Packaging Cost: Know the Value of a Perfect Package

Packaging plays a quintessential role in promoting product identity and recognition. The unique style in which a parcel is wrapped creates a long-lasting memory of that brand in the minds of the customers. Moreover, this will help get word-of-mouth publicity for the company as the buyers will share their unboxing experience with others. Thus packaging also forms a core part of marketing.

There are various types of packaging, from which a company can choose the ideal one according to their objectives and budget. Brands can also add style to their packaging as an extra effort to make it unique and attractive enough to grab the attention of their customers. However, customisation of packaging comes with additional expenses. The charges for packaging vary depending on several factors. Some packaging types are inherently expensive than others.

 Globally, manufacturers spend more than USD 150 billion every year on the packaging. According to statistics, the value of the FMCG (Fast Moving Consumer Goods) packaging market in 2019 was USD 710 billion and by 2050, it is predicted to cross over USD 935 billion. The FMCG packaging market is projected to achieve growth at a CAGR of 4.6% during the next five years.

This article discusses the types of packaging, the cost incurred for each type and the environmental impact of excessive packaging. 

Packaging: Types and Objective

Packaging is an important step in eCommerce logistics. Selection of the type of packaging depends on various factors like the product type, mode of shipping and distance to be covered, handling and storage conditions during the transportation, durability of the packaging, and the packaging regulations of the destination country. Packaging is not just wrapping things in any material. There are certain objectives behind packaging and these are listed below:

• Functional Requirement: The main purpose of packaging is to keep the product safe and secure during transportation. The ideal packaging type and material, which is specific to an item, can protect the goods from damage due to shocks, vibrations, accidents, poor handling, and harsh climatic conditions.

• Labelling of Product:  Product labelling refers to the display of information regarding the product in writings on the packaging. It features details like the product and brand name, the product’s origin, materials used in the making, necessary certifications it has, instructions for use, etc. These details printed on the packaging help to convey relevant information regarding the product and also in promoting the brand.

• Marketing: An attractive packaging with aesthetic essence will attract customers attention and it will leave an imprint of your brand’s and product’s name in their minds. It will also tempt them to purchase the item. The uniqueness of your package will help the product stand out in its category, thereby differentiating it from the competitors. As part of marketing, you can also add a return label inside the package to add convenience to the customers and they will appreciate your concern for customer satisfaction.

eCommerce businesses choose the ideal packaging type for their products considering the several factors and purposes mentioned above.

 The types of packaging and packaging material used for each type are detailed below. 

• Primary Packaging: This is the packaging layer that encloses the product and protects or preserves it. It is in immediate contact with the product. The primary packaging needs to be compact enough to protect the delicate goods. Different types of packaging materials are used in primary packaging and they are:

• Plastic laminating pouches 
• Plastic containers
• Thermoformed products
• Tin can
• Parchment paper
• Paper bags
• Wet-strength paper
• Monocartons.
• Aluminium foil laminate
• Glass containers
• Woven sack
• Bubble wrap

• Secondary Packaging: Secondary packaging is the next layer covering the primary packaging. It is done to wrap together products that are to be delivered in bulk. Thus it bundles several primary packaged items. Secondary packaging acts as an additional protective layer and also serves branding purposes. Materials used in secondary packaging are:

• Paperboard box
• Plastic trays
• Plastic crates
• EPS (Expanded Polystyrene) tray
• Wooden crates

• Tertiary Packaging: This is the third protective layer added to ensure damage-free shipping, transportation and storage of the products. Materials used in tertiary packaging are:

• Corrugated fiberboard
• Wooden containers
• Wooden pallet
• Plastic pallet

• Ancillary Packaging: Ancillary packaging materials are those that add benefits to the primary packaging and complete the packaging process. These combined with the primary packaging layer protect the product from contamination. Ancillary packaging includes:

• Adhesives
• Printing inks
• PP (Polypropylene) straps
• Caps and closures
• Tapes
• Labels
• Cushioning materials

eCommerce businesses can choose the packaging type and material according to their product type and needs.

