Online shopping has boomed during the pandemic, but the resulting surge in e-commerce orders has been a mixed blessing for many retailers. Although they welcome the added business, they also face formidable fulfillment challenges like labor shortages, Covid shutdowns, and a historically tight trucking market.
In search of solutions, some businesses have turned to an unexpected corner of the warehouse: the packaging department. There’s a reason for that. Although the prototypical packaging container—the common cardboard box—lacks flash, it has nonetheless proved to be fertile ground for operational improvements over the years. Retailers have found benefits in tweaking those boxes to save time on the packing line, cut materials costs, incorporate more recycled content, and even add marketing pizzazz.
Now, packaging is getting a critical new role, as retailers increasingly see it as an opportunity to optimize the parcel transportation leg of the e-commerce journey—and in the process, make their business more attractive to carriers.
There are a lot of potential gains in that new approach, says Matt Huckeba, senior vice president of parcel strategy and chief of staff at Transportation Insight, a shipping consultancy. Despite the pressing need for e-commerce efficiency, warehouse operations have been slowed down in recent months by factors like pandemic- and labor-related issues, supply chain delays, and a cardboard shortage, he says.
Exacerbating those issues is a seemingly innocuous tech feature found on many retailers’ websites, the “buy now” button. For users who are already logged into a site, that simple button allows them to set the entire fulfillment chain in motion with just the tap of a finger. While that might sound great to sales executives, it can be a headache for logistics professionals, since the button encourages shoppers to order a single item at a time, instead of bundling multiple products into a larger order that can be transported more efficiently.
“The buy-now button has led fulfillment centers that process e-commerce orders to throw more orders into smaller boxes and get them out the door as quickly as possible to meet their shipping and delivery promises,” Huckeba says. “Carriers want to work with shippers who can be as efficient as possible—the more packages they can get on a truck, the more revenue they’ll make—but it’s not efficient to fill a truck by weight with large numbers of small order parcels.”
To address this challenge, some warehouse management systems (WMS) now include order consolidation capabilities that help shippers avoid sending two or three packages on a single truck to the same address, he says. Combined with laser dimensioning systems and cubing and weighing machines, these systems allow sophisticated DCs to bundle several individual orders together and then create a custom-sized box for the consolidated shipment.
Another way to achieve that goal is to influence consumer behavior before the order ever reaches the DC, Huckeba says. The mega-retailer Amazon.com is a leader in that regard. “Instead of sending eight different boxes to your home that are going to arrive over three or four days, they offer to reduce that to one or two boxes and have them take a day or two longer. And if an order isn’t time-critical, the consumer gains too, because they may be able to pay slightly lower shipping fees.”
THINKING OUTSIDE THE BOX
Another way to tweak packaging practices to improve transportation and delivery efficiency is to avoid the rigid box altogether. These days, more and more retailers are using flexible plastic polybags, especially for clothing and apparel, or padded paper envelopes for books and magazines.
That approach uses less material, but even more importantly, it appeals to carriers because it allows them to build denser loads, Huckeba says.
Yet another way to achieve that goal is to build custom cartons or boxes tailored to the exact length, width, and height of the item (or items) being shipped, says Sean Webb, director of automated packaging solutions in North America at Sparck Technologies, a provider of fit-to-size packaging technology.
“Carriers want their goods to be packaged as efficiently and with as little waste as possible. Right-size automated packaging with little to no void fill creates smaller parcels and reduces the volume of goods by up to 50%,” Webb said in an email. “This will lead to a higher density of orders on vehicles, potentially doubling a driver’s productivity. By accurately scanning and measuring goods and creating fit-to-size parcels, fulfillment centers can increase the amount of items in a single [shipment], leading to [fewer] truckloads, and positioning themselves as the shipper of choice.”
The drive to streamline the packaging and shipping process led Narvar, a California company whose software tracks consumers’ purchases and their post-purchase experiences, to acquire Lumi, a marketplace for packaging supplies, in December.
Combining Narvar’s supply chain data with Lumi’s packaging expertise can give retailers more control from the point of online purchase all the way to delivery, Narvar says. That includes procuring packaging supplies quickly, personalizing parcels, sending and tracking packages, and managing returns. “Packaging influences multiple expense line items for retailers, including fulfillment, shipping, and returns. Packing one small item in a giant box is not only inefficient and annoying to the customer, it’s also more expensive to ship, may require additional packing material, and can cause damage to the product in transit,” Amit Sharma, founder and CEO of Narvar, said in an email.
Some e-commerce delivery models take the concept of “right-sized” packaging even further, encouraging retailers to skip the package altogether. “For same-day and scheduled retail deliveries up to 100 miles, the best packaging may be no packaging at all,” says Valerie Metzker, head of partnerships and enterprise sales at Roadie, a crowdsourced delivery platform that enables scheduled, same-day, and urgent delivery in passenger vehicles across the U.S.
According to Metzker, labels and packaging are completely optional for Roadie shipments, since each item is picked up and hand-delivered by a single driver, rather than bouncing from truck to truck. That approach allows retailers to save money on boxes, tape, and void fill, she says.
MANY HAPPY RETURNS
The push to minimize packaging—and packaging waste—is spilling over into the reverse logistics segment, a move that could pay big dividends at a time when shoppers return an estimated one in three items bought online. That adds up to a lot of packages traveling back to the original retailer, which, in turn, may repackage the item(s) for further transport to a warehouse, a refurbishing site, a recycling center, an overstock marketplace, or a partner company that consolidates returns, Huckeba says.
In an attempt to cut down on packaging waste, many retailers have instituted programs that allow consumers to skip the label and box altogether, and instead, hand-deliver their returns to designated sites. A prime example is Amazon.com, which lets consumers drop off unboxed returns at multiple locations, including UPS Store outlets and Kohl’s department stores, he says. Once there, backroom employees sort the items into bulk containers for transport en masse to the appropriate destination.
BECOMING A “SHIPPER OF CHOICE”
Amid the ongoing struggle to whisk e-commerce orders to impatient consumers in an era of limited trucking capacity, many shippers are rethinking their packaging practices. Whether it’s tweaks like order consolidation or swapping out the venerable rectangular box for low-profile bags, they’re getting serious about developing more carrier-friendly freight profiles, thereby enhancing their chances of securing the capacity they need and preserving a critical link in the e-commerce chain.
