by Hollingsworth Hollingsworth

The world of retail is in a constant state of flux, thanks to Amazon’s persistent changes that continue to turn the industry on its head. From transforming consumers’ expectations with reduced shipping times (and free shipping), to introducing automation and robotics to streamline the supply chain, retail fulfillment is becoming faster and more efficient every day.

Many retailers are outsourcing aspects of their fulfillment in order to jump on board with these industry-wide changes, while looking to do so without radically increasing their overhead costs. Contract packaging is an area where 3PL providers are helping retailers achieve success.

Increase Profit Margins with a Contract Packaging Partner

3PL companies with contract packaging operations offer some significant benefits for retailers and e-commerce businesses, contributing to a greater profit margin. Contract packaging companies have a greater purchasing power and can pass those savings on to their retail partners.

With a long list of additional, related services such as kitting, warehousing and order fulfillment, a contract packaging partner can support additional steps in the supply chain and do so more efficiently. When a skilled 3PL partner takes over your inventory management, they are able to implement best practices they have fine-tuned from previous experience to streamline operations, minimize errors, speed up order fulfillment and reduce overhead costs.

Greater Order Flexibility with Contract Packaging

Contract packagers can accommodate a far greater volume than an in-house operation, offering much more flexibility with order fulfillment. This is very important for manufacturers who need to meet tight retailer deadlines. Inventory is stored at the packaging facility for picking and packing when demand calls for it, reducing shipping times and freeing up space at the manufacturing facility for those operations instead of inventory storage.

With streamlined inventory management and large order capacity, contract packagers have the flexibility, experience and operational ability to handle surges in orders far more easily. Instead of falling behind and hurting the customer experience or risking revenue, outsourced contract packaging enables the manufacturer or retailer to take on unexpected demand and capitalize on the additional revenue. They can also do so without a significant spike in overhead costs to hire additional staff or equipment to accommodate the surge in orders.

Outsourcing Packaging Operations Can Reduce Shipping Costs, Expand Options

E-commerce fulfillment has undergone a change in recent years, where shipping carriers prefer to ship smaller containers. In most cases, the shippers have changed their pricing to reflect this, by charging rates based on dimensional weight or the weight of the package itself (whichever is greater) instead of based only on package weight. This is because the dimensional weight takes into account the space the package occupies in addition to its actual weight. This is a vital thing to consider, particularly for e-commerce retailers that often ship large, yet lightweight objects such as pillows.

So, size and fit matters with packaging in order to manage costs. By outsourcing this service to a contract packaging center, retailers can save a lot in overhead costs because these distribution centers are able to source their packing materials in bulk. A contract packaging partner may also be able to acquire oddly shaped or sized packaging materials to help reduce shipping rates that are based on dimensional weight.

Better Visibility with Outsourced Contract Packaging

Best-in-class 3PL partners often bolster their operations with the most cutting-edge technologies and equipment in their efforts to constantly improve order efficiency, accuracy and speed while minimizing costs and maximizing their own profits. Technology such as RFID is used to accurately track products through the supply chain, while automation technology helps to improve efficiency in fulfillment to speed up shipments and eliminate human error.

Outsourcing packaging to a contract partner can mean far greater transparency throughout the supply chain, with real-time visibility to order statuses for both the manufacturer and retailer. More precise delivery ETAs will improve the relationship between these parties and could be a significant differentiator.

Contract Packaging Partners Improve the Customer Experience

Packaging impacts a customer’s experience in some unexpected ways. More and more, consumers are demanding packaging that’s easier for people with arthritis to open, while remaining secure and child-proof for safety – particularly with healthcare products. When manufacturers consider this in the design of their packaging, it usually results in a better customer experience.

Product packaging is also a good opportunity to increase customer loyalty and awareness through branding. Retailers can get creative with the labeling and packaging, creating a more enjoyable experience for the customer while also extending their ability to make an impression (and hopefully, result in additional sales). This is particularly important with subscription box retail, since customers often expect an enjoyable ‘unboxing’ experience when they receive their monthly shipment.

With decades of excellence in packaging and other logistics services, Hollingsworth is a best-in-class partner for manufacturers in the retail and e-commerce industry. Our systems are specialized to accommodate each client’s unique needs, supported with program management and processes that have been strategically designed for peak efficiency. Contact us to learn more about contract packaging with Hollingsworth and find a solution for your packaging requirements.