Boxing Up Shopping's Magic Moment
Retailers Gussy Up Packaging so Rumpled Goods Don't Tarnish the Brand; Seeking Fray-Proof Ribbon
By ELIZABETH HOLMES WSJ BUSINESS NOVEMBER 17, 2011
Online retailers are thinking inside the box—and about the box itself.
Unlike in stores, shoppers on the Web need to be wowed twice, first when they are browsing around the site and again when the purchase lands on their doorstep. Anticipation builds while they wait for their order.
There's something exciting about the unpacking process, as documented in the many online "unboxing" videos of people opening electronics packages. And even the most extravagant splurge can disappoint if it arrives in a tiny plastic envelope or a giant postal box.
Basic packaging is in keeping with shoppers' expectations of rock-bottom prices at websites that compete primarily on price, such as Amazon.
But for brands with stores offering a high level of service and design, the challenge is to reproduce a theatrical shopping experience in a brown cardboard carton.
"We've got to find a way, when we're not front and center with that customer, when they open that box, to thrill that customer," said Gregory Shields, senior vice president of distribution, logistics and fulfillment at Neiman Marcus. The luxury department store has more than 64 sizes of boxes in which to ship everything from champagne flutes to Christian Louboutin shoes.
Nearly half of U.S. consumers say they will shop online this holiday season, up from about a third last year, according to a recent survey from the consulting firm Deloitte.
Sixty-eight percent of retailers expect online sales to rise by at least 15% this holiday season, according to the National Retail Federation. That is more than five times the industry group's forecast for a 2.8% gain overall.
Spending by affluent households is expected to make or break the holiday season for many retailers this year. These are the shoppers with the greatest propensity for online shopping. People with incomes exceeding $100,000 are expected to do almost 40% of their holiday shopping online, says Deloitte, compared with an average of about 33% for shoppers overall.
Shipping companies are gearing up for the crush. FedEx Corp. predicts a 12% rise in activity between Thanksgiving and Christmas this year, to an estimated 260 million shipments.
As always, retailers' No. 1 priority is to get the package there unscathed. That begins with the outer box, the widely used corrugated cardboard box.
HSN, formerly known as the Home Shopping Network, tests approximately 30 packages a day within its quality-assurance unit.
First, packages with merchandise inside are put through a "heavyweight drop tester," a machine that lifts them up and drops them from as many as 11 different angles.
Packages containing items, like electronics, with a lot of parts also spend several hours on a "random vibration test machine," experiencing the kind of gyrations that might occur in transit.
"It's the types of things that could happen if a driver was tossing boxes. They shouldn't, but, you know, that happens," says Rob Solomon, HSN's executive vice president of operations.
Some jewelry that used to be shipped in only an envelope is now shipped in a box, because of reports of damage, Mr. Solomon says. "Our packaging needs to be consistent with what they're seeing on TV," Mr. Solomon says. "The presentation really becomes that exclamation point on the product inside."
Crate & Barrel, the home-furnishings retailer that sells a lot of fragile tabletop items, has over the past 10 years driven its damaged-goods rate down to just four tenths of one percent, says Zuzana Kajuch, senior director of logistics—meaning 99.6% of all packages arrive without damage.
It takes lots of cushioning to ship a theatrical experience somewhere in one piece. The more cushioning, the more protection—and the more waste. "It's the balance between recycled content and actual performance," Ms. Kajuch says. "The visual presentation of our brand is so important to us."
Boxes are packed in one of Crate & Barrel's three distribution centers. Packers, the warehouse employees who get the longest training time, meet weekly to walk through the best way to wrap a new item and any other issues that arise for specific products.
Step Up Your Own Holiday Shipping
· Swaddle gifts in colorful tissue paper or ribbon before placing them in boxes, to keep them secure.
· Use a shipping box that's big enough so presents don't press against the sides but snug enough so nothing moves around. Wrap everything in bubble wrap.
· Place a handwritten note on top, so it's the first thing the recipient sees when opening the box.
Once they've determined the best method to secure an item for shipping, the packaging focus then turns to the extras—the small decorative touches that convey personal attention. The first thing some customers see when they open a Crate & Barrel package is a card that says "Big Thanks."
Anthropologie, part of Urban OutfittersInc., has dressed up some of the most mundane aspects of packaging. For example, Carolyn Keer, the chain's brand director of packaging, created order-form envelopes using patterns from the season's bedding and quilts.
Ms. Keer also used the designs to dress up the plastic bags in which Anthropologie ships T-shirts and other single, low-priced items. The bags aren't her favorite packaging element—"I fought it and fought it and fought it for years," Ms. Keer says—but she says she has done what she can make them as appealing as possible.
Anthropologie ships most items in unmarked boxes. Inside, merchandise is wrapped in colorful tissue paper, just as it is when purchased in stores or gift-wrapped.
"When you get something in the mail, it should feel like a present, whether you bought it yourself or not," Ms. Keer says.
Ms. Keer learned that the gift-wrapping Anthropologie offers online can't be too complex. On her first trip to the distribution center, she saw employees taking a long time to tie bows. She designed gift-wrapping without bows, instead using knots or a decorative button to wrap the string around.
Employees write messages to recipients by hand. The notes that go with gift cards tend to be longer and so are printed by computer.
The average packer at Neiman Marcus's Irvine, Texas, fulfillment center prepares up to 20 orders an hour, says Mr. Shields, who oversees logistics. In December, peak gift-wrap season, the rate plummets to four orders per hour, he says.
Neiman Marcus expends a lot of effort selecting gift-wrapping components, from the box to the ribbon to the decorative tie-on, Mr. Shields says. They change each year and are important to the Neiman Marcus customer.
The retailer charges a flat fee of $8 for gift-wrapping—although about 80% of it is done at no charge, either through promotions or rewards for certain members of the In-Circle loyalty program.
Its gift-box components include a plain cardboard box and decorative paper that doesn't wrap the box but rather adheres to it. A testing committee glues several types of wrapping paper to cardboard and examines each one for durability.
"What do the corners look like? Does it tear?" Mr. Shields says. "The customer is going to see that and they're going to think it's not of high quality." There is a similar process with ribbon, to test for fraying and color stability.
To prevent bows from getting smashed, Neiman Marcus uses a round cardboard "bow protector." It ties an ornament, picture frame of other small keepsake to each gift-wrapped package, Mr. Shields says.
