Six Ways To Make Packaging Your Secret Weapon
Lumi CEO Jesse Genet shares some crazy entrepreneurship war stories and teaches us how to make packaging easy and strategic to your company. To listen to the full interview, tune into the podcast here or on iTunes. This story originally appeared on Forbes.com.
E-commerce has quadrupled in the past decade and direct-to-consumer has become a key sales channel for brands. Consumers are now comfortable having almost anything delivered to their doorsteps. And today, the box is the new storefront. With every box or mailer you have an opportunity to craft a memorable experience for your customer.
I had a chance to sit down with Jesse Genet, the founder of Lumi, on The Art of Manufacturing podcast to hear her insights into new e-commerce trends that make your packaging more important than ever before. Jesse started her first business in Detroit when she was 15, and in the process of growing her manufacturing company, Inkodye, she was amazed how easy it was to start a business on the digital side. But when it came to the physical side it was the complete opposite. It was those experiences that inspired her second company, Lumi, to address the opportunity.
Lumi aims to be the platform to handle the physical logistics of running a product businesses. They handle packaging and fulfillment and work with brands to reduce costs, make their supply chains more nimble, and delight customers. When it comes to these functions, she has seen both horror stories and success stories. In this episode, she shares her secrets for getting direct-to-consumer packaging right.
(On the podcast, she also shares her real-life experiences and perspectives on being an entrepreneur. You won’t want to miss her stories about turning down Mark Cuban, stalking the original owner of the Inkodye technology, and what happened as she was about to walk onto the set of Shark Tank.)
1. Take packaging as seriously as your brand
Direct-to-consumer retail is an important channel for small companies, who can now have a direct relationship with their customers. And with a new trend called digitally-native Vertical Commerce Brands (VCBs), this is more true than ever. Companies like Bonobos, Casper, Warby Parker, and Dollar Shave Club have embraced the ability to control the customer experience, from the moment customers decide they want to buy a certain type of product to when it shows up on their doorsteps.
When you ship directly to customers, the first encounter they have with your brand is the packaging. It’s the physical manifestation of your company. Make sure it’s worthy of your brand.
2. Make it an experience that’s fun to share
A whole genre of content has appeared on YouTube called “unboxing videos” that show people receiving and opening new products. If videos like these can garner hundreds of thousands of views, it should be no surprise that online brands are taking seriously the customer experience of opening their packages.
You don’t have to be conventional — in fact it’s best not to be. MeUndies, the monthly underwear subscription service, packages their products in a bag with a “freshness seal.” Not only is the act of opening the package memorable, it communicates the message of freshness and cleanliness in a way words never could. Not to mention, the packaging is inexpensive to produce and handle.
Encourage your customers to share their experiences, too. For example, in Dollar Shave Club’s #UnboxDSC campaign, customers who shared their unboxing on Instagram would be eligible to receive free giveaways. Creating these kinds of experiences not only creates brand awareness but also gives customers a deeper relationship with the brand.
3. Don’t over-package
Different products have different packaging needs, from a practical standpoint. A mug or glassware needs more protection than a t-shirt. Consider the minimum you need to get your product from point A to point B safely, but don’t go overboard.
You can be frugal and still create a memorable experience. Threadless places their shirts in plastic bag with a bold imprint that says “Great Art in a Squishy Bag.” Threadless is a no-frills brand and it owns the simplicity of their packaging. And they save money in the process.
Fortunately, customers don’t want you to overspend on packaging any more than you do. Consumers will even complain about over-packaging because they view it as wasteful. “If they paid you $50 and it looks like your box and the packaging costs $4, they know that they overpaid for the things they bought,” explains Jesse.
Think about the image you are trying to convey. Are you a luxury brand? Or is economy part of your image? As a rule of thumb, spend about 0.5–3% of the purchase price on the packaging. Spend just enough, and no more.
4. Consider the whole cost
Simple packaging isn’t only cheaper, it’s easier to assemble, store, and ship. Seconds more per package can mean thousands of dollars as labor costs add up.
Consider your storage capacity. Most entrepreneurs assume the first step is to print custom boxes, but that can be a trap. “The inventory exposure and everything else is a go and they buy 2000 boxes and three or four pallets show up at their SoHo apartment.”
This situation happened more than once, and it didn’t take long for Jesse to start asking startups about storage before they ship the product. Sometimes custom tape is the best choice, especially early on. “That fits in a drawer.”
5. Think local
Cost also depends on where you manufacture the packaging and fulfill the final product. There is a common misperception that it’s cheaper to manufacture overseas. Many factors go into the final cost of the product, but as a guideline, the more it costs to ship something, the more likely it will cost less to produce it locally.
This fact is especially true of packaging. Jesse urges companies to manufacture their packaging within 100 miles from where they ship. More than 75% of products that Lumi sells are made in the USA.
Of course, where a company fulfills its orders can change over time as it grows, so a company like Lumi can work with you to adapt your supply chain, wherever you need it.
6. Be nimble
Most companies would order a year’s-worth of packaging and forget it. But for startups and companies that care about their brand, that’s a mistake. For many reasons, Jesse urges companies to order no more than 2–6 months of inventory.
For startups in particular, it pays to be nimble. New companies pivot pretty quickly, so no sooner than they order a year’s worth of boxes, they decide they want to change their logo or change the look.
Some suppliers are perfect for the growing small business, while others won’t give you a second look until you are larger. But once you have those larger volumes you can probably get better prices by switching. Find the right suppliers at your current volumes and keep reevaluating as you grow.
Lumi’s platform aims to help companies optimize the cost based on their changing needs very quickly. “Working with Lumi and buying your packaging is so easy, that [our customers] make changes whenever it will serve their business.” One of their clients on a whim designed special Valentine’s packaging.
In today’s shifting landscape, and with online tools like Lumi, packaging is not just a cost and it’s not just logistics. It’s a core element of your brand and can be a new channel for communications. It’s an opportunity to build a deeper relationship with your customer.
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Krisztina ‘Z’ Holly is an MIT-trained tech entrepreneur. She is the Founder and Chief Instigator for MAKE IT IN LA and the host of The Art of Manufacturing Podcast. This column originally appeared on Forbes.com. You can listen to more episodes of her podcast here: artofmfg.com or on iTunes.