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Web plus: A dot-com looks for packaging solutions

Overstock.com offers a variety of name-brand surplus merchandise, such as toys, diamond rings, and TVs, for up to 70% off the retail price. Just like a catalog retailer, this Internet retailer must invest in quality packaging to ship products to consumers.
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Since the Salt Lake City UT-based company’s start in 1999 packaging personnel manually handled product shipment. Operators would spread paper pulp loose fill in the bottom of a corrugated container add the merchandise and pour foam peanuts or other protective dunnage material around the items to protect against in-transit damage.

Scott Stuart Overstock.com’s vp/director of logistics says “The paper and pulp loose fill we were using didn’t provide enough protection for the items we were sending to our customers. Items had a tendency of knocking against each other so they reached our customers in bad condition.”

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By the end of 2000 Overstock.com invested almost $100 in a Sealed Air (Saddle Brook NJ) Instapak® packaging solution through distributor Xpedx (Nashville TN). The complete system consists of an Instapak pad molding machine which produces flat pads as cushions for the bottoms of all containers and six SpeedyPacker™ foam-in-bag packaging systems for the Instapak void-fill process that locks the products in place inside the containers. Two 55-gal drums of Instapak UltraLite™ Foam an ultra low-density foam-in-place packaging material are used.

Stuart says that since Overstock.com switched to Instapak packaging the firm is about 5 to 10% below the industry average for merchandise returned due to damage occurring in shipping. “We have been able to reduce the amount of items returned to us because of damage by 65%” says Overstock.com CEO Patrick Byrne. “In addition shipping costs have been reduced by 20%.”

Protecting products

When an order is placed an Overstock.com operator collects the items and selects a corrugated container provided by Packaging Corp. of America (Lake Forrest IL) in a variety of sizes. Small orders and priority mail are shipped in containers from the U.S. Postal Service.

The operator places an Instapak flat foam pad created by the Instapak pad molder in the bottom of the container. The pad molding system transfers a rising bag of Instapak foam between two conveyors that form a flat pad at the adjusted thickness. Merchandise is placed on top of the flat pad and an operator checks the accuracy of the order by scanning the bar code of the products.

The container proceeds down a conveyor to one of the six SpeedyPacker systems. Each SpeedyPacker can deliver up to 21 foam-filled bags/min. With the touch of a button an operator selects the proper amount of foam required and places the rising bag of Instapak foam on top and along the sides of the products. The container is then closed allowing the foam-filled bag to expand to the shape of the void and lock the products in place. The container is sealed on a semi-automatic random taper from Intertape Polymer (Bradenton FL).

“On a cost per package basis this is more efficient” says Stuart. “You can control the amount of packaging materials you are putting in the box so there is less waste.”

At the same time Overstock.com saved on warehousing of packaging materials. In the past it devoted 200 pallet locations (15 cu’) to storage of loose fill. Because Instapak packaging expands up to 280 times its liquid volume Overstock.com can now devote just two pallet locations (154 cu’) to warehousing its packaging materials.

“Our switch has enabled us to increase our output to 8 packages per shift compared to 1 in an extremely short amount of time without any problems or delays” says Stuart. “This solution met our overall commitment of delivering a timely quality product to our customers.”

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