PACKAGING - 31.05.2016

Small packaging; big savings

Taking the wrap

In 2008 Amazon pledged to reduce the amount of packaging it used, but it hasn’t kept its promise. In December 2015 an army of peeved customers took to Twitter to post images of the online retailer’s excessive packaging. There are two clear problems here for Amazon.

Customer care. People are much more inclined to tweet or post on Facebook about their experiences with companies these days. The storm also led to pieces in some of the national papers. However, this won’t really affect Amazon, which has managed to weather even harsher storms involving its treatment of staff and non-payment of taxes.

Waste of money. The second issue is one that the company should be more concerned about. It has clearly been sending a lot of orders in packaging that’s way over-sized and this means it’s spending more on materials than it needs to. The bigger the package, the more it costs.

Weighing up the costs

Consider a mug sold online that would fit snugly inside a 100x100x100mm box. A pack of ten of these will set you back £2.50, or 25p per box. However, a 150x150x150mm box will set you back 33p. At the extreme end of the scale, if you start sending out the mugs in 200x140x80mm boxes then you’re looking at around 60p per box.

Packaging problems

For those businesses that only sell mugs, or indeed mugs of one size, then there’s no excuse but to use the packaging that fits. But start selling different sizes of mugs and then different items and you can see how the issue of choosing the right packaging becomes a bit more of a headache (even for the likes of Amazon).

Example. Right Retail offers a range of household goods online. The firm sells 1,000 products per month. 90% of these are small items, for which they have one box size - 200x140x80mm. These cost 58p per box. Anything larger goes in a 450x370x440mm box, which is £1.97. This means the company spends £522 on the small boxes per month (900 x 58p) and £197 on larger ones; or £719 in total.

This all worked fine when Right Retail was selling a limited number of items, but in the past year the range has expanded with some smaller items now increasingly popular. An analysis of sales over the past year shows that every month 40% of the items sold would actually fit into a smaller box (150x150x150mm) than the 200x140x80mm one. The downsized box is almost half the price of its big brother at 33p. So what happens if Right Retail switches boxes?

Tip. Check that the packaging you buy is the right size for the items you are sending. Smaller containers will always be cheaper.