July 16, 2010
This blog post is in response to a great many blog posts I've seen over the years on how to bring a product to market or outsource your product manufacturing to a contract manufacturing firm. Right about now we're likely to start seeing more of these posts because the timing is ideal for final manufacture work before the holiday shopping season. I'll keep a running list of some of these blogs at the bottom of this post.
Shipwire is pretty lucky in that there are many niche product manufactures that work with us because we take away the hassles of the storage and shipping as they scale their sales. We also give them a "ship-to" address that can be given to a manufacture sending product from overseas, which can be a really nice alternative to your garage if you are just starting out.
Most of the blog posts out there talking about manufacturing products overseas, product design and manufacturing-on-demand focus on finding a manufacturer, working with the manufacturer to get the product built, getting samples and test products and then scaling up production.
That is all well and good; but, what most new product designers ignore (and even a few seasoned designers have missed) is the importance of packaging and specifically shipping packaging as part of the design process. Here are a few critical mistakes that we see all the time from new product sellers:
- No thought to shipping
- No thought to packaging
- No thought to labeling for outsourcing distribution or a third-party fulfillment center.
- No thought to leveraging shipping as a sell point, much less offer free shipping options.
So lets dive into each of these and give them some thought.
1) Start with the end in mind – How will you sell?
If your plan is to drive trucks around and deliver every product, then you may have less concern here. However, if you choose to sell the product online or through multiple distributors, you will need to think about size, weight and packaging. If you”re selling to consumers online, your product had better fit the size requirements for UPS, USPS, FedEx or ___ (insert your regional postal carrier name).
However, if you decide to sell wholesale, you”ll need to learn a bit more about freight, container, and truck-load shipping. If you buy a container will you will want to know if your product can be floor-stacked in a container or if you need to put it on pallets.
If you have designed and are selling a heavy product (over or close to 150 lbs) you should consider whether the product should be split into different shippable components. That way you can ship to buyers in multiple packages.
If you are planning to sell wholesale and retail, then case packs and master cartons are going to be important. How many individual units you can fit into a case pack and how many cases will make up your master cartons will impact everything from your minimum order size to your fulfillment costs. If 10 eaches are packed into a case, it makes little sense to have a minimum retail order size of 5 units; you will cause yourself a shipping nightmare trying to fulfill all those minimum orders. Here is some information on master carton management.
2) Packaging for Savings and Maximum “Ship-ability”
As you work with suppliers and manufacturers, don't ignore packaging. "Inner" product display packaging or "outer" shipping packaging. Both are important. Especially today when more and more companies are putting product into display packaging that can also survive shipping. This is a favorite of eco-friendly companies, and I for one think it is a great movement.
The larger your items get the more important packaging can be; even little changes in small product packaging can have a huge impact on your products' ship-ability, the end consumer costs, and the likelihood of the product getting broken during transit. Here are some general rules of thumb:
- Packaging is almost always cheaper when done closer to the point of manufacture. This is especially the case if you need custom or die-cut packaging to fit your products.
- Once again, you should know the maximum shipping size and weight of your favored parcel carrier if you are selling directly to consumer. A incredibly common mistake entrepreneurs will make is not taking into account the additional, protective packaging (outer) they”ll have to put around the product before it can be shipped if the display packing won't survive transit.
- Package products as you would sell them in order to reduce labor costs. For instance, if you sell individual items and wholesale lots, create “master cartons” of wholesale amounts that easily can be broken down to individual units at the time of shipping.
- For large multi-part products, consider how you want to individually package and group the constituent pieces to reduce shipping costs and ensure easy replacement of parts for end buyers. Components wear down, need to be replaced, are lost in transit, stuck in customs or need different versions to be released at different times. Plan for it. For goods that are close to/over 150 lbs or are oddly shaped are all ideal for attempting to break into multiple components. We recommend working with your manufacturer to create multi-part assembled products that can be shipped individually.
- Talk to your warehouse provider to understand the impact to your freight and warehouse costs when deciding whether to palletize or floor-stack your products especially for container receiving.
As with packaging, understanding labeling will help you close business or at least give you increased flexibility.
If you have a complex product assortment or you ever want to outsource your shipping to a third-party warehouse, labeling is especially critical. Barcodes are one thing; but, you still need to be able to identify the product. In today's complex online sales world your product ID (SKU_ID) will be the "index id" that you push up to marketplaces like eBay and Amazon. It's also the number that you”ll reference in your web store, that will flow down to your warehouse, your outsourced warehouse or your drop-shipper. Better make sure your physical product has the same SKU/product_ID on it so whoever ships it doesn't grab the wrong product!
If you plan on selling wholesale, then packaging your master cartons and labeling them separately from your individual units is CRITICAL. If you forget this expect to pay time and material costs to correct your wholesale packaging and labeling. It is an expensive mistake. Here are some labeling requirements to send to a supplier. If you can satisfy the Shipwire requirements, then you are likely in good shape.
4) Fast and Free Shipping closes deals
If you”re selling online today, you better understand how to leverage shipping and how that impacts your margins. Buyers want products “Fast and Free”; here are 6 ways to make it happen. 6 Fast and Free Shipping Tips
5) Bonus Tip!! Learn about Drop Shipping!
We posted an article on demystifying drop shipping a while back. Here is the difference between drop shipping and order fulfillment
For more information on manufacturing and bringing your product to market, check out this post from the Shoestring Venture on bringing products to market. Also there was a good series on Tech Crunch about going it alone in china, first of that series.