The Expense for Packaging and Marketing Material

Packaging requires you to spend a fair amount of money. There are two types of charges that add to the final price of packaging; fixed cost and variable cost. 

Fixed cost is the amount of money the manufacturer of the packages has to incur irrespective of the production output and volume. This means that these costs will be fixed, whether you order a small volume or a large volume. Fixed costs include the charges for:

• Machinery 
• Printing plate
• Mound (die cutting, foil stamping, embossing, etc)
• Rent of manufacturing facilities

Variable costs vary based on the production output. If the order volume is small, then the variable cost will be low and if the order volume is large, it will cost you more. The various charges that add to the variable cost include:

• Paper and material price
• Hourly wages for labourers
• Charge for ink and lamination material
• Shipping rates

Customisation of packages is more expensive compared to the standard ones. Product packaging costs are on the rise and it is estimated that the global eCommerce packaging market value will reach USD 61.55 billion by 2026, far surpassing the 2020 market value of USD 27.04 billion. The projected CAGR of the global eCommerce packaging market from 2021 to 2026 is 14.59%. 

The normal cost of some of the packaging materials is listed below so that you can get a general idea about the packaging charge you may have to incur.

Impact of Excessive Packaging on Environment

Adequate and the right packaging is essential to protect the product while transporting and also for brand marketing. However, excessive packaging is not only unnecessary and costly, it can pose a threat to our environment. These go wasted and when dumped in landfills cause pollution. Some packaging materials, like those made of plastic, also release toxic components into the environment, polluting soil, water, and air. This will in turn affect the life forms and hence excessive packaging is detrimental to our ecosystem. 

A report by the Ellen MacArthur Foundation details the scale of environmental impacts caused by packaging waste.  It says that currently 150 million metric tons of plastic waste lie in the world’s oceans. More than 60% of the plastic wastes removed during coastal clean-up operations are from packaging materials.

According to the foundation’s analysis, the annual environmental cost of plastic consumption is USD 75 billion. The largest contributors to this, making up 23% and 12% of the total impact, respectively, were the food and soft drink industries. 

These figures tell how much is the plastic menace. Considering the environmental impact, businesses should adopt sustainable packaging methods and avoid excessive packaging. Many of the companies have already shifted to eco-friendly packaging, showing their responsibility towards the safeguarding of the environment. The general public is now more conscious of the environmental impact of plastic waste and pollution. So, nowadays many consumers are even willing to pay more for eco-friendly packaging.

In 2021, the market for global sustainable plastic packaging was estimated to be worth USD 85.8 billion. By 2030, the market is predicted to reach a value of around USD 143.7 billion, with bioplastics set to take over the market as more businesses use these technologies. While increasing the percentage of post-consumer recycled content in their packaging products, many consumer firms are simultaneously aiming to reduce the amount of virgin plastic used in them.

Conclusion

Packaging of a product is necessary for its safe transportation, storage, sale, and use. Businesses can opt for the standard packaging if they are just looking for the safe shipping and delivery of their products. However, if they also want to market their product and create brand awareness, then customised packaging is a perfect choice. This is usually expensive as the packaging involves additional laminating, printing, and designing costs. Typically luxury brands use customised packaging to stand out in the market and create a brand identity.

While eCommerce businesses are booming, there is also a rising concern about the environmental impact of excessive packaging. To address this issue, many of the companies have adopted eco-friendly packaging. Turning to eco-friendly packaging materials can help in the drive to reduce environmental pollution. It helps reduce the carbon footprint and put an end to toxin release from plastics. It also highlights the brand in a positive light.

FAQs

1. What is the most commonly used packaging material?

Paperboard is the most widely used packaging material around the globe. It includes cardboard and folding boxboard.

1. What are some of the eco-friendly packaging?

Some of the popular eco-friendly packaging includes corrugated packaging, cellulose packaging, cornstarch packaging, mushroom packaging, etc.

1. What are some of the recyclable packaging materials?

Recyclable packaging materials include paperboard, recycled PET, bioplastic, glass, etc.