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Frequently Asked Questions: Contract Packaging Edition

Contract packaging, or co-packing, has become a vital manufacturing option for many companies that don’t have the resources to manage the process effectively by themselves. Logistics businesses — especially those in the food and beverage, health, and pharmaceutical industries — that capitalize on this service can produce large orders without having to scale their manufacturing practices or staff, giving them a lot of advantages over their competition.

On the surface, packaging may seem like a simple thing. Still, like any other trade, it can be challenging to recognize the subtle differences that make one packaging choice a better fit for a certain kind of product over another. It’s important to understand these nuances between the various types of contract packaging services that are out there, so you can make well-informed decisions that protect and enhance the appeal of your products on shelves.

The last thing any company wants is damaged goods or sloppy packaging that poses a risk to their brand or a wasted marketing opportunity. To provide logistics businesses with some much-needed clarity, here are some answers to questions frequently asked about co-packing.

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So, what exactly is co-packing?

Many companies that don’t have the time or money to develop their packaging facilities or invest in state-of-the-art equipment will often outsource some, or all, of their co-packing needs. This term refers to the process of outsourcing a company’s essential packaging services to a trusted contract packager, or co-packer.

A reliable co-packer or third-party logistics provider that has the expertise and capabilities to manage your specialized packaging, assembly better, and kitting processes can help you improve your operational efficiency overall.

What is the difference between primary packaging and secondary packaging?

If you’re not directly involved in the business, you may not know there are three fundamental levels of packaging that all serve different purposes: primary, secondary, and tertiary. Typically, the primary level of packaging is the material closest to a product, and the last piece a consumer removes before use.

For example, the can surrounding soda or a box that holds staples both represent different types of primary packaging. While this level can take a variety of forms, it usually protects your goods and promotes your brand in addition to educating or drawing in customers.

The secondary level of packaging is the additional packaging used to hold individual units together that are already in their primary packaging. For instance, two common examples of this second level include the six-pack rings holding the soda cans together or a carton containing pre-packaged vials of pharmaceuticals.

In many cases, secondary packaging mainly serves more of a utility purpose than the branding function of primary packaging, but it can market your goods as well. It’s typically intended, however, to facilitate convenient transportation and help retailers easily restock their shelves. Like primary packaging, secondary packaging needs to be accessible yet also more durable to offer the proper protection for your product.

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What does repackaging involve?

Repackaging refers to the process of removing a product from the original packaging it was first distributed in by the manufacturer to another container. Repackaging takes products that have already been in primary packaging and places them in entirely new packaging designed to meet customer needs.

Whether your product required safer packaging for inspections, was packaged incorrectly or was a medication that needed separating into smaller dosages, repackaging services exist to ensure that your finished goods are in the best format possible.

When should you use multi-packs vs. variety packs?

Multi-packs and variety packs are two other popular trends (especially in today’s retail markets). Companies tend to lean toward one or the other without understanding why or when to use these forms of packaging.

Multi-packs, or bundles, are pretty much what they seem: multiple units of the same product Untitled Designpackaged together in one container. They allow manufacturers to increase production volumes, which is what helps manufacturers provide discounted prices to consumers.

On the other hand, variety packs combine several different products into one package to help manufacturers show the full extent of their goods.

Both packaging options offer great opportunities for attracting new customers or gaining volumes, but variety packs can be more optimal for seasonal products.

What are some of the significant competitive advantages of co-packing?

1. Boost sales

Regardless of your industry, great packaging can increase sales. Many consumers make impulse purchases based on how a product looks, so the appearance of packaging alone can improve your bottom line. Also, with neat presentations and easily accessible products, you will build an appeal with your customers and preserve your company’s reputation. The growing trend of CPG companies using the co-packing technique called rainbow packaging is an excellent example of how presentation can improve sales.

2. Decrease costs

Third-party co-packing companies have the necessary qualifications that make the packaging process more efficient. A manufacturer that chooses to co-pack with an outside company doesn’t have to make the hefty investments required to provide the flexibility they need with packaging, which saves them from taking on a lot of additional operating costs. Many fixed expenses, like equipment and space, can be avoided.

A co-packer is also able to produce lower volumes when it’s required and can offer more flexibility for what your business needs. With shorter lead times and faster order fulfillment, you can further decrease your production expenses as well as lower transportation costs to generate even more significant savings.

3. Increase product visibility

Private labeling is another example of a benefit that contract packaging offers companies. A co-packing partner that provides private labeling services can help businesses reach a much larger audience because of the potential for multiple branding opportunities.

Often, a privately labeled product sells at a lower price point without the need to sacrifice its quality. Large co-packing companies that have their hands in various markets can add value to your business because they can increase the visibility of your goods.

4. Invest in sustainability

Consumers have become far more aware of packaging. Factors like whether or not a product uses recycled materials, or even the exact percentage that is recycled, are now essential concerns for many consumers.

Since co-packing can help reduce a company’s carbon footprint and the amount of waste that packaging creates, consumers are more likely to buy a product that’s sustainably packaged over one that’s not. If you co-package your goods with recycled materials, you can also advertise your eco-friendly practices on the label of your product, which is an added marketing bonus.

Greener alternatives, such as club store packaging, cut down on excessive materials and decrease the weight of shipments as a result. So more of your product can fit in warehouses, on trucks, and retailer’s shelves. In terms of transportation, lighter packaging materials are much more cost-effective because you can use smaller, more cost-efficient trucks or place more of your goods in a single load. While club stores may have stricter guidelines compared to other retailers, the environmental benefits and cost savings can make it worthwhile.

As manufacturers try to differentiate themselves from their competition, co-packing has become an increasingly sought after solution due to the many competitive advantages it can provide. After all, the packaging and presentation of your products will influence customers at the exact moment their purchasing decisions get made. If you’re struggling to sort through the many layers and types of packaging that go into developing a finished product, consider working with a co-packer that can sweat the small stuff for you.

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