Returns are a normal part of running an e-commerce business: the average rate of retail returns reached just over 16% in 2021.
However, the costs associated with returns can add up quickly — especially the cost of packaging materials. One estimate places the cost of packaging at 10-40% of a product’s retail price.
So, an item sold to a customer for $100 could cost your e-commerce business $10 – $40 in packaging costs.
Consumers, too, are more aware of the environmental costs of product packaging than in previous years.
According to Sustainable Brands, “Nearly seven in 10 (68%) Americans are more conscious of packaging materials and design today than they were five years ago. Roughly three in ten (31%) Americans complain that packaging creates a mess in their home, and just under half (47%) also feel that extra packaging is wasteful.”
E-commerce packaging is important to protect your products in transit. It’s also a way to connect with your customers. Great packaging can help build brand recognition and loyalty, ensuring customers remember your brand for the right reasons.
In this guide, we’ll discuss the importance of e-commerce packaging materials, some options to consider, and how to optimize your product packaging design. We’ll also go over some eCommerce packaging tips that will save you money and improve customer recognition.
When 95% of customers say that packaging impacts their purchase decision, your product packaging should not be an afterthought but a core component of your selling strategy.
The Importance of Packaging in eCommerce
In e-commerce, customers cannot see or touch the products they are buying. Packaging is their first concrete impression of your brand.
Well-designed product packaging can make a big difference in the customer experience and even lead to repeat business.
Today’s customers have hundreds of online merchants to choose from. As you work to recruit loyal customers, every detail counts. The packaging materials you choose can either surprise and delight your customers or send them packing (pun intended).
First and foremost, packaging materials must protect your products during shipping. If your products are damaged in transit, you will have to issue costly refunds or replacements.
The customer will also be frustrated by receiving a broken item they have anticipated since clicking “buy.” Proper cushioning, secure closures, and durable materials protect products from mishandling, moisture, temperature variations, and other potential hazards encountered during shipping.
Beyond protecting the product, packaging materials offer an opportunity for marketing. When customers receive their orders, the packaging is often the first thing they see. A well-designed package with distinct logos, colors, typography, and other branding elements creates a memorable and recognizable brand experience.
It can make a positive first impression and set the tone for the customer’s experience with your brand.
Unboxing videos on social media can also promote your brand to a wider target audience. Ensure your packaging serves your marketing needs when someone posts an unboxing video.
And finally, while packaging adds value to the customer experience, balancing cost efficiency is crucial. Businesses must choose packaging materials and designs that protect the products effectively without incurring unnecessary expenses.
Efficient packaging practices optimize shipping and storage costs, reduce waste, and improve operational efficiency.
5 Benefits of Cost-Effective Packaging
Cost-effective packaging uses materials and methods that help reduce overall packaging costs without compromising the quality or safety of the product. The right cost-effective packaging can positively impact your bottom line and the environment.
Businesses can balance an exceptional customer experience and functionality by prioritizing affordability in packaging decisions. Ultimately, cost-effective packaging can contribute to your brand’s financial success and competitiveness in the market.
Lower Shipping Costs
Cost-effective packaging materials lower costs across the board, starting with shipping costs.
By using lightweight packaging materials and right-sizing packages, businesses can reduce dimensional weight charges imposed by shipping carriers. Smaller and lighter packages also occupy less space during storage, optimizing warehouse utilization and potentially reducing storage expenses.
In addition, the right packaging materials that deliver proper cushioning and padding ensure that products arrive in good condition. This reduces the costs associated with returns, replacements, and customer dissatisfaction.
And by eliminating excessive packaging materials, businesses can minimize packaging waste. This also reduces disposal costs and potential fees associated with excessive waste generation.
Eco-friendly packaging materials aren’t just good for the environment but also for business. Cost-effective packaging can align with sustainability goals by utilizing environmentally-friendly materials and practices.
By opting for recyclable or biodegradable packaging materials, businesses demonstrate their commitment to reducing environmental impact. E-commerce packing materials can be made from various sustainable options, from cardboard to cornstarch.
Sustainable packaging choices can also resonate positively with eco-conscious consumers, enhancing brand reputation and customer loyalty.
“Consumers are 57% less likely to buy products in packaging they consider bad for the environment. 44% feel even stronger and say they “won’t buy” products in packaging that’s environmentally unsustainable,” reported Route.
Enhanced Branding Opportunities
Cost-effective packaging can be designed to be attractive and eye-catching, making a great first impression upon receipt of the new product.
When businesses optimize packaging costs without compromising on product protection or the unboxing experience, it can positively impact customer satisfaction. Satisfied customers are more likely to return for future purchases and recommend the brand to others, leading to increased sales and business growth.
Try adding personalized touches such as handwritten notes, customized messages, or surprise gifts to create a sense of connection and appreciation. As a bonus, many customers will feature these gestures on their social media profiles.
Reduced Labor Costs
A small business e-commerce brand is probably very aware of the cost of every package that ships — including the overhead it takes to get the product out the door. The right packaging can streamline various operational aspects, thereby reducing labor costs.
