Whether you are Amazon Marketplace or an online retail brand being run out of a garage, there are certain e-commerce challenges that sellers of all sizes must navigate. Packing optimization is one of them.
Packing optimization is the process of selecting the best way to house and protect your products in shipment. This includes decisions like identifying the ideal box, carton, envelope, or case for each shipment; choosing the perfect packing strategies to protect your merchandise in transit; and selecting environmentally-conscious packaging materials.
Despite all the considerations that go into product optimization, online retailers’ interest in the process typically stem from a desire to cut logistical costs. It makes sense. If you’re not careful, the shipping costs associated with last-mile delivery can wreak havoc on your bottom line. Most shipping and freight services establish these costs through the use of a practice called dimensional weight (dim weight).
Understanding Dimensional Weight Is Key to Understanding Packing Optimization
Dimensional weight (sometimes referred to as volumetric weight) is a comparison between two calculations – the physical volume of the item to be shipped (found by multiplying the length, width, and height dimensions) and the weight of the item. Providers maintain both volume- and weight-based rates that are applied to each package. The higher of the two resulting values is the dim weight shipping cost.
The logic behind this billing strategy is twofold:
- The heavier an item is, the more energy (fuel) it requires to transport.
- The larger an item is, the less space there is for other items.
While it is possible to work with carriers to negotiate more favorable rates, dimensional weight typically remains the key metric in ultimately establishing the shipped price per package.
That means that one of the most productive ways to keep your shipping costs down for both your customers and your own bottom line is to keep your dim weights as low as possible. No matter the size of your e-commerce business, there are lessons to be learned from the packing optimization practices employed by e-commerce industry leaders like Amazon, Walmart, and Staples.
Focus On the Same Shipment Packaging Metrics E-Commerce Marketplaces Do
When it comes to minimizing dim weight packaging costs, sellers are faced with the two-headed monster of trying to minimize both package volume and weight simultaneously. This is a challenge faced by all e-commerce sellers – large and small. Small improvements and optimizations can add up to large landed-cost savings when multiplied over significant numbers of orders. As such, it can be helpful to crib from the notes of the industry leaders to mimic some of their packing optimization best practices.
Optimizing Packing Weight
Weight is a fairly cut-and-dried metric. Your products weigh what they weigh. The only optimizations worth focusing on are centered on how much weight you put into a single carton and the weight of your packaging.
All shipping carriers have certain weight thresholds that trigger big jumps in shipping costs. In some cases, it is more cost effective to separate an order into multiple cartons to avoid having to pay the overweight shipment fees associated with putting the entire order in a single carton. Online marketplaces like Walmart and Amazon account for this with shipping algorithms designed to optimize what and how much to put in a single carton. This is a practice that your logistics workflow should include as well. When weighing outgoing orders, your shipping protocols must account for where the red lines are for overweight (and thus more expensive) packages.
The other piece of this equation is the actual shipping materials you use. One of the primary goals of every shipment is for it to arrive at its destination without getting damaged en route. As a seller, you have a responsibility to select packaging materials that will ensure that customers receive orders in the condition they expect. Amazon routinely conducts studies and applies machine learning (ML) data to ensure that the ideal packaging material is selected for each type of order they process. While you may not have access to the same degree of internal analytics that a global corporation might, you certainly can (and should) be reflecting upon the ideal packaging materials for your products (more on this later).
That said, you should also consider the weight that your packing materials add. This is particularly true for products where weight overrides volume in dim weight shipping cost calculations. If cutting packaging weight is to be a priority, start with products that fall into this category.
Optimizing Packing Volume
When it comes to volume, carton optimization (sometimes referred to as cartonization) is an ever-evolving science pertaining to how to best orient and combine items in a shipping box. Too much empty space can drive up shipping costs; while at the same time, packing too many items in a single oversized or overweight box can trigger additional shipping fees.
One way marketplaces like Amazon are approaching this issue is by moving to custom-sized cartons designed to perfectly fit products and shipments. In some instances, machines are used to fabricate corrugated cardboard boxes tailored to individual order dimensions. Further advancements include machines that use plastics and polymers to create even more customizable (and lighter) package sizes and shapes. The rise of on-demand packaging systems like these will allow logistics teams to create shipping materials to custom specifications and minimize overall package volumes.
