Stop Killing Your Profit Margins with Special Packaging Customers Don’t Care About

by G.B. Oliver

Sorry if the headline is harsh, but I want you to make money!

I was doing a consultation on a very nice online jewelry shop, and the seller was making the same mistake a lot of other small online sellers seem to do. Every item is sent to the customer in a beautiful gift box. And for free. So I have to ask – why?

Designer Kate Spade charges a small fee for gift boxes
Designer Kate Spade charges a small fee for gift boxes

There are so many things wrong with this I am not sure where to start:

  • First of all, what if it is not a gift? The box is then a wasted cost and definitely not an incentive to buy.
  • What if it is a gift and the buyer doesn’t like the gift box you’re offering? They are just going to toss it anyway, so again, a wasted cost.
  • How much is it costing you to offer these gift boxes that the majority of its buyers don’t care about, eating into probably already slim profits?
  • How is this gift box affecting shipping charges, which without it could then be lowered, and low shipping charges are more of an incentive to buy.
  • What if the buyer orders 5 items? Are you going to send 5 gift boxes? That becomes a pretty large shipment.

In the last year I have ordered clothing and jewelry from many mid to high-end online stores, and guess what? Each time my items came individually packaged in plastic bags. It didn’t bother me. If it means my shipping charges are lower due to less weight and bulk, so be it. I don’t need any more boxes.

But there are cases when clever packaging can work. The other day I bought a pair of earrings at a popular retail fashion chain. The salesperson handed me the earrings, small as they were, in a mid-sized reusable cushioned bag with fabric handles that could be used for a lunch bag or small tote.  It seemed excessive considering how small the earrings were, but it was neon green with their logo taking up both sides, so it would basically act as free advertising for them anywhere I took it. Now, this is smart packaging. And the cost of the bag is essentially an advertising cost, not a packaging cost.

Now, by all means, offer gift wrapping or gift boxes as a value added service that you charge for, $2 or $3 to recoup your costs, or just offer it for free during the holiday season.  Plus, it is dependent on price. If you are selling a $600 necklace, then yes you should probably put it in a box. But for low to moderate priced jewelry, it’s not an issue.

And let your customers know that you don’t use fancy packaging (just protective packaging to avoid damage) because you want to save them these unnecessary costs and it’s better for the environment (well, not plastic). This way there are no surprises, they know how it will be arriving, and they will appreciate what you are trying to do as a small business person.

FINAL WORD: Small businesses need to maximize profit margins in order to offer competitive prices and still make money. Therefore, do away with any unnecessary costs that are not going to impact the buying decision.

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© 2013 G.B. Oliver. All rights reserved.