Ideally, simple and lightweight packaging simplifies packing processes, reduces the time and effort required for packaging, and facilitates faster order fulfillment. This improved efficiency translates into lower labor costs, increased productivity, and smoother operations.
Likewise, cost-effective packaging solutions are scalable and adaptable to different product sizes and types. These solutions can accommodate varying inventory levels and product assortments, allowing businesses to efficiently package and ship a wide range of products without needing multiple packaging solutions — or additional staff members.
Increased Customer Satisfaction
Ultimately, the right packaging will allow your business to deliver products to your customers intact and without damage.
Cost-effective packaging enables you to meet and exceed your customers’ expectations, building a reputation for reliability. When businesses optimize packaging costs without compromising on product protection or the unboxing experience, it can increase customer lifetime value at relatively little cost.
5 Packaging Tips for eCommerce Business Owners
The sustainable packaging market is estimated to reach $444 billion by 2028. Now is the moment to invest time and effort into optimizing packaging for your e-commerce brand to stay ahead of the curve.
As customers increasingly shop online, they are mindful of their shopping habits’ impact on the environment. Ensure you alleviate customer concerns by building these e-commerce packaging tips into your operations — and stay ahead of the competition.
Choose the Right Packaging Materials
Invest in high-quality packaging materials that provide adequate protection for your products. Your packaging should be sturdy enough to protect your products during shipping. This means using high-quality materials.
Traditional materials like corrugated cardboard or bubble wrap are good options. And plenty of eco-friendly packaging materials could be right for your brand. Some of these materials include:
- Compostable materials that use a combination of paper, cardboard, and bioplastics
- Recycled materials that have been recovered and reprocessed into new packaging
- Corrugated packaging made from three or more sheets of corrugated fiberboard
- Glassine, a pulp-based material made from hardwood tree.
- Cellulose packaging, a type of plastic that is made from biodegradable material that can be recycled
- Mushroom packaging, a polystyrene replacement that’s made from fungus roots
Each sustainable packaging material has pros and cons; some are more affordable than others, while some are not yet widely available. In addition to the containers you use, consider using cushioning like biodegradable packing peanuts made from cornstarch.
Optimize Package Dimensions
Optimize your packaging by selecting each product’s appropriate box or container size. Oversized packages can increase shipping costs and waste. Your packaging should be the right size to fit your products snugly.
Keep in mind that different products require different types of packaging. For example, fragile items may need to be packed in bubble wrap or foam peanuts, while heavier items may need to be packed in cardboard boxes. Depending on your product line, you may also need mailers, foam inserts, pouches, or custom boxes.
In addition, make sure your packages are securely closed to prevent accidental openings during transit. Use strong adhesive tapes, secure tabs, or other reliable closure mechanisms to keep packages intact.
Consider testing to ensure the range of packing supplies you have can withstand shipping and handling to customers anywhere in your delivery area. Simulate conditions during the shipping process by performing drop tests, compression tests, or temperature tests to assess packaging durability.
Add Design Elements
Your packaging should be designed to be eye-catching and exciting. Customers are often anxious to receive your package in the mail! Delivering a well-designed package will help you communicate your brand identity from the very first impression.
Design elements such as stickers, typography, and colorful packaging can be used to build brand recognition. Prominently display your company’s logo, colors, and any taglines that customers will instantly recognize.
You can also use your packaging to promote your sustainability initiatives, tell your brand story, and highlight social responsibility efforts.
An appealing package design also incentivizes customers to make unboxing videos. Unboxing videos are some of the most popular content online; a study by Google found that 20% of consumers watched an unboxing video before making a significant purchase.
Streamline Your Packaging Process
Design your packaging with easy returns in mind. Include a pre-paid return label or instructions on how to initiate a return. Make it as simple as possible for customers to repack and return products if needed, enhancing their experience and reducing return processing time.
In addition, it helps to include clear and concise product information on the packaging, such as product names, SKU numbers, or barcodes. This helps customers identify and handle the products correctly.
Provide additional instructions or safety information to ensure customers have all the necessary details.
Implement Cost-Saving Measures
Look for ways to lower shipping costs outside of packaging changes. For example, see if your e-commerce brand can collaborate with shipping partners to understand their requirements and guidelines.
This includes any reverse logistics partners who may be in charge of handling your returns, refurbishments, or recycled goods.
Ensure your packaging meets your partners’ specifications to avoid additional charges or shipping delays. Collaborating with shipping partners also helps you stay updated on any packaging-related best practices or regulation changes.
Some returns are inevitable; how you control the cost of returns can make or break your business.
Your e-commerce packaging strategy can help you save on shipping costs, improve customer satisfaction, and show a commitment to sustainability. Packaging plays a meaningful role in the post-purchase experience: how the customer interacts with your brand after clicking “buy.”
With well-designed, eco-friendly packaging, you can ensure your products are delivered in one piece.
Build brand trust with your customer with a partner like Rich Commerce. With Rich Commerce, Shopify merchants can create a custom returns page, issue prepaid return labels, and process refunds. Let Rich Commerce automate your shipping and reverse logistics so you can focus on delivering a unique, affordable packaging strategy.
Learn more about Rich Commerce and how to extend customer lifetime value by signing up for a free 14-day trial by clicking on the button down below.