A Guide to Formulating an Effective Packaging Strategy

How to Create Your Packaging Strategy

• Developing consumer insight

• How to: Customer insight analysis

• The e-commerce packaging design strategy 

• Creating the packaging strategy

• Packaging: What do your customers want 

• Environmental factors influencing packaging

• A packaging strategy, your business process, and the customers' journey

• Innovate your e-commerce packaging strategy

• Tips to optimise your packaging and shipping strategy

Developing Consumer Insight

For the first stage, working out ‘Where are we now?’ requires you to understand your customers’ perception of your packaging. With the rise of online shopping, the first time customers get a physical impression of your brand might be when they receive your products in the post. Packaging leads to an emotive connection between consumers and your brand. Therefore, understanding what your customers want and expect will help you determine what to deliver and ensure that the connection is positive and lasting.

Customer insight is fundamental to developing 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 or making simple but effective changes to your current packaging and shipping strategy.

How to: Customer Insight Analysis

Before developing a product packaging strategy for your online store, you must understand all the elements affecting your business. This should include both environmental and economic external factors. 

Analysing your current product range and 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 wider environmental changes, researching online shopping consumer behaviour, and reviewing potential cost efficiencies from different suppliers will help your business develop packaging as a strategic differentiator.

The e-commerce packaging design strategy 

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 from competitors with product packaging.

A robust packaging strategy ensures you target the most profitable customer and product segments. This is done by communicating through your packaging. Messages include how your product/packaging is superior to 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.

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Creating the Packaging Strategy

Parcelub, part of the Whistl group, 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. 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 reflects 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 must 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?

Did you know that serial returners can actually be some of your most valuable online customers? In some circumstances, these consumers can create a stronger lifetime value with your brand and more involved loyalty. Your customer return data could help your business create a strong strategy for growth. Making your packaging reusable will aid the process of consumers returning goods, allowing these consumers to have a good experience and repurchase items.

Packaging: What do your customers want 

Now that you understand your customers’ priorities and 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 looking at externalities such as consumer preferences and environmental factors influencing packaging.

If your current packaging doesn’t respond to consumer demand and meet expectations, your business could miss out on vital engagement points. These engagement points could help you acquire and retain a greater number 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 for consumers is whether your business is conducting e-commerce trading in a way that cares for the environment.

Whistl carried out a consumer study about online shopping behaviours. The 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?’

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Environmental factors influencing packaging

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 generational value: teens generally have less disposable income and less luxury when 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 consumer research, Whistl found that consumers don’t prefer these terms. It seems eco-friendly has a positive association, no matter how small the effort.

A packaging strategy, your business process, and the customer journey:

Creating a packaging strategy is about more than minimising costs and driving profitability; packaging needs to work for your business at each interaction point inside your business and ensure your customers are satisfied with the item and packaging solutions. Here are 10 areas that 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 your solutions with a dedicated page on your website, including sustainability or a branded approach to packaging.
• Order processing—A robust warehouse management system will track 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 that when your packaging, products, and/or raw materials are shipped by your suppliers, they are packaged in the most efficient way to minimise freight forwarding and pallet storage costs.
• Reworking and preparation of orders: Reworking involves reclaiming, re-labelling, inspection, pre-ticketing, assembling and merchandising products and their packaging. As this is a laborious process, check if the packaging design disrupts 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, item packing, inspection, labelling, routing, and manifesting your outbound orders.
• Order delivery: Whether you work with a single or multiple delivery provider, 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, unboxing your items is your second chance to 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 creating 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.

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Innovate your e-commerce packaging strategy.

Many online retailers have made packaging their unique selling point. Often an overlooked component of the e-commerce customer journey, Garçon Wines has tailored its packaging to fit its wine bottle product 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 will get there’ and reach your objective. Outlining specific deliverables and achievable KPIs that you can measure periodically will make your packaging strategy more effective for your business. 

Tips to optimise your packaging and shipping strategy:

Read the Whistl whitepaper on what consumers want from packaging, keeping your target audience in 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 customer deliveries.

• Streamline your picking and packing process with packaging that is easier to construct.

• Access discounted shipping rates by leveraging third-party buying power.

• Conduct packaging value engineering to minimise your storage costs.