By Bryan Wyatt | Senior Manager, Transportation | Chainalytics
In today’s omni-channel marketplace, retailers are expected to provide a wide variety of delivery options to customers in order to remain competitive. There seems to be a limitless U.S. appetite for instant gratification in an incredibly fast-growing home delivery marketplace, fueled by both ecommerce and increasingly mcommerce shopping.
But in the rush to fulfill a customer delivery to a home or other location, retailers often overlook how the item is actually packaged.
Consider a typical scenario for a traditional retailer:
- The retailer orders the items, which are then shipped in bulk to their local retail distribution center and subsequently to the store, either shrink-wrapped or with a strong outer casing that significantly limits product damage.
- Once the items reach the store, they are removed from bulk wrapping and displayed in their “primary” packaging, designed for in-store appeal.
No problem, right? Actually, yes, there are problems. Enter the dynamics of managing product flow and damage in the omni-channel marketplace.
The Complex Problems of Omni-channel Packaging
The issue is that store-front packaging is designed for very limited hands-on customer contact: Customer visits store, customer buys item off shelf/showroom floor, customer takes item home.
But with ecommerce/mcommerce, even though the purchased item no longer has its bulk shipping protection, packages shipped from a warehouse direct to a customer’s home experience 10 to 15 times more “touches” than the traditional retail model.
As shipments move through these new omni-channels, they ride on conveyor belts and multiple trucks; experience UPS handling; and then sit on front porches or driveways for hours in the driving rain, howling wind or broiling sun.
It’s no surprise that retailers are seeing a significant increase in item returns–sometimes the items have experienced damage due to this multi-touch journey; other times they are in perfect condition, with the exception of the external packaging.
At minimum, the additional handling implicit in direct-to-consumer shipments impacts the quality and appearance of the package as it arrives. In a best-case scenario the customer is merely displeased with the condition of the packaging; but unfortunately the more common impact is the customer rejects the goods based on the condition of the outer packaging.
To mitigate these issues, retailers need to take a step back and review their packaging strategy. Can the current material handle omni-channel? What are my return rates? How much time is my team spending on reverse flow items? How can I re-engineer my packaging to allow more product on each shipment while reducing damage?
The good news is that there are many options available to retailers today, from re-engineering the customer-facing packaging to installing on-demand packaging machines (machinery placed directly on packing lines to provide immediate, custom fit liners for each shipment).
There are many factors to consider and retailers should evaluate multiple options to improve packaging for the new normal. In short, at least in supply chain, it’s what’s on the outside that counts. Sorry Mom.
Bryan Wyatt–senior manager of Chainalytics’ Transportation Competency–has over 20 years of hands-on experience in transportation operations, strategic sourcing, data analysis and logistics planning.
Read more about how Chainalytics helps clients address their supply chain and product and package delivery challenges:
