An extra dollar per order doesn’t sound like much — until you ship 5,000 orders a month.
Most e-commerce founders can tell you their ad costs down to the cent.
You know what you’re paying for traffic. You know your conversion rate. You probably check your shipping invoices more often than you’d like.
But packaging?
That usually sits in the background. Boxes go out. Orders arrive. As long as nothing breaks, it feels “fine.”
The problem is that packaging doesn’t hurt your margins in obvious ways. It doesn’t spike overnight. It leaks. Slowly. Quietly. And it gets worse as you grow.
From our perspective at The Packaging Company, supplying packaging to e-commerce brands at different stages of growth, we’ve seen this pattern repeat itself. Packaging rarely causes one big failure. Instead, it quietly chips away at margin as order volume increases.
Why Packaging Costs Are Hard to See
One reason packaging flies under the radar is that its costs are scattered.
- Shipping shows up on one report.
- Labour lives somewhere else.
- Materials get lumped into overhead.
- Returns sit with customer support.
No single dashboard shows how packaging performs end to end. So when something goes wrong, it gets blamed on the nearest problem.
Shipping is too expensive? Must be the carrier.
Returns are creeping up? Probably the product.
Fulfilment feels slow? We need more staff.
Packaging is usually the common thread. It just doesn’t look like one.
Where Margin Erosion Actually Happens
Most margin loss tied to packaging doesn’t come from one big mistake. It comes from small decisions that compound as volume increases.
Shipping Air: Paying More Without Realizing It
This is the fastest way to lose money without noticing.
Here’s a simple example.
A brand selling lightweight products — under two pounds — was shipping most orders in a single “standard” box. It made packing easy. Fewer SKUs. Less thinking.
The issue? That box pushed many shipments into higher dimensional weight tiers.
On paper, the box only looked a few inches too big. In practice, it added $1.80 to $2.40 per order in shipping costs.
At 3,200 orders a month, that was roughly $6,500 disappearing — every month — just to move empty space.
Nothing was broken. Nothing failed. But margin was leaking on every shipment.
If you take one thing from this article, let it be this:
Shipping air is expensive, and it scales terribly.
Labour: The Invisible Multiplier
Founders tend to underestimate labour costs tied to packaging because they don’t feel dramatic.
Saving 20 seconds per order doesn’t sound like much. Until you do the math.
One brand we worked with was packing about 450 orders a day during peak periods. Their packaging required packers to:
- Resize boxes
- Add extra void fill
- Adjust products by hand
Each order took about 30–40 seconds longer than it needed to.
That doesn’t sound like a crisis. But over a day, it added up to 4–5 extra labour hours. Over a month, it meant paying for an extra employee — without realizing why.
Once packaging was simplified, average pack time dropped under two minutes. They didn’t lay anyone off. They just stopped needing to add staff during busy weeks.
If your packaging requires decisions at the packing table, it’s costing you money. Every single day.
Damage, Returns, and Misattributed Blame
Most packaging problems don’t show up as “packaging issues.”
They show up as returns.
I’ll give you a real example.
A food and drink brand was seeing about 6% returns on a specific product. Most were labelled “damaged” or “not as expected.” The product itself was usually usable.
The assumption was that customers were being picky.
What was actually happening was internal movement during shipping. Items arrived scuffed. Corners were dented. Nothing was broken, but the product didn’t feel premium.
Customers didn’t say, “Your packaging failed.”
They just sent it back.
A small internal packaging adjustment reduced returns on that SKU to under 3% within six weeks. The product didn’t change. The carrier didn’t change. Packaging did.
If you’re seeing returns that don’t quite make sense, packaging is often part of the answer.
Over-Packaging: When Spending More Doesn’t Protect More
When damage happens, the instinct is to add more.
More padding.
More layers.
More tape.
I get it. It feels responsible.
But over-packaging is usually a reaction, not a strategy.
One brand added extra void fill and double-boxed a fragile product after a few bad weeks of damage. Costs went up. Packing slowed down. Damage rates stayed the same.
Why? Because the product wasn’t failing from movement. It was failing from pressure at one specific point.
Once packaging was redesigned to protect that exact failure point, damage dropped — and material use went down at the same time.
Protection isn’t about adding more. It’s about being precise.
Why Growth Makes These Issues Harder to Ignore
At low volume, most of this is survivable.
You can eat an extra dollar per order when you’re shipping a few hundred packages a month. You can absorb inefficiencies when your team is small and flexible.
Growth changes that.
At 1,000 orders a month, small leaks are annoying.
At 10,000 orders, they’re structural.
The tricky part is that packaging decisions tend to stick. A box chosen early on often becomes “the box” long after it should’ve been re-evaluated.
Growth doesn’t create packaging problems. It exposes the ones you’ve been living with quietly.
What You Should Re-Evaluate as You Scale
You don’t need to overhaul everything. But if you’re growing, these are worth asking — honestly.
- Are your box sizes chosen for convenience or fit?
- Does your packaging speed up packing or slow it down?
- Do you actually know why products get damaged, or are you guessing?
- Are custom boxes and other custom packaging solutions a feasible option?
- Are returns ever reviewed through a packaging lens?
- Has anyone revisited packaging since your order volume doubled?
You don’t need a spreadsheet for this. You need awareness.
Walk the packing floor. Watch an order get packed. Time it. Open one of your own deliveries like a customer would.
You’ll learn more in 20 minutes than you will in most reports.
Packaging as Margin Infrastructure
- Packaging isn’t marketing.
- It isn’t exciting.
- It doesn’t show up in growth charts.
But it touches every order you ship.
Think of it like plumbing in a building. When it works, nobody talks about it. When it’s inefficient, the cost shows up everywhere else.
Margins aren’t always lost through big, dramatic mistakes. More often, they disappear through small decisions that never get questioned because “that’s how we’ve always done it.”
If you’re scaling an e-commerce brand, packaging isn’t something to obsess over — but it is something to respect.
Because it’s quietly doing more to your margins than you think.
Author Bio:
The Packaging Company works with growing e-commerce brands to design and supply packaging built for real-world shipping, fulfilment, and scale. Their perspective comes from years of hands-on experience supporting brands as order volume and operational complexity increase.
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