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Putting a Dent in Profitability: The Real Impact of Ineffective Packaging and Damaged Products

If packages could talk, they would tell us frightening tales about life on the road. But since they can’t, a simple YouTube search speaks on their behalf about the many ways deliveries can go wrong. For online retailers, videos showcasing disappointed customers unboxing damaged goods don’t just hurt to watch, they hurt the bottom line.

If packages could talk, they would tell us frightening tales about life on the road. But since they can’t, a simple YouTube search speaks on their behalf about the many ways deliveries can go wrong. For online retailers, videos showcasing disappointed customers unboxing damaged goods don’t just hurt to watch, they hurt the bottom line.

With one in 10 packages mangled in transit, companies must eat the cost of damaged items and the cost of reshipping. This gives product manufacturers and fulfillment operations a strong incentive to package it right the first time.

Beyond the Costs of Packaging

When evaluating and choosing protective packaging, companies oftentimes have trouble seeing beyond packaging costs alone – not realizing the ripple effect that ineffective packaging can have on their business. If you were to include every function and process in calculating costs for a single return, it could easily reveal hundreds of dollars in added expense.

To shed some light on the not-so-obvious ways that ineffective packaging can impact profitability, we’ve identified six ways products that are damaged, broken and/or delivered in non-functioning condition incur profit-killing costs:

  1. Freight: Shipping the damaged product back to the warehouse and sending a replacement product.
  2. Product cost: Providing a brand-new product or repairing the damaged item.
  3. Customer-service labor: Processing returns and talking to customers who may want to vent about their experience.
  4. Warehouse labor: Time spent evaluating the damaged good to determine whether it should be fixed or replaced, then repeating the fulfillment process all over again.
  5. Packaging supplies: Paying for the same supplies twice.
  6. Customer lifetime value impact: Consumers who receive damaged goods are much more likely to shop elsewhere next time.
According to a Packaging InSight study, nearly three-quarters of participants said they’d be unlikely to purchase from a company again after receiving a damaged item. Download our white paper to learn more.

 

Protecting Brand Image and Profitability

A new generation of high-quality packaging materials makes it easy to reduce the costs associated with damaged products. 

Contact us to learn more about the impact of damaged goods on your bottom line.