Businesses everywhere are searching for ways to cut packaging costs.
Higher raw material prices, sustainability mandates and better customer expectations have made it challenging. But…
Some brands are thriving anyway.
Packaging material costs are expected to reach USD 1.08 trillion by 2025 and USD 1.44 trillion by 2034. Unless brands take steps to reduce packaging expenses now, they’ll be left paying unnecessary fees and losing ground to their competitors.
The good news is that lowering packaging spend without sacrificing protection, presentation or your brand doesn’t have to be hard. Below are effective solutions that have already helped brands cut costs.
Let’s dive in…
Contents
- Why Businesses Are Feeling the Pinch with Packaging Costs
- Expenses That Come From Skimping on Packaging
- 5 Packaging Cost Reduction Strategies that Really Work
- Selecting Materials & Packaging Solutions That Fit Your Budget
Why Businesses Are Feeling the Pinch with Packaging Costs
Packaging is getting more expensive.
Corrugated cardboard prices increased by 9% from 2022 to 2023 alone. Domestic parcel prices went up across the board by 5.9% on average in 2024. Factor in increases to layer energy and labour shortages and it all adds up.
For many companies, packaging materials make up 10–20% of total fulfilment spend. On its own, that doesn’t seem like much. But when it applies to every product order your business ships, it starts taking a noticeable bite out of profits.
Plus, this problem isn’t limited to the cost of materials. There are other pressures at play too:
- Unexpected price hikes due to supply chain issues
- Regulations driving the industry towards sustainable alternatives
- Customers who want better unboxing experiences than ever before
…and these are just a few. These challenges aren’t going away any time soon. But that doesn’t mean they’ll spell disaster for your bottom line.
Expenses That Come From Skimping on Packaging
Here’s a secret.
Cheap doesn’t equal cost-effective when it comes to packaging.
Bottoming out on your packaging materials may save you a few bucks per shipment, but will do little to protect your product from damage during transport. Returns, refunds and unhappy customers are expensive. And while they may not be reflected in your packaging bill, they will hurt your profits.
Your packaging also represents your brand. If it looks flimsy, doesn’t fit well or feels outdated, customers will notice. Spending the bare minimum often results in packaging that checks all those boxes.
The key is to spend wisely.
5 Packaging Cost Reduction Strategies that Really Work
So, you want to spend less money on packaging? These are the most effective strategies proven to work for other businesses:
Right-Size Your Packages
There’s a reason this tip is number one.
Having packages that are too large with excessive void fill is something most businesses do. By moving to boxes that better fit the size of the products you ship, you’ll save money on materials and qualify for lower dimensional weight rates with your carrier.
Businesses who switch to right-sizing report seeing anywhere from 20–30% savings on shipping costs. What’s more, your customers will likely notice and appreciate the smaller package size as well.
Low hanging fruit? You bet.
Implement Flexible Packaging Solutions
Flexibles aren’t for everything. But they should be considered for products that don’t require rigid boxes.
Flexible packaging uses fewer materials, weighs less and typically costs less to produce and ship. From shrinkwraps to flexible plastics, these products are the fastest growing packaging type in the world. Sales are expected to grow from $197.7 Billion in 2023 to $253.2 Billion by 2028.
As their popularity suggests, flex packaging works for many products. Take another look at your shipping methods and see where flexible packaging can replace rigid containers.
Audit Your Suppliers & Look for Alternatives
Do you use the same supplier for all your packaging needs?
Relying on a single supplier is always risky. Make sure your packaging costs don’t skyrocket unexpectedly by finding alternative packaging solutions providers and creating supplier diversity.
Too many brands get comfortable with one supplier and stop looking elsewhere. Having multiple packaging suppliers not only gives you negotiating power, but protects your business from price hikes.
It’s an underrated tip that can save you a lot of headaches (and money) in the long run.
Package Smartly with Sustainable Materials
Eco-friendly packaging has been getting a bad rep for being too expensive.
And while that can be true if you’re not careful, sustainable packaging materials are also an opportunity. Research shows 72% of consumers are willing to pay more for sustainable packaging. That means using sustainable packaging is costing you money if you don’t market it correctly.
By slowly phasing in alternative packaging, you can spread out costs and start capitalising on your eco-friendly packaging. Start with your highest margin products or market segments that care most about sustainability.
Standardise your Packaging Formats
Need three different sizes of boxes to package your products? Been customising packaging for each individual product line?
Custom packaging sounds nice on paper, but it comes with a complexity cost. Standardising your packaging formats (i.e using less box sizes, mailer types and protective products) will help reduce waste, clean up inventory management and give you buying power when ordering in bulk.
Many brands find they’re able to keep their packaging feel custom and branded without having a unique package format for every SKU.
Selecting Materials & Packaging Solutions That Fit Your Budget
Not all packaging materials are created equal. Here’s a rundown of the most common options you’ll come across:
- Corrugated cardboard: The most popular option. Durable, recyclable and versatile. Prices have fluctuated a lot in recent years. Safe choice for most products.
- Flexible mailers: Lightweight and inexpensive. Works well for soft goods, clothing, and other non-breakable products.
- Paper: Sustainable packaging materials are predicted to make up 20.5% of the market by 2026. Another option that’s gaining popularity with eco-conscious brands.
- Foam/bubble wrap: Offers great protection for fragile items. Often cheaper than people think if you use it sparingly and avoid ‘over-shipping’.
- Rigid plastic: Durable and reusable. Treading lightly in most markets due to regulatory pressure.
The Bottom Line
Cheap packaging isn’t cost-effective.
True cost-effectiveness comes from right-sizing, supplier diversity, leveraging flexible packaging, and switching to sustainable materials in a way that makes sense for your business.
And it’s businesses that take these steps that will come out on top. Not the ones who spend the least. Spend wisely, and you’ll quickly see the difference.
Pick one or two strategies from above to focus on, execute on them, and watch your margins improve.
Frequently Asked Questions
What materials are most cost-effective for packaging?
Corrugated cardboard and flexible poly mailers are going to be your best bet for most businesses. But right-sizing your packages to fit your products is the fastest way to lower packaging costs per-order.
How can I save on packaging without sacrificing quality?
Right-sizing, standardising your packaging formats, finding multiple suppliers and using flexible packaging for non-breakable products are the most effective tactics. Not only will they save you money, but they won’t reduce the quality of your packaging.
Does sustainable packaging always cost more?
While some eco-friendly materials can be more expensive, you can usually make up the price difference by marketing it correctly. Plus, you can always phase in sustainable packaging over time to soften the impact of cost increases.