While these machines and services may be outside the reach of smaller online retailers, the principles behind their benefits are not. When making decisions about the cartons, cases, and envelopes to order for your shipping needs, start by focusing on the dimensions of the SKUs in your inventory. Having appropriately sized boxes for individual item sales can go a long way in keeping dim weight and, in turn, shipping costs down.
Along those same lines, consider kitted bundles and the most popular combinations of SKUs you sell. Keeping cartons on hand that are the ideal size for these orders can help ensure you aren’t forced to routinely pay for carton volumes that exceed what you actually need.
Packing optimization should also factor into packaging decisions for new SKUs that you plan to add into your existing catalog. When designing the packaging for a new product, consider dimensions that are either similar or complementary to existing SKUs you are already selling. This will make life easier for your warehouse and fulfillment teams while also potentially keeping the product’s cost of goods sold (COGS) down.
Packing Optimization Is About More Than Just Size
Moving beyond dim weight, there are other packing-optimization components that are worth paying attention to as well. Chief among them are durability and sustainability. While all packing decisions should be evaluated in regards to their impact on dim weight calculations, failing to meet customer expectations can wind up costing you more than a few extra dollars per package shipped.
- Protect your merchandise. Not only will damaged orders lead to unsatisfied customers, if it becomes a common occurrence it can lead to you getting banned from your most critical third-party marketplaces. Depending upon the shapes, contents, and overall fragility of the items you ship, there may be a need to include additional protective material in your optimal packing configurations. Cushioning material and air pillows can keep in-box movement to a minimum by filling voids and bracing merchandise. Bubble wrap and packing fill material can be used to wrap and add extra insulation to fragile and/or awkwardly-shaped items.
In most cases, these protective packaging materials only add nominal mass to your overall package weight. In the long run, taking these steps to ensure safe travels for your merchandise are significantly less costly than RMAs, dissatisfied customers, and marketplace-imposed penalties.
- Choose sustainable packing materials and demonstrate your brand’s commitment to an eco-friendly future. This continues to be an ongoing priority for big-name e-commerce players like Amazon. While keeping packaging to a minimum is obviously a big part of the equation, the actual packaging materials themselves are just as important. While your e-commerce brand may not be the next Amazon, continued advancements in affordable recycled and biodegradable packaging materials allow your business to take a green approach to both boxing and protecting your customers’ orders.
As more and more customers begin to consider the sustainability and recyclability of the products they buy, this environmentally-conscious position will continually grow in importance. What’s more, cities, states, and countries are starting to eye stricter measures in regards to styrofoam and plastic waste. Making a proactive shift to recycled and recyclable packing materials now can save you from having to be reactive down the line.
Sellercloud’s 4D Scale Takes the Guesswork Out of Finding Your Packaging Sweet Spots
Continuing our dedication to providing e-commerce sellers with reliable, affordable, and scalable tools for streamlining their inventory and logistics workflows, we at Sellercloud have created the 4D Scale – a multidimensional scaling system designed to make finding your package weights and dimensions as simple as possible.
Once a package is placed on the 4D Scale, its exact weight and volume are calculated with laser precision. 3D visualizations and integrated unit conversions ensure that you have all the specifics you need for every package. This data can be instantly integrated into your existing Sellercloud and logistics workflows, allowing you to improve warehouse productivity and avoid costly shipping errors. What’s more, this data can be accessed both on site and remotely from any web-enabled device, giving you valuable oversight capabilities no matter where you are in relation to your warehouse.
This data can be especially useful when determining the impact packages’ dimensional weights have on shipping costs. In this use-case, the 4D Scale becomes an invaluable tool for self-assessing your packing optimization decisions – giving you the exact measurements you need to determine the ideal shipping materials and packing protocols to keep costs in check.
No matter the size of your e-commerce brand, you can still approach package optimization like the industry leaders. Contact us directly for a free demo of how 4D Scale and the rest of the Sellercloud family of products and tools can help you streamline your workflows and spur omnichannel growth.