The rapid growth of ecommerce and business to consumer direct shipping is undergoing some bumpy transitions on its road to the mainstream. So far consumers have gotten quite a break with free or low costing shipping. But that’s changing and businesses will need to improve their shipping processes.
Fed Ex recently announced that it would be charging dimension weight rates which means raising shipping rates. Now it is according to the volume of the package rather than its weight in lbs. It’s expected that UPS will follow suit and raise their rates.
It’s possible Fed Ex is losing on shipping big boxes of diapers, toilet paper, and other lightweight types of products. While this could only be a cash-grab by them for more profit, it may also be that competitors were able to underprice them for shipping heavier packages. They could have been losing sales to opportunistic regional shippers.
Prices Are Increasing
Whatever the truth, businesses that depend on ecommerce sales and cheap shipping rates have to come to grips with this new threat. As you can see from this screen capture shot below from a Wall Street Journal report, the price increases range from 10 to 37%.
A 20% price increase on shipping prices doesn’t necessarily bring online sales of diapers and toilet paper to a shuddering halt. Consumers are getting used to shopping online and they won’t necessarily be heading back to the box stores and malls to shop.
What’s more likely to happen is ecommerce sellers will use this opportunity to encourage shoppers to spend more (increase their basket size) and buy more products, then the shipping price becomes less of a concern. So in the end, this threat to ecommerce might actually turbocharge sales.
More Efficient Packaging is on the Way
The size of the cardboard shipping box is not always directly related to what’s being put in it, which boxes are often much bigger than they need to be. Now, manufacturers shipping direct to consumer will probably look to custom size boxes that fit the product inside tightly. Companies such as Zappos are said to use elaborate algorithms to determine how much they can stuff in one box. Other retailers such as Amazon and WalMart will likely be doing the same thing.
Another key issue though is damage to the product. Direct shipments experience a much rougher ride to the consumer than they do during commercial bulk shipments. Those shipping ecommerce products need to ensure their packaging protects the products inside, particularly if it is fragile electronics or glass.
Space efficiency combined with protection will undoubtedly spawn innovation in business to consumer packaging. A good opportunity for cardboard packaging suppliers, especially those using eco-friendly materials.
Promotion Via Packaging Will Increase
One other thing shippers weren’t doing much of up to this point is effective promotion. It’s not uncommon for consumers to want to return the goods they bought, something marketers call post purchase anxiety. The packaging and extra promotional materials can go a long way to preventing that costly experience. And, in-box promotion can go one step further to promote a brand, stimulate further sales, and make the box opening experience a pleasant one. After all, click and opening is their shopping experience.
I’m taking a closer look at better eCommerce packaging in next week’s post. Don’t miss it.
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