Packagaing Cost Reduction Analysis

Inbound freight costs

Your packaging comes from somewhere. Even when you receive “delivered pricing”, you know that cost is built in and included.

Storage costs

Most of our customers utilize 3PL or co-packers to do their order fulfillment. Those service companies receive and store your products as well as your packaging materials, typically on X dollars, per pallet, per month basis. That can quickly add up and usually ends up being more expensive than anticipated.       

Out bound shipping costs

With the popularity of “free shipping” e-commerce, and DIM (dimensional) shipping, getting your products to your customers has never been more expensive. We have the experience to know how to minimize those costs for you. We redesigned and reduced a well-known razor and blade company primary shipper weight to just under one pound saving them nearly $2.00 per package. At that time, they shipped nearly 20,000 per month.       

Packaging labor

3Pl companies charge you to pack and ship your orders. Depending on your products and orders, it is typically a flat rate per order or per item. However, there can be various “add-on” costs that were not included. That can be for anything like the type of inner packaging you do, or even the type of carton sealing tape you want them to use.

Void fill and interior/protective packaging

Anyone who has been reading our blog for any length of time, knows we are not great fans of void fill, especially loose void fill. There are applications when that is the best option, but they are few and far in between. Generally, they are messy, laborious, and tracking usage and cost is almost impossible because every packer uses void fill differently. For many applications, a properly designed corrugated insert can make for a far better presentation at a lower cost.

Product replacement costs

Whenever a product arrives to your customer damaged or broken, the likelihood they will purchase from you again, is diminished. They might though, but that depends totally on how you respond. You can send them a replacement and, in many cases, not ask for the damaged article to be returned. There are many obvious problems with this customer service response but at the very least your inventory has been reduced by one.

Replacement shipping costs

Even in a situation when you can return the damaged product to your vendor, the additional shipping costs begin adding up. Calculate shipping cost to you, shipping costs from you to the customer, shipping costs for the damaged return to you and then back to the manufacturer for credit or replacement. As you can see, there are few ways to make money, but there are many ways to lose money on an order, especially a damaged order.

What to expect from your packaging supplier.

First, you should expect them to know and understand all the above. Your supplier should know that saving you a dime on a box is meaningless if your damage rate increases from 4% to 8%. Do not let anyone tell you that 5% damage is normal and to be expected. Our goal is always zero percent except in unusual, extraordinary cases.