03 Dec 2020 How to Reduce Your DTC Box Cost After the Industry Wide Corrugated Price Increase
Attention DTC Box Customers; Price Increase is Here
We have been warning friends and customers for several months that a substantial price increase was on the way. It has arrived and box manufacturers are raising prices anywhere from 7% to as much as 10%. The industry has not had an increase in over two years so this is expected and probably justified.
However, an increase like this can be tough on the bottom line so this is a good time to remind everyone of our approach to e-commerce packaging. Our goal remains to provide you with the best possible packaging at the lowest possible cost. So, let’s review the many ways we have been able to help our clients and customers dramatically reduce their packaging costs, even at times of market increases like this.
No better time to right size!
Your immediate reaction might be, “oh no, not this again” because everyone talks about right sizing, but the fact is that few do it correctly. We estimate that as much as one-third of the packaging we see is oversized and could be substantially reduced. Certainly, using the smallest box possible makes sense and saves money on the box but the real savings is sometimes shipping costs. If saving 25 cents on the box but reducing your shipping cost by $2.00 is appealing, allow one of our trained and experienced branding specialists to review your specific application.
The impact increasing your order size can have on your costs.
For example, on our die cut mailer boxes, increasing your order from 1,000 to 2,000, depending on box size, can save you 20% or more. Keep in mind at this level, it is not about board or ink costs, it is all about set up cost. At our 1,000 MOQ, you are paying a penalty because set up costs are amortized over the length of the run.
By consolidating your box sizes, this cost reducing change can be easier to accomplish than you think. For example, there is a substantial savings resulting from buying 3,000 of one size box as compared to buying 2,000 of one size and 1,000 of a second size. In addition, you can stock one size rather than two while eliminating one packaging SKU.
Reducing shipping cost inbound and outbound
We’ve already mentioned how reducing a box size can potentially save big money on outbound shipping costs to your customers. However, your inbound shipping cost from your supplier to your packing operation can also be reduced. If you are aware of what is happening in the truck freight industry, you know shipping four pallets of boxes is not twice the cost of shipping two pallets. It is often far less, and that savings adds up as well.
Reduction in packing/fulfillment costs
This may seem an odd subtopic to include in this blog post, but for many DTC companies the cost of having your orders picked and packed is a significant cost. What I have learned over the years is that a well run 3PL, will charge for anything that consumes resources, especially labor.
If your box requires void fill, bubble foam, paper, etc. there is a cost for that. If your product inserts for presenting and protecting your product takes time to assemble, there is a cost for that as well. So, a well-designed product insert can potentially save you money.
Questions that require answers
Obviously, there are many different ways to potentially reduce your box and overall packaging costs. Some of the questions you may have include:
- Am I better off consolidating box sizes and increasing order size?
- Is there a potential outbound shipping cost?
- How much can I save on inbound shipping if I double my order quantity?
- Does my volume and product lend itself to an insert, partition, or divider?
There are no easy or standard answers to these questions because every situation and customer is different. What can help you is to consult an experienced packaging person who has helped hundreds of customers to determine the best way to maximize the savings and minimize their cost. If you have been doing the same thing, the same way for years, it is likely there is a better solution out there.
Contact us at www.SalazarPackaging.com or call us at 630-551-1700. We will be glad to help you. At a time of industry corrugated price increases, now is a great time to review your options and savings potential.