How EPR is Reshaping What Total Cost of Ownership Looks Like

Click. Your customer hits the check-out button, and their shopping cart is now empty.

“Thank you for purchasing! Your order will be shipped soon. Be on the lookout for tracking information.”

The journey of a product purchase seems simple: an order comes through; products are picked, packaged, and shipped. But it’s a lot more complicated than what a packing list indicates.

Is it fragile? Is it being shipped with other products? Is it necessary to plan for returns? Is it being shipped in a corrugated box or a mailer? Does it need protection? What is the cost of shipping it?

The total cost of ownership to ship a product is a major aspect of packaging operations. It accounts for all the costs associated with shipping an order—from packaging material choices to freight charges to damages caused in the shipping process.

And if it wasn’t complex enough, Extended Producer Responsibility (EPR) legislation and customer sustainability expectations have reframed what this looks like for businesses.

How EPR Impacts Your Packaging Materials Choices

Businesses are now responsible for the disposal of the packaging waste they produce when creating a product in an effort by states to divert resources from filling up landfills, fund recycling infrastructure, and encourage the use of more sustainable materials.

EPR primarily affects the costs associated with the packaging materials used to ship products. This includes primary, secondary, and even tertiary packaging—everything from the original box or bag within which a product is contained, to the stretch film used to bundle items being shipped to its destination.

Each material is charged a fee. More sustainable options have a lower cost to encourage the use of more environmentally preferred materials, like those that can be easily reused or recycled by the end-user.

But there’s more to consider than just choosing paper over plastic.

Read how we collaborated with Emerald Packaging and Wada Farms to help Walmart achieve one of their sustainability goals through an innovative solution.

Total Cost of Ownership Factors

When making packaging material selections, packaging teams should take a holistic view of the entire packaging life cycle.

Material & Equipment Cost

Labor and Pack-out Efficiency

Freight & Dimensional (DIM) Weight

Inventory Costs

Damage, Returns, Reshipping

Overall Material Usage

Usually, the best packaging options are the ones that reduce environmental impact and overall waste throughout the shipping journey by protecting the order properly.

Breaking it Down: Packaging Material Choice and Total Cost of Ownership

USE CASE #1: Lightweigh Product—eCommerce Apparel

Anya bought a soft t-shirt and a pair of chino pants from an online clothing retailer. It's lightweight, and more resilient to damage during shipping.

KEY TAKEAWAY: Although flexible packaging like poly mailers may incur higher EPR fees, they use less material and lower shipping costs for lightweight, non-fragile items while still ensuring a positive customer experience and reducing total cost of ownership. 

USE CASE #2: Heavy Product—Automotive/Industrial Products

Tony purchased a new door panel replacement from the original manufacturer at an automotive dealership for a customer. It's heavy and needs to be protected from damage during shipping.

KEY TAKEAWAY: Even though using more packaging materials for heavy or fragile products might seem less efficient, providing proper protection from the start actually reduces returns and repeat shipments, lowering the overall cost of ownership. This approach also helps strengthen your brand's reputation. 

Actions You Can Take Now

You can make informed decisions as to which packaging materials are most cost-effective by evaluating the total cost of ownership for your packaging throughout its life cycle journey. And in doing so, you’ll make your packaging program more efficient, especially when navigating EPR compliance.

Three Steps to get Started

As more states pass EPR legislation and are fully operational, you’ll want to ensure that you have processes in place to adapt, including periodically reviewing your packaging program for improvement.

The most successful packaging strategies look at the entire picture and not just on individual elements.