E-Commerce (Part 4) – Stop Shipping Air!

Empty Box

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When you order something Online there is great excitement in anticipation of opening your package when it arrives.  With any luck the company you have ordered from has provided a positive experience in the online ordering and payment process.  Now you are just waiting for the package to arrive.

Most recently we ordered a couple of items online.  They were relatively small items and could easily fit in the palm of your hand.  Within a couple of days a large box arrived at the front door.   I wasn’t quite sure what it was because the box was rather big, big enough for a toaster or perhaps a couple of large board games.

I was surprised when we opened the big box, removed a bunch of crumpled paper and packaging material, and found the 2 small items we had ordered sitting on the bottom of this box.  The items could have fit inside a standard envelope.  Instead they were deliberately packaged in a box which could have held 200-300 of the items.

What a waste!

This has happened MANY times when ordering from MANY different companies, big or small.

There are many stakeholders negatively impacted by this wasteful practice and it is important to understand why this is unacceptable from everyone’s perspective.

 

Online Customers

As a customer and a consumer I am certainly happy to receive the items I ordered online.  And the customer experience may have been great when I ordered the item.  But when I receive a virtually empty box with a couple of lonely items on the bottom a lot of the goodwill I had is squandered by the company I ordered from.

To me it signifies poor management on behalf of the company.  It suggests a lack of concern for the environment, whether that be in the extra cost of the packaging materials, the unnecessary filler/dunnage, or the extra fuel costs for the truck that had to deliver this unnecessarily bulky box.  It also suggests a  lack of focus on efficiency improvement and waste elimination. If the company is that inattentive to packing a box how do I know that the actual product I ordered doesn’t also have some of that poor attention to quality built-in?

You should also know that even if the company tells you that you are getting free shipping, the shipping cost is just built into the price of the item you are buying.  So if shipping costs are higher than they need to be, you are also paying for it, even if that cost is hidden from you.

 

Company

In 2015 both FedEx and UPS declared that they were going to start charging shipping costs based upon the greater of the Dimensional weight or the Physical weight of a package, and not just the Physical weight.   The rationale is that the cubic size of a package can be very large, which occupies a lot of space when shipping, even though the item may be very light in physical weight.  As such just charging shipping based on Physical weight was no longer appropriate.

This change in calculating shipping costs can easily result in a 20-40% price  increase as compared to costs based on physical weight alone.  The profitability of E-Commerce fulfillment is already under tremendous pressure.  So why would a company knowingly add to that pressure by unnecessarily adding to their shipping costs by packing orders in boxes larger than are required?

Even if your company has a large variety of skus that you ship, you should be able to increase the number of package size options.  It doesn’t have to be an unmanageable number of different box sizes, but the example I’ve shown here is real.  It is not an exaggeration and it is not an exception.  Companies need to do a better job here.

 

 

In many cases these items are packaged manually.  As such your operators should be given different options for which box size to use to fulfill an order.  This can be visual or it can be programmed in such that the computer system recommends a box size to the operator.  In either case there should be a formal process in place to allow for better box size selection while still ensuring that your products will arrive intact.  There are many dimensional weight calculators available online to help you determine an optimal number of package sizes based on the size of the items that you ship.

Depending on your product this increased density will also allow you to get more packages on a pallet or in a shipping container.  Even if this means only one more customer gets their package delivered faster it is worth the effort.

 

Shipping Companies

Whomever your carrier may be they, like everyone else, are faced with the realities of ensuring they have enough capacity to deliver packages on time during the busiest time of the year.  The phenomenal growth rate of E-Commerce means that capacity constraints and the prospect of shipping delays are a reality.

If you are able to optimize your package sizes you effectively increase the capacity of your carriers to handle a higher volume of goods and support your growth.  This allows both you and your carriers to be more profitable and to deliver a better customer experience.

And as mentioned previously the more product you can get onto a pallet or shipping container means that there are more orders getting to your customers faster.

 

It is worth spending the time now to ensure that your package sizes and packaging are optimized.  Especially when you get in to the heat and stress of the Holiday period you must already have processes in place to ensure that this package optimization continues.

You and your organization need to pay attention to the entire end-to-end E-Commerce supply chain, not just the front end wherein you take orders.  You should never ship in a large box that which could fit inside an envelope.  It’s common sense.

The result will be a better customer experience, better environmental stewardship, lower costs, higher profitability, faster delivery, and increased capacity for growth.  Your customers, your company and your carriers will all be better off for your effort.

It’s a win-win-win!

 

Check out   World Class E-Commerce Fulfillment Design Principles (Infographic)

#B2C #ECommerce #Logistics

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1 thought on “E-Commerce (Part 4) – Stop Shipping Air!”

  1. Nice blog. Worth reading. e commerce is constantly changing, forcing retailers and transportation & logistics businesses worldwide to think outside of the box. Thanks for sharing the above information.

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