A better way to envision packaging for eyeglasses
It’s a fact: prescription eye wear is almost always essential and most often costly. San Francisco Bay Area-based Zenni Optical is out to change that – at least the costly part. According to Sean Pate, marketing VP at Zenni Optical, eyeglasses simply never experienced the sort of price optimization that is common in many, if not most commoditized products. Even national discounters like Lens Crafters and Costco sell glasses with a price tag well into the three-figure range.
Zenni Optical was introduced in 2003 after its founders identified the difference between manufacturing cost and product price among traditional retail eye wear channels. The margins were considerable. According to Sean Pate: “the cost in making those goods is nowhere near the cost that’s passed along to the consumer. There’s sometimes a 10x markup or more.”
From the start, Zenni’s business approach would be based on a volume-driven, direct-to-consumer model focusing on low price leadership. Competing with Costco and other similar discounters, where retail prices easily rose to $150 and more, the average price for a customer buying a pair of glasses from Zenni is around $40.
Controlling costs by streamlining packaging
Zenni spent its first decade on developing a vertically integrated manufacturing and supply chain that’s not beholden to any of the industry giants. Once that supply chain was firmly established, the company turned up the heat on marketing. While a considerable number of customers had discovered Zenni over the years, their full-on commitment to aggressive marketing has the company growing at a year over year pace of 25-30%. At its current pace, that equates to 10,000 to 15,000 individual packages per day.
The direct-to-consumer e-commerce model was a key factor in controlling costs from the start. Like many other fulfillment operations, Zenni’s objective was to eliminate the requirement for brick and mortar retail locations altogether. Part of the plan was to locate manufacturing to a low-cost region. Now, roughly 2,500 styles of frames, and all prescription lenses are manufactured to order in Zenni’s manufacturing facility in Danyang, China, then shipped via UPS air freight in 500-count corrugated shippers to Zenni’s Bay Area fulfillment center. Each pair of glasses carries a unique identifier via bar coded order number, which stays with the glasses through the entire process. In this way the order can be tracked and traced through the entire supply chain – including returns, should this ever be necessary. An order placed online in the US triggers a specific style and prescription to be produced in China. Product is then shipped in a bulk, corrugated case to the Bay Area fulfillment center where the glasses are placed into glasses cases, then pouched and labeled.
Reducing the cost of secondary packaging
From its inception, fulfillment for Zenni required a considerable amount of hand packaging. An operator picked out the finished frames from the bulk shipper, scanned the frame’s bar code to identify and match it with a mailing label. The glasses were then hand packaged into the glasses case, then into hand-sealed bubble mailers before hand labeling with a separate pressure-sensitive shipping label. The process was labor intensive – and labor in the Bay Area does not come cheap.
Production has reached an all-time high. However, in greater volume, the cost of secondary packaging material goes from manageable to having a significant negative impact on the bottom line. Realizing how materials and hand packaging were affecting gross margins, Zenni Optical looked to packaging automation to help tamp down labor and material costs and at the same time manage their skyrocketing growth.
Building an efficient fulfillment center
Simon Goh, Shipping Manager at Zenni, attended PACK EXPO in Las Vegas to research automated bagging systems. There he was introduced to PAC Machinery. Goh initially purchased a PAC Rollbag R1285 Velocity Automatic Bagger from PAC Machinery, then quickly followed up by adding three additional machines. The fulfillment center would now utilize four automated pack stations equipped with PAC Rollbag tabletop baggers. “The seal produced on the PAC bagger creates a comparatively thick seal with high integrity. This is what drove us to add more of the PAC machines,” Goh says.
The Zenni operation is not yet fully converted over to the automated pack stations. Roughly half the volume of glasses shipped is still hand-packed in bubble wrap packs with hand-applied 4×6-inch shipping labels printed on a label printer but seeing the old process and new process working side by side brings the difference between the two into clear focus. “One metric I use is the number of steps an operator requires to move each pair of glasses,” Goh says. “On the manual stations, an operator has nine steps to complete the shipper. Using the PAC Rollbag R1285 automatic baggers, we’ve reduced that number