The Ecommerce Tipping Point in Packaging
A range of automated packaging equipment options enables cost-effective, speedy fulfillment even during peak periods.
With the rapid growth in eCommerce, online retailers that are already annually fulfilling a significant volume of orders may reach a tipping point where they must eliminate manual aspects of the packing and fulfillment process and transition to higher speed, automated packaging operations.
Although the tipping point for any online retailer varies, companies processing several hundred thousand orders a year often find themselves in this position. Symptoms of the growing pains include orders that sit in bins for days before leaving the warehouse, high manual labor costs and even high packing material costs. In addition, increasing staffing to meet peak seasonal demands can be even more of a challenge. During this time, most e-retailers run extra shifts and hire large quantities of people who must be trained for the 30-60 days they will work. But even this approach can lead to slow order fulfillment, a detriment when competing with companies, such as Amazon, that offer one day — or same day — delivery.
Whatever the reason, when this tipping point is reached, eCommerce retailers are forced to evaluate options for more automated equipment and additional packaging and fulfillment lanes. Fortunately, there is packaging equipment that provides the functionality and options to cost-effectively scale up from manual to semi-automation to full automation as growth continues. In many cases, this is the same type of equipment used in the largest fulfillment centers used by leading online retailers.
FragranceNet.com, a fast-growing online retailer of discounted brand-name fragrances, skincare, makeup, haircare, aromatherapy and candles, hit the tipping point with regard to automating packaging several years ago. The company, which has doubled its annual sales for years, has shipped over 30 million packages and sold more than $1 billion in beauty products since 1997.
“I come from a corporate background [at a Fortune 50 company] where if we had a 2% sales increase, we flew to South Beach for a party,” says Hector Dilan, FragranceNet.com’s director of warehouse operations for the past six years. “But our eCommerce sales have doubled here every year since the day I was hired.”
Unfortunately, with such growth comes growing pains. The partially automated fulfillment process frequently left too many bins of picked items waiting to be processed. That problem was exacerbated each year from Black Friday through Christmas, when FragranceNet.com generated more than half of its annual income.
“Peak season shopping can result in up to 10 times the normal sales volume for many days in a row, which strains fulfillment capabilities,” explains Dilan. “In just five weeks during the holidays, the company’s fulfillment operations recently had to work 16-hour days, seven days a week to meet the demand.”
The company had been employing a conventional packaging system that included manual labor. This involved having a checker manually place product in a box, adhere a shipping label and put it on a conveyor. Another team would add void fill to protect the product, and the box would be sealed with tape. “With the conventional packaging system, we were paying people to make boxes, fill them, tape them up and put on labels,” says Dilan. “We needed a system that was faster and more automated.”
Graduating to High-Volume Automated Packaging Equipment
Given the rapid growth of ecommerce and dramatic spikes in order volume during the holidays, FragranceNet.com felt driven to invest in new automated packaging lanes in 2015.
The company turned to a compact, automated parcel packaging machine called ParcelPack by Systems Technology Inc. (STI), a manufacturer of automated packaging systems that has equipment installed at other fast-growing online retailers including Amazon, Shutterfly and District Photo. The equipment can package as many as 20 orders per minute and can reduce labor up to 50% or more with ROI typically in 10-24 months.
In conjunction with the automated packaging system, the online retailer also uses a patented STI product called SecurePack, which protectively holds the contents of the shipment in place on a corrugate base pad using shrink or stretch film, without the use of void fill. “There is no need to manually put items in a box because the box gets formed around the pad, and there is no need for void fill because we shrink wrap the items to the pad,” says Barbara Porter, FragranceNet.com’s chief technology officer. The shipping label is printed, applied automatically and adhered to the top of the box, and the order and shipping label are verified to match.
Porter notes that the packaging automation helps to streamline the fulfilment process not only during the holidays but also throughout the year. “Today, with Amazon shipping items out the same day, waiting two days to see order tracking is unacceptable,” says Porter. “So, our packaging line automation was needed to streamline the process to get shipments out faster.”
With the packaging automation supplementing its traditional packaging lines, Porter says that product is getting fulfilled and shipped much faster so that FragranceNet.com is well positioned for continued growth and volume, even during the upcoming 2020 holiday season.