sending out a replacement item.
2. Product replacement
When a product comes back damaged, you either need to dispose of the product (resulting in landfill waste) and send a different one as a replacement or you have to put in time, labor and parts to repair the initial product before sending it back out.
3. Customer service labor
On average, customer service personnel spend a minimum of 5 minutes on the phone (often much longer than that) or online processing a return. If the situation is complex or the customer wants to vent, that time allocation jumps much higher. Don't forget about the hidden costs here, like health benefits, hiring and recruitment, and more.
4. Warehouse labor
When the returned damaged shipment comes in, an employee has to unbox it and determine if it can be fixed and resent to the consumer or put back into stock—meaning the fulfillment process is repeated.
5. Packaging supplies
Sending a replacement shipment to the consumer also means you will be paying twice for supplies. This typically will include a corrugated box or mailer, cushioning and/or void fill, tape, labels, and more.
6. Customer lifetime value impact
By far the most expensive part of the equation is the loss of customer lifetime value.
In a recent study conducted by Package Insight, an overwhelming 73% of participants indicated that they would be unlikely to purchase from the company again after receiving a damaged item. In fact, product protection was ranked as the "most important" characteristic of the packaging materials used to ship items to their final destination (compared to sustainability and ease of product removal) by 80% of participants.
With the help of our Reducing Damages Playbook, take some time to run through all six steps of the analysis above on your own damaged product returns. You might be unpleasantly surprised as to how high the impact of each return is to your brand's bottom line (or better yet, call the experts at Pregis to calculate the true cost of damage).
A widespread problem
E-commerce return rates are between 20% and 30%, which is more than double the 9% traditional retail return rate, according to Packaging Digest. That’s one reason e-commerce packaging carries such a heavy burden for product protection—it often is also used for reverse logistics. There is also far more opportunity for product damage during the e-commerce process due to the high number of touchpoints.
For e-commerce businesses, reducing the number of damaged products has a massively positive impact for brand reliability and is important for profitability by reducing unnecessary cost. But fear not: If done right, premium packaging can elevate a company above its competitors by delivering a high-quality product sans packaging or product damage.
How to avoid damage in the first place
When you take the time to pack your products correctly, you are not only protecting the product—you are signaling to your customer that you care about them and the experience they have with your company.
So, how do you avoid damage in the first place? Properly pack your products the first time around. With air cushion packing you have many different methods to choose from to make sure your goods are secure, ready to be shipped, and will arrive safely to happy customers. Here are 8 methods for using your Pregis air cushioning solutions.
1. Block and brace
Block and brace is a packing method used with sturdy packing material, such as air cushions. You can arrange the air cushions in such a way that will absorb any shock energy and direct it towards the strongest point of the product during shipment. This method is also great for when your products aren't uniformly shaped. Place air pillows along the sides and on top of the item so all space has been filled.
2. Corner protection
Is your product more rectangular- or square-shaped? We recommend you pack using the corner protection method. Place air cushions around two opposite corners of your product so the item is secured in the middle of the box. The pillows should fill the space between the corner of the item and the corner of the box. Repeat this process on the diagonally opposite corner, and repeat this until the item is secure. This will keep the product from moving around during transit.
Packing as much product into one shipping container is good for many reasons. It cuts back on materials needed and results in an expedited process. When you have fragile products, pack with the interleaving method to safely stack fragile items of a similar size and shape into the same shipping container. To do this, start by placing one layer of air cushion material on the bottom of the box so that any excess material flows over the left and right sides of the box. Place your first item into the box on top of that first layer to hold everything in place. Then, add a second layer of cushioning on top of the first item, but this time place the quilt inside the top edge of the box so that the excess flows over the bottom. Add your second item on top of the first and move the remaining packing material from the bottom to the top wrapping it all up in a safe cocoon of protection. Think about it as a way to braid your way to a safer package.
If you are looking for a method that will give your product overall protection, we recommend you pack using the cross-layer method. Place two equal lengths of quilted packing material layered in an x-shape into the center of the box so that the excess length hangs over the top corners of the box. Place your item over the center of the X and fold in the excess so that the item is surrounded safely by the packaging material.
5. Top-layer or top-fill
Top-layer or top-fill packing is a great method for when your product may fit almost perfectly into a box, but you want to pack it with a little bit of extra attention and protection. This is a very simple way of packing your products. Once everything is safely placed in the shipping container, add a layer of air cushioning on the top of the product so it creates a cushion between the product and the top of the box. This method not only helps protect your product, but it helps prevent dents and damage to the box that may occur during transportation.
Void-fill is kind of like the catch-all of packing methods. If you need a method that allows you to ship multiple items in the same box that do not need special individual protection, we recommend you pack using void-fill. Place the items in the box and use air pillows to fill any empty space between the products and the box. By filling these voids, you are helping to prevent movement during shipping—and consequently, potential damage to your product in the process.
The wrap method should be used when you are packing single, fragile items or items that may not have outer packaging to begin with. Wrap is a method that you have probably used time and time again in your personal life when you are moving things from one place to the other. The wrap method is done when you place the item at the end of the packing material (in this case, air cushions), and roll it until the item is completely covered on all sides. Place the wrapped product into the box and make sure that all the wrapped layers are tightly wound. If there is still movement in the box, try using a smaller box so things fit snugly.
Of course, selecting the right type of protective packaging solution for your specific product needs is critical to ensuring that you minimize-or even eliminate-damaged returns. Inviting a qualified protective packaging professional to provide a no-obligation audit is the first step to minimizing your returns and improving your company's profitability. We're here to help. For a free analysis of how damaged product impacts your business, contact us at firstname.lastname@example.org or 877-692-6163.