Is Packaging Hurting Your Profit Margin?

Is Packaging Hurting Your Profit Margin?

A few days ago, I popped into work to say hello to my boss and found myself assisting in her latest project — reviewing our merchandise.

To be perfectly frank, it’s one of my favorite things to do in this business and a chance to give my boss my input on what is selling and what isn’t. While we do have a very user-friendly POS system that tracks our transaction histories and overall sales numbers, this is one project that also heavily depends upon human judgment.

Consumers want something that meets their needs, but all too often are overwhelmed by their choices — and this is where attractive packaging can make or break a sale.

Some of the products up on the chopping block were items that just didn’t fit the needs of our customer base; some items were just too expensive; and finally, some items just had packaging that was unappealing, or fragile (that particular plastic formed into a box that becomes brittle with age and cracks easily) or a combination of all of the above.

But my manager is not the type to simply get rid of an item without first checking it out — and come to find out, some of the products with less than stellar packaging were hidden gems. We found some strong, sexy vibes that we knew customers would absolutely love — if we could only get them to look past the packaging they came in.

I’m not going to call any manufacturer out on the carpet — that’s not at all my intention here. But how many products just don’t perform as well as they could have because the way they were presented to customers — and to distributors — wasn’t well thought-out or planned? No matter how strong, or sexy or unique the product, if it isn’t presented with care, it won’t sell.

Yes, retailers should always spend time getting to know the merchandise that they carry, and I know that, in our stores, we always try to familiarize ourselves with new, hot products to show to our customers. But sometimes, the newest, hottest items don’t even make it to the retail level. We buy from distributors, and distributors buy direct from the manufacturers, often at trade shows like ANME. No matter how fantastic your product, a buyer from a distributor also has to take into account how said product is presented. They know their customer base — the retailers who purchase from them — and what those customers’ needs are.

Retailers want attractive packaging that draws the everyday consumers’ eye inside their store, but they also want that packaging to help them actually sell that product. Consumers want something that meets their needs, but all too often are overwhelmed by their choices — and this is where attractive packaging can make or break a sale.

A number of companies have reinvented themselves with a packaging design change, and whereas a few years previous their sales might have been less-than stellar, they have now become the shining stars of a retailer’s stock. The toys inside might be the same, but sturdier boxes, a change in packaging color or gorgeous graphics draw the consumer’s eye. And on a busy day in a retail store when there are several sets of customers and maybe only one or two sales staff to handle everyone, the ability to draw the eye — and therefore interest of a consumer — makes all the difference between a sale, and a customer browsing before leaving empty-handed.

While I certainly don’t think that sales should be solely dependent upon an item’s packaging — clever and eye-catching merchandising on the part of the retailer is vitally important as well — it is certainly helpful. I know there are big superstores scattered across the country, but not all adult retailers have vast amounts of square footage of floor space available to them. In my admittedly limited experience, most stores are on the small side, and toys must share space with racks of DVDs, lingerie and other pleasure products such as lubricants and condoms.

The retailer wants to bring in products that help their bottom line, not ones that will sit on shelves and hang on walls collecting dust. In an ideal world, consumers will let the product itself determine their decision to purchase, and not care about the packaging it comes in — after all, isn’t the package going to wind up in the trash anyway?

But let’s look at the issue from another angle, shall we?

We all know that many products wind up being very similar in form and function; maybe the colors are different, but otherwise they could be identical, even though they come from two different manufacturers. So, if there are two items that are shaped the same, have the same number and type of functions, and let’s say both are similar in price, which does the consumer pick?

The product with the more eye-catching packaging — or has packaging that is sleek and sexy — is always going to be the go-to. As the stigma surrounding frank discussion of sex and sexuality decreases, we as retailers see an increasing number of consumers who purchase toys and other sex-based products as gifts for loved ones, friends and even work colleagues.

Well-designed packaging becomes an integral factor in a customer’s choice of purchase. So when there are two products similar in price, form, and function, the customer will always pick the one that has the more attractive presentation.

Over the course of the past year or so, I have noticed an increasing number of manufacturers discontinuing older lines of products, only to re-release them in all-new, much more attractive packaging. Some manufactures have gone all the way with brand relaunch, and while the products inside might not have changed, the way they are presented to the consumers have brought them into the limelight.

In my store alone, we sell out of these products within days of receiving them in our order. Consumers no longer rely solely on a sales clerk to direct them to products, but research heavily online before ever setting foot in a store. They might know exactly what they want, or they might only have a general idea, but they will make a beeline for products that have the nicest packaging.

When business is brisk and sales staff are helping other customers, having products that practically sell themselves by way of packaging, easy-to-understand functionality — or barring this, clear instructions printed somewhere on the box — is immeasurably helpful to not only the retailer’s bottom line, but to the manufacturer’s profit margins as well.

RJ McCarthy is a freelance writer and editor who spends her days in an adult retail boutique on the East Coast educating her customers in all things sex-related. She comes from a long line of educators, and considers her store to be just another type of classroom, one in which she can promote healthy attitudes towards sex and sexuality. Holding both a B.A. in English and a MFA in fiction, McCarthy has written articles for Sexual Health magazine and Impulse Novelties’ blog.