Many times, companies focus only on the upfront cost of packaging. However, the multifaceted effect of package damage trickles down to your entire business and impacts your bottom line. From customer satisfaction to labor costs, here are the top hidden costs of package damage that impact companies:
Freight & Replacement When damaged products are received, a company must eat the costs of shipping the damaged item back, and many times, expedite the shipment of the replacement item, further driving up freight costs. It must also absorb additional the cost of a replacement item.
Packaging When a product is damaged and a replacement product is sent, a company will pay for packaging twice.
Labor Customer service and warehouse labor costs are increased when a product is damaged. A customer service representative must spend time working with a customer to ensure their damaged product issue is resolved. Warehouse time is also incurred to make &/or send a replacement item plus process the damaged product once returned.
Customer Satisfaction A company’s reputation can be at stake when products arrive damaged. After all, packaging is typically a customer’s first impression of a product. Damaged packaging may ruin the otherwise perfect product it carries. The most expensive part of the equation is the loss of customer lifetime value (CLV).
When a package is damaged, a company can incur considerable costs plus the loss of potential future orders. Furthermore, increased freight adds to increased carbon omissions and damaged products typically end up adding to landfill waste. Our WIC team is ready to put together a package design and plan that mitigates the hidden costs of packaging damage in your supply chain. Contact us to learn more.