With companies fulfilling e-commerce orders on a larger scale than ever before, there are many variables in play when it comes to meeting consumer demands while working toward profitability, many of which are new to traditional retail brands. There are already innumerable factors weighed into the design of a product, but with more and more purchases being delivered via mail, the impact of one component has become increasingly important during this phase: shipping.
Considering the following shipping-related factors during the product design phase can contribute significantly to a company becoming more profitable.
Product size and shape
How will your new product fit into your existing shipping cartons? If it is not designed to accommodate dimensional weight limitations set by carriers, it could negatively impact your ability to qualify for any price breaks you might have access to through your fulfillment arrangement.
Dimensional weight and pricing--computed by multiplying package length, width, and height--has become the standard measurement in the shipping industry. This occurred over time in response to the shippers' tendencies to put low-weight packages in oversized boxes, which resulted in underutilized space in transit. Tailoring the size of your product to take up the least amount of space during shipping can help you realize substantial savings, and could potentially put you in a better position for future carrier negotiations.
Preventively speaking, the more durable a product is, the less needs to be spent on protective packaging. From a responsive standpoint, the better a product holds up in transit, the less likely it will need a replacement, warehouse labor, and shipping costs associated with damaged items that the company must absorb. Another factor to consider is the cost of losing dissatisfied customers.
I recently ordered a lamppost that came with a glass globe. The first time it was delivered it was broken. The company sent a replacement, which was poorly packaged and not marked fragile--again, broken. It happened again after that. I'm now waiting on lucky number four. I don't know how much this has cost the seller, but I do know it could have been mitigated with proper dunnage (protective interior packaging) and labeling, which also would have prevented an otherwise happy customer from becoming frustrated.
Pregis, a global provider of protective packaging materials and systems, did the math in a white paper. At an e-commerce freight expense of $11.66 for a two-day, zone four, five-pound residential shipment, the resulting expense and profitability loss is $23.32. A review of your returns data can help you determine how this is impacting your company's bottom line.
Product damage is impossible to avoid entirely; some factors are simply out of our control. That's why it's important to make smart decisions regarding product durability where you do have control: In the design process.
An item's barcode may be small in terms of footprint, but the decisions surrounding it can make a big difference when it comes to fulfillment accuracy and, as a result, savings. More specifically, the size and placement of a barcode on an item affects its readability. Optimizing barcode location and readability (whether products are being scanned or processed manually) is likely to improve picking and packing, quality control, inventory accuracy, and order throughput--all of which leads to operational savings.
Designing a product requires thinking holistically, from sourcing materials all the way through to managing returns. Because shipping is one of the final stages of the product journey, it can be tempting to put those decisions off until post-production. In practice though, it's one of the primary costs of e-commerce. Thinking about the various ways an item will ship during the product development process can lead to saved time, less frustration, and increased profitability.