A Blog by Jonathan Low


Dec 24, 2017

More Amazon Orders, But In Fewer Boxes

Using intangible data to reduce tangible packages and their cost. JL

Laura Stevens and Erica Phillips report in the Wall Street Journal:

Amazon is trying to ship each order in one package instead of multiple boxes, responding to rising shipping costs and consumers’ concern about environmental impact. Algorithms decide which box to use and how many items should be packed  in each. Machine learning tests out new combinations. The algorithm can scan customer reviews to see if it worked and adjust as needed. Amazon is making progress in persuading manufacturers to rethink packages for online sales.
Americans are ordering more than ever from Amazon.com Inc. this holiday season—but they may have fewer boxes on their doorsteps.
Amazon is trying to ship each order in one correctly sized package instead of multiple boxes, responding to rising shipping costs and consumers’ concern about the environmental impact and general nuisance of all that cardboard. That means adding bubble envelopes, tweaking algorithms and negotiating with manufacturers to make smaller packaging specifically for online sales, not store shelves.
“There’s a lot of pressure to come up with solutions that eliminate a box,” said Ken Chrisman of Sealed Air Corp. , which designs packaging materials for retailers, manufacturers and logistics firms, including United Parcel Service Inc., XPO Logistics Inc., Wal-Mart Stores Inc., Costco Wholesale Corp. and Kroger Co.
Donnarie Hales of Raleigh, N.C., does almost all her shopping online—and her recycling bin proves it. She stacks up box overflow in her garage since the recycling truck comes only every other week. “It’s a lot of cardboard,” the 35-year-old product manager said.
Ms. Hales said she has noticed that Amazon seems to be shipping items in fewer, smaller packages. Still, she said she occasionally gets a big box with a tiny item inside. Receiving orders item by item “drives me up the wall,” she said.
This year, Amazon added machines in its warehouses that create padded mailers on demand to fit smaller items, all of which used to go into the company’s smallest-sized box. Almost half of all of Amazon’s products fit into the new mailers and poly bags, said Kim Houchens, director of customer packaging experience.
Her team has been working to improve algorithms that help decide which size box to use and how many items should be packed together in each shipment. The algorithms use machine learning to test out new combinations—for example, shipping a breakable item in a smaller box with less cushioning. The algorithm can scan customer reviews and other data to see if it worked and adjust as needed.
The trick is “to make better choices with each box size,” Ms. Houchens said.Online shoppers typically place several items in the cart for an order. Each item may come from a different warehouse or store around the U.S., and all need to make it to the shopper within the promised delivery window.
Amazon says it is making progress in persuading product manufacturers to rethink packages for online sales. Most are conceived to help products “stand out among a sea of choices” on a store shelf, said  Brent Nelson, senior manager of customer-packaging experience at Amazon. “Almost universally, packaging designed for brick and mortar is oversized with expensive and redundant shipping features.”
Take Philips’s Norelco OneBlade trimmer and shaver, which is sold in stores with 13 packaging pieces. But Philips created special packaging for Amazon: A plain brown box, which eliminates the need to put the razor in a separate Amazon box, cuts out four pieces of packaging and is about 80% smaller in volume than the box needed to ship the store version. Shoppers can select between the two types of packaging on the site, “standard” and “frustration-free.”
Consumers—especially younger ones—have concerns about the environmental impact of all their online ordering, Amazon’s Ms. Houchens said. And the right packaging material can win brand loyalty.
Brian Richards, a 31-year-old resident of Grandville, Mich., recently ordered four bulletin boards from Amazon. Each came in a too-big box that he said could have fit all four. “It was outrageous,” said the father of two and online trainer. “It was a huge, huge amount of packaging.”
Amazon has recently been hit or miss when it comes to packaging, he said. “In general, I’m really torn because I like to use as few resources as possible, but I also like leaving my house very little.”
Amazon’s number of U.S. shipments could reach more than 1.2 billion this year, about double the number five years ago, according to estimates by supply chain consultancy MWPVL International Inc. Amazon’s third-quarter world-wide shipping costs rose 39% over last year to $5.4 billion.
One motivation for retailers to offer better boxing is a change in how UPS and FedEx Corp. charge for deliveries. This holiday season, UPS added an extra charge per package for certain dates. Both UPS and FedEx in 2015 started charging by size instead of by weight alone, to discourage retailers from sending small items in big boxes.
These factors are making smarter packaging a “major factor” this year, said Berkley Stafford, vice president of sales at shipping consultancy Transportation Impact LLC. “It reduces cost with less air in the box.”


Post a Comment