Total Cost of Ownership: Minimizing Product Damage & Returns With Smarter Packaging
Our Total Cost of Ownership (TCO) series breaks down the direct and indirect costs tied to packaging. In this post, we focus on product damage and returns. We’ll explore how tailored protective designs, advanced materials, and data-driven refinements prevent damage before it happens. Then we’ll examine how this spares you the double hit of product replacement, additional shipping, and lost customer lifetime value—while keeping sustainability targets on track.
Returns are eating up budgets faster than ever. In U.S. retail alone, they totaled roughly $685 billion in 2024. Damage-related returns are one of the most expensive slices of that pie: every compromised box or cracked component triggers duplicate freight, labor, and wasted inventory. Worse, consumer research shows that 73% of shoppers hesitate to buy again after receiving a damaged order. In this final chapter of our TCO series, we show how strategic packaging lowers those hidden costs while extending the lifetime value of customers.
The Hidden Cost Behind “Just One” Return
One damaged shipment triggers far more than a refund. It kicks off a domino effect that quietly eats into profit:
- Reprocessing and replacement orders: You pay for a replacement item plus the effort to pick, pack, and pay outbound freight (again) along with the cost of customer service time and added strain on payment processing systems
- Lost resale value: Cosmetics, electronics, and seasonal items often can’t be resold at full price—if at all.
- Reverse-logistics labor: Carriers charge inbound fees, and distribution center teams must inspect, sort, and either restock or scrap the item.
- Customer churn: Damage erodes trust, leading to fewer return purchases and higher costs to bring in new customers.
- Environmental impact: Returns add miles to the supply chain, increasing transportation-related emissions, and often send damaged or unsellable products straight to the landfill.
A mere half-percent rise in damage can drain hundreds of thousands of dollars from annual profit—a hit far larger than most line-item packaging budgets.
Three Packaging Moves That Drive Damage Down
Below are three proven packaging strategies that consistently reduce damage, waste, returns, and the costs that follow:
- Damage risk assessment
Assess product fragility through drop and vibration testing to fine-tune pad density, wrap tension, and load containment—avoiding costly trial-and-error and reducing damage risk before each SKU rollout. - Advanced materials and smart design
Investing in high-quality, impact-resistant materials such as shock-absorbing cushioning and reinforced corner guards concentrate protection where it’s needed most. - Data-driven refinement
Return codes such as “broken,” “leaked,” or “crushed,” are more than post-mortems; they're a road map. So is your customer feedback: Are they posting about positive experiences, or calling out damage and delays? Overlaying that data with shipment routes and carrier touchpoints–alongside carrier claims–can reveal actionable steps you can take, like tweaking board strength, adding corner buffers, or shifting to mailers. Continuous loops like this steadily push damage rates down and customer confidence up.
Beyond the Warehouse: Four Ripple Effects
Lowering damage inside the distribution center sends benefits rippling through the rest of the business:
- Higher customer lifetime value: Fewer negative encounters keep buyers coming back and spending more.
- Stronger brand advocacy: Happy customers share their positive experiences, driving referrals in both B2B and B2C markets.
- Lower acquisition costs: When a customer doesn’t come back after a damaged order, it’s not just the sale you lose, it’s the acquisition cost you already spent to win them.
- Premium brand positioning: Consistent delivery quality earns trust, supporting higher prices and stronger margin.
Conclusion
With returns crowding the trillion-dollar mark and customers churning after a single bad experience, damages must be addressed. Strategic packaging—custom-fit, lab-validated, and continuously refined—turns damage control into a profit lever that protects margins, loyalty, and sustainability goals.
Connect with Pregis for an onsite damage-reduction audit and start turning returns into revenue.
Missed the first installments in our TCO blog series? Explore Part 1 (hidden expenses), Part 2 (impact of material choices), and Part 3 (labor efficiencies), Part 4 (freight costs) and Part 5 (storage & warehouse costs) to see how a TCO mindset drives value across your operation.
