Online retail growth in Asia is on the rise – sales in the region for 2016 are expected to exceed US$1 trillion with growth set to reach US$2.725 trillion by 2020. Expanding middle classes, increased mobile and internet penetration and improved infrastructure all contribute to this growth.
However, the success of e-commerce is also largely dependent on having an efficient supply chain that helps deliver goods and a satisfactory customer experience.
Consumer expectations today are for fast, free delivery and equally quick and easy product returns. Packaging plays a big role in driving customer perception and loyalty.
Retailers should be aware of four common packaging pitfalls that can cost time, money, material resources and put customer satisfaction and loyalty at risk. These include: neglecting return logistics, overpacking, under-protecting and underestimating the risks of omnichannel fulfilment.
How do I return this?
Customers may sometimes want to return products that don’t fit or don’t look right or wasn’t what they had in mind after ordering it. It is perfectly normal for consumers to change their minds. With growing competition amongst retailers, some are trying to create a point of differentiation by offering generous returns policies to drive customer loyalty.
People have come to expect fast goods delivery and expect the returns process to be equally efficient and uncomplicated. Returns packaging should be a value-add that facilitates interaction between retailers and customers instead of being a hassle, and the wrong packaging can damage a retail relationship.
A customer who is returning a product has already been disappointed by the brand, and a poorly constructed shell that is difficult to seal or poly bag without a tear strip only complicates the returns process for the shopper. Conversely, easy-to-use returns packaging and a simple returns process can go a long way towards pacifying a potentially disgruntled customer.
Filling empty spaces
Overpacking is an issue that more and more consumers are becoming increasingly vocal about. Many people find packaging wasteful especially when they receive a small item in a large box filled with void-filling material or a number of small items packed in separate boxes.
Wasteful packaging affects a consumer’s perception of a brand’s efficiency and sustainability. Using the right packaging material and using it to provide maximum protection with minimum packaging allows retailers to optimise freight costs, and maintain a better brand image amongst their customers.
Packing non-conventional items
E-commerce sites offer customers choice. Traditionally, things like flat screen televisions or home improvement items like bookcases were store bought and delivered by van or truck.
Online retailers have given consumers the option and ability to buy goods that they may not have had access to previously – for example, a customer can now buy a stereo system from a retailer in Australia and have it shipped to his home in Singapore. A stereo system is fragile, heavy, oddly shaped and difficult to ship. Furthermore, the product was not likely to be originally packaged with B2C delivery in mind.
This means the online retailer who sold the stereo needs to be ready to provide adaptable, protective solutions that ensures that the customer gets what they ordered and in the condition they expect it in no matter how heavy, fragile, or bulky the product may be.
In such instances, retailers are best served by expert packaging companies with engineering design expertise, advanced live and virtual lab testing and experience with custom package designs.
Underestimating omnichannel risks
Some online retailers also have physical stores that they use as miniature shipping warehouses or a collection point for customers. Using front-of-store employees to fulfil back-of-store shopping is also an effective use of staff but there are a number of risks involved. Employees who are used to manning the storefront may not have the right training on how to use packaging material effectively and efficiently.
This can result in overpacking or under-protected merchandise and it can also lead to wasted material, and higher freight costs if items are shipped with incorrect packaging.
Dimensional weight pricing is gaining traction in more countries and is used by many international freight forwarders like DHL and UPS. The pricing technique estimates the weight of a package which is calculated from the length, width and height of a package.
The success of e-commerce is largely dependent on having an efficient supply chain that helps deliver goods and a satisfactory customer experience.
This means, a product that has been incorrectly packed in oversized packaging will incur higher freight costs regardless of its nett weight. Additional costs incurred from overpacking will ultimately affect retailers’ margins thus requiring retailers to ensure that each package is as small as can be to keep freights costs down.
One way to counter this is for physical stores to come equipped with pack stations which are as efficient as fulfilment centres. These stations need to have both the right high-performing packaging materials as well as the automated technology that can ensure optimal product protection.
With continued growth in the e-commerce sector, both retailer and customer needs are set to evolve. Every step of the supply chain must adapt accordingly in order to deliver the right-sized packages, build brand loyalty through positive customer experiences, reduce damage and optimise fulfilment speed.
Pasi Pesonen is Vice President, Product Care Asia Pacific, Sealed Air.