Latest / The DTC Marketing Podcast with Fexingo: Direct-to-Consumer Brands, Shopify, and E-Commerce Growth / How DTC Brands Use Packaging to Cut Returns
Transcript
- Lucas: So I was looking at some numbers this morning, and something a little surprising popped out. For a typical DTC apparel brand, returns can eat up somewhere between twenty and thirty percent of gross sales. Luna: That's huge. And most people probably blame the fit, right? But I heard a really interesting take that packaging might be just as guilty. Lucas: Exactly. The traditional wisdom is 'returns are a fit problem,' but a growing body of evidence suggests that what happens before the customer even opens the box can set the stage. And that's what I want to dig into today. Luna: Before we go deeper, I just want to say—if these conversations have sparked something you've actually used in your own store or your own work, the reason we can keep doing this ad-free is listener support. You can help keep that going at buy me a coffee dot com slash fexingo. Lucas: Yeah, it genuinely makes a difference. And it's not a big ask—just if the show's been useful to you. Anyway, back to the box. Lucas: So here's the thing. When we think about packaging, we usually think about protection—making sure the product arrives intact. But the smartest DTC operators are treating the box as a piece of marketing collateral. It sets expectations. Luna: How does a box set expectations? I mean, it's cardboard. Lucas: Fair question. Let's use a specific example. There's a mid-size apparel brand—I won't name them because they're private—but they were seeing a return rate hovering around twenty-five percent. They redesigned their packaging, and within two quarters, that number dropped to nineteen percent. Eighteen percent relative reduction. Luna: That's a serious improvement. What did they actually change? Lucas: Two things. First, they resized their boxes. They had been shipping everything in this big, generic mailer, and now they matched the box size to the product. Second, they added a simple insert—a size guide that showed exactly how the garment was cut, with measurements in inches and centimeters, plus a note saying 'if you're between sizes, here's what we recommend.' Luna: So it's not just about the box itself, but what's inside it. That size guide is basically pre-empting the 'does this fit?' anxiety. Lucas: Exactly. And it's that anxiety that drives a lot of returns. When people order online, they're already braced for disappointment. A well-designed unboxing can actually reverse that. It's a moment of confirmation rather than doubt. Luna: And the box size thing—there's something psychological there too, right? Like when you get a huge box for a tiny t-shirt, it feels wasteful, and that might subconsciously make you more critical. Lucas: That's a real phenomenon. Researchers have found that when a package feels disproportionate, it lowers the perceived value of the item inside. You paid forty dollars for a shirt, and it arrives in a giant box with all this air—it just feels off. The customer's first impression is 'this wasn't worth it.' Luna: And that's before they even try it on. So the box is literally the first touchpoint. Lucas: Right. And it's not just about feelings—there's hard math behind it. Every returned item costs money: shipping both ways, restocking labor, inspection, and if it can't be resold as new, the whole thing gets written off. For a typical order, that's often between ten and twenty dollars per return, and that's before you account for the carbon footprint. Luna: And with sustainability becoming a bigger deal for consumers, that's a hidden cost to your brand, not just your bottom line. Lucas: Exactly. So the question becomes: how do you reduce returns without hurting conversion? Because one obvious answer is to make returns harder, but that just drives people away. The genius of the packaging play is that it addresses the root cause—expectation mismatch—rather than punishing the customer. Luna: So for a smaller DTC brand, what's the first step? I mean, not everyone can afford a full packaging redesign. Lucas: You don't need a full redesign. Start with the size guide insert. That's a low-cost, high-impact test. Print it on a recycled card, drop it in every box, and track your return rate for a month. If you see even a two or three percent dip, that's a win. Luna: But what about the box size? Is it really worth reordering all your packaging? Lucas: It can be, if you're shipping a lot. I've seen brands cut their dimensional weight shipping costs by fifteen percent just by switching to a right-sized box. That's a cost saving that pays for the packaging redesign pretty quickly. Plus, you're sending a signal that you care about the details. Luna: And there's the data side too. I was reading about ai powered size prediction tools that integrate with Shopify—they ask the customer a few questions and recommend a size based on their body measurements. That's kind of the next step. Lucas: Yeah, those tools are getting really good. Some brands are seeing return rate reductions of ten to fifteen percent just by adding that to the product page. But it's not a silver bullet—you still need the packaging to deliver on the promise. Luna: So it's a combined approach: the AI helps you get the size right, and the box confirms that you got it right. Lucas: Exactly. And there's another angle that's gaining traction: the 'try before you buy' model. Some DTC brands are shipping a product with a prepaid return label, but instead of a traditional return policy, they invite the customer to wear it, live with it, and only pay if they keep it. That sounds risky, but it actually reduces the psychological pressure to return. Luna: How does that work? Doesn't that just encourage people to keep it and not pay? Lucas: Most people are honest. And the data shows that when you trust the customer, they're more likely to become loyal. One brand I read about saw their return rate drop to single digits because the customers felt a sense of obligation—they'd already worn the shirt, so they kept it. It's a counterintuitive strategy, but it's working for some. Luna: Interesting. But I imagine that's not for everyone. For a high-ticket item, that could be a big risk. Lucas: For sure. It works better with lower-priced, everyday items. For something like a luxury watch, you're not going to ship it out on a trial basis. But for a forty-dollar t-shirt, it's a whole different ballgame. Luna: So, what's the one thing a DTC brand should test first if they want to cut returns? Lucas: I'd say the size guide insert. It's cheap, it's fast, and it's directly addressing the number one reason people return: fit. And if you pair it with a box that doesn't look like an afterthought, you're already ahead of most brands out there. Luna: And what about measuring success? Just the overall return rate, or should they track something else? Lucas: Track return reason codes, if you can. Separate 'fit' returns from 'damaged' returns from 'changed mind.' If your packaging changes are working, you should see the fit-related returns drop specifically. That's a clearer signal than the overall rate. Luna: And for those who are worried about the cost of changing packaging—any tips on how to do it cheaply? Lucas: You don't have to custom-print everything. Use a standard box size that's closer to your product, and buy plain, unbranded boxes for now. Add a small sticker or a card with your logo. That's a fraction of the cost of a fully custom box, and you can still test the effect. Luna: That makes sense. So the box is more than just a container—it's a communication tool. Lucas: Exactly. And the brands that get this right are building a better relationship with their customers. It's not just about reducing costs—it's about creating a moment that makes them want to come back. Luna: I'm thinking of a friend who runs a small skincare brand—she's always worried about returns, but she's been hesitant to change her packaging because she thinks it'll confuse customers. What would you tell her? Lucas: Tell her to start with a simple test. Try the size guide, and maybe add a note that says 'we've carefully packaged this to ensure it arrives in perfect condition.' That little bit of reassurance can go a long way. Luna: That's a nice touch. So it's about managing expectations at every step. Lucas: Precisely. And as we move into a future where returns are a bigger issue—especially with more people shopping online—the brands that master this will have a real edge. Luna: I can see that. So, final thought—if someone's listening and thinking about their own brand, what's the one takeaway? Lucas: The box is not the afterthought. It's the first handshake with your customer. Treat it like the start of the relationship, not the end of the shipping process.