A Guide to Formulating an Effective Packaging Strategy
When your customers purchase from your online store, their first physical interaction with your brand is usually when they receive their goods. With the right packaging approach, you can establish a highly emotive experience that will encourage return customers and brand recommendations.
To effectively plan and implement a packaging strategy it must be tailored to your specific customer base. That could be a focus on sustainability, cheaper shipping prices or innovative packaging design, and will mean exceeding customer expectations through superior quality.
As with any business strategy you need to work out:
- Where are we now?
- Where do we want to go?
- How are we going to get there?
Article Content Summary
For the first stage, working out ‘Where are we now?’ requires you to build an in-depth understanding of your customers’ perception of your packaging. With the rise of online shopping, the first time your customer gets a physical impression of your brand might be when they receive your products in the post. Packaging leads to an emotive connection from consumers to your brand. Therefore, understanding what your customers want and expect will help you line up what to deliver and ensure that connection is a positive and lasting one.
Customer insight is fundamental in order to develop any e-Commerce strategy. By researching and reviewing the trends in customer satisfaction Whistl has outlined some key insights in our whitepaper, to help identify consumers' perceived gaps in your offering. This could include modifying your target audience and marketing efforts, to simple but effective changes you could be making to your current packaging and shipping strategy.
Before developing a product packaging strategy for your online store, it’s important that you understand all elements affecting your business. This should include both environmental and economic external factors.
Analysing your current product range, measuring customer preferences through surveys and customer feedback via review platforms will help identify gaps in the quality of your customers’ delivery experience, of which packaging is a crucial component.
Looking at the wider environmental changes, research into online shopping consumer behaviour and reviewing potential cost efficiencies from different suppliers will help your business develop packaging into a strategic differentiator.
For e-commerce retailers, it’s becoming harder to stand out in the marketplace using just a product line, as customers today are inundated with choice! One way to stand out in a crowded marketplace is to distinguish your products against competitors with product packaging.
A robust packaging strategy ensures you are targeting the most profitable customer and product segments. This is done by communicating through your packaging. Messages such as how your product/packaging is superior to that of your competitors, whether that differentiator is your packaging materials, the suppliers you work with or whether your packaging is multi-purpose.
By identifying and analysing consumer insights, you can establish which strategic decisions will have the best and most profitable impact on your particular target audience.
Whistl has outlined some key things to consider, both internally and externally when deciding how to make packaging work for your online store going forward:
What can you afford?
Work out if you can afford to invest in packaging: How profitable are your products? Those with higher profit margins will allow for an increased budget allocation for investing in superior packaging. However, remember, better doesn’t necessarily mean more expensive. You can add value in other ways such as making the packaging reusable, for example. This is why identifying the priorities of your target audience is vital to your packaging strategy.
- Tailor your packaging to your business model
How important is packaging as part of the buying experience? Different products will require different types of packaging, to ensure the item arrives in the right condition and to reflect the style or nature of the business or brand. Some products such as a pair of high-end shoes are high-involvement, high-emotion purchases, whereas others such as pet foods are obviously more for convenience. Your packaging strategy will need to mirror both your brand and how you would like your consumers to feel when they receive your item/s.
And how high are your return rates?
This can play a part. Research conducted by ReBOUND has shown serial returners can actually be some of your most valuable online customers. These consumers can actually create a stronger lifetime value with your brand and more involved loyalty. Making your packaging reusable will aid the process of returning goods, to allow these consumers to have a good experience and repurchase items.
So you have an understanding of your customers’ priorities and their perceptions of your e-commerce operation. The next step in creating an effective packaging strategy is to work out ‘Where do we want to go?'. Fundamental to this strategic component is that you look at externalities such as consumer preferences and environmental factors influencing packaging.
If your current packaging isn’t responding to consumer demand and meeting expectations, then your business could be missing out on vital engagement points. These engagement points could help you acquire and retain a greater quantity of more profitable customers.
In a world where it’s become incredibly easy to start selling online, consumers are increasingly harder to impress. Consumers are interested in how their items arrive at their chosen destination and they now want to know about key details such as packaging. One area that has increasingly become a focus with consumers, is whether your business is conducting e-commerce trading in a way that cares for the environment.
Whistl has recently carried out a consumer study about online shopping behaviours. Our research found that just over half of consumers would be willing to pay more for eco-friendly packaging, and this increases with shopping frequency. By making eco-friendly packaging an option, you can give your most regular customers the choice to shop more sustainably without harming your profit margins. More details on the thoughts of the consumer study can be found in our whitepaper ‘What do your customers want?’
In the same study, we found that consumers find excess and non-environmentally friendly packaging to be key frustrations. However, if your customer base is at the younger end of the scale then these are less of a concern. There is a chance that this is not a sign of a generational value: teens generally have less disposable income and so less luxury in deciding when to spend more. While positive associations with eco-friendly packaging increased with age, their willingness to pay for it actually decreased.
Eco-friendly packaging comes in different forms. The terms ‘can be recycled’, ‘biodegradable’ and ‘is already recycled’ all mean different levels of waste are involved in the production process. However, through our consumer research, Whistl found that consumers don’t have a preference between these terms. It seems eco-friendly has a positive association, no matter how small the effort.
Creating a packaging strategy is about more than just minimising costs and driving profitability; packaging needs to work for your business at each interaction point both inside your business and ensure your customers are satisfied with the item and packaging solutions. Here are 10 areas which should make your packaging strategy a competitive advantage:
- Consumer research: Some online shoppers will look at your shipping costs, partners and packaging methods, so make it easy to find with a dedicated page on your website about your solutions including sustainability or branded approach to packaging.
- Order processing - A robust warehouse management system will keep track of your packaging stock levels. Ensuring your packaging data is mapped out in your WMS will help you keep the optimal amount of packaging to process orders as they come in.
- Inbound logistics: Ensure when your packaging, products and/or raw materials are shipped by your suppliers they are packaged in the most efficient way to minimise freight and pallet storage costs.
- Reworking and preparation of orders: Reworking involves reclaiming, re-labeling, inspection, pre-ticketing, assembling and merchandising of products and their packaging. As this is a laborious process, check if the packaging design is disruptive to any of these processes.
- Picking and sorting orders: There are four key areas to picking and packing - If you combine picking and packing processes (discrete order picking), consider investing in wheeled picking and packing tables to help you move packaging from one location to another.
- Packing shipments: Placing your best selling items closest to your packing stations and storing items that regularly sell together will help you maximise your packaging speed and efficiency.
- Preparation for outbound logistics: Create locations for each stage of the outbound process, namely: packing of items, inspection, labeling, routing and manifesting your outbound orders.
- Order delivery: Whether you work with a single, or multiple delivery providers, each carrier will have different maximum dimensions and weights for different services. Assign a pallet location for each carrier that you work with ready for collection by the carrier or direct injection (in which you or a third-party delivery management company delivers to the nearest carrier hub.
- The unboxing experience: After your website experience, the unboxing of your items is your second chance to really impress your new or returning customers. This could mean using branded boxes, unique packaging material or a sustainable approach to present your products in a memorable way. Consider adding promotional inserts to drive repeat business and add a touch of personalisation where possible.
- Product returns: Ensuring your packaging is returns-ready will help make your customers’ experience seamless even if what they order isn’t what they expected. To help your customers in these instances provide clear returns instructions on how to create a return label, work with a packaging supplier that can create multi-use packaging and consider adding a seal strip to ensure the item is secure on its return to your, or your provider’s fulfilment warehouse.
Often an overlooked component of the e-commerce customer journey, many online retailers have made packaging their unique selling point. Take Garçon Wines as an example, who have tailored their packaging to fit their product, a wine bottle, to fit through consumers’ letterboxes.
Furthermore, they have only used recyclable packaging materials and developed 100% recyclable bottles. Another great place to look for packaging ideas is Pinterest, where you will find the latest innovations in packaging design.
The final stage of an effective packaging strategy is to outline ‘how you are going to get there’ and reach your objective. By outlining specific deliverables and achievable KPIs that you can measure periodically, your packaging strategy will be more effective for your business.
Read our whitepaper on what consumers want from packaging, keeping your target audience top of mind.
Tailor your product packaging to your product range.
Review your packaging suppliers and their environmental credentials.
Give your customers the choice to pay extra for eco-friendly packaging.
Review your parcel delivery strategy to ensure effective and efficient deliveries to your customers.
Streamline your picking and packing process with easier to construct packaging.
Access discounted shipping rates by leveraging third-party buying power.
Conduct packaging value engineering to minimise your storage costs.