Developing Durable And Eco-friendly E-commerce Packaging To Reduce Revenue Leakage From Damages and Associated Costs

Background

E-commerce packages need to be robustly packaged to withstand the last mile delivery journey. However, well-defined and standardized packaging guidelines do not currently exist in the delivery ecosystem. Different sellers/platforms maintain their own unique standards that are only enforced loosely at best. This engenders a delivery landscape whereby e-commerce sellers fulfil parcels via various packaging standards, a spectrum which ranges from excessive materials used to inadequate packaging applied.

Cost-wise, this translates to monetary loss from write-off of products due to damages, as well as non-monetary loss that results from inefficiencies arising from substandard packaging.

More specifically, for 3rd party logistics players (3PLs), this translates to:

  • Operational issues resulted from substandard packaging (Most common examples are damaged items or missing air waybills)
  • Reduction in parcel processing speed from non-standardized packaging

Broadly, across the industry, further inefficiencies arise from:

  • Overpacking of items which translate to additional cost, as well as non-eco-friendly practices
  • Higher damage rates leading to increased loss of sales, as well as reputation for sellers and e-commerce platforms
  • Manhour costs from investigation of liability, processing refunds, customer service etc.

Currently, 3PLs serve as the filter for packaging standards. Drivers reject parcels with poor packaging during pick-ups where possible. This process is prone to lapses on the driver’s end, especially for sellers with larger volumes per pick-up. More commonly, packaging can look robust externally, but lacks structural integrity internally (e.g., bubble wrap for fragile items) – something that cannot be caught with a cursory glance.

Simultaneously, 3PLs also actively reach out and advise shippers that are identified to have poor packaging via internal standards. This does not work at times as sellers may wilfully ignore such advice in an attempt to manage their cost. Other times, disputes surface because sellers believed that their packaging standards is sufficient for their products. Lastly, such an approach also means that there is a constant need to educate new e-commerce sellers, something more salient in recent days as sellers digitalized their business post Covid outbreak.

Requirements

In general, solutions that work through 3PLs should be avoided (e.g., parcels to be repacked at sorting facilities). Though poor packaging can be rectified via such a safety net, associated costs of poor packaging upstream will still be incurred. We believe that an optimal workflow is to target the source, and the most impactful solution would be to educate sellers to pack parcels within a specific guideline to begin with.

As such, an innovative, high quality and eco-friendly packaging solution is sought. Eco-friendliness is not limited to the use of biodegradable materials but could include reusable packaging as well, in which case the logistic costs incurred to reuse the packaging need to be taken into consideration.

The proposed solution should:

  • cater to the diversity of items being transported
  • be robust enough to prevent damages to the merchandise during the last mile delivery.
  • enable shippers to do the packing by themselves at their facilities
  • help to reduce packing time
  • be cost competitive with existing packaging methods
  • be eco-friendly (e.g., prioritising reduction such as adopting reverse logistics to reuse logistics packaging for subsequent deliveries and eliminating unnecessary packaging materials through optimising design, use of recyclable materials, use of packaging with recycled content; communicating to end users on how to recycle the packaging if it can be recycled; take-back of used packaging for recycling)
  • pass packaging drop tests based on international standards, e.g., ISTA’s standard

Ninja Van packaging guidelines are being provided for reference so that potential solvers are aware of how the different and common categories of merchandise are being packed currently.

Desired Outcome

  • Price competitive, robust and eco-friendly packaging solutions catering to different types of merchandise
  • Faster and easier for shippers to pack their merchandise
  • Substantially reduce damages during delivery which minimise losses due to product write-off

Minimum Required Technology Readiness Level (TRL)

Level 8

Expected Impact to Business

The primary advantage would be cost savings to shippers/e-commerce platforms, as well as 3PLs. More broadly, having robust packaging standards will enhance last-mile viability of the e-commerce industry, and allow for more products to take the e-commerce route, hence promoting the continual growth of the market to all stakeholders alike.

Development Timeframe

Expected implementation timeline will be approximately 4-5 months (18 weeks)

Stage 1: Design and source for desired packaging materials (12 weeks)

Stage 2: Test robustness of packaging standards, as well as to re-iterate designs (6 weeks)

Additional Info

Ninja Van can support the innovation in 3 main areas:

  1. To provide input and expertise on required packaging standards
  2. To connect and source for buy-in from shippers/e-commerce platforms
  3. To support the testing phase of the proposed solution, based on packaging standards
Challenge

E-Commerce Supply Chain Challenge 2020 (ESCC2020)

Organisation

Ninja Van

Proposal submissions are open from 2 Oct 2020 to 20 Nov 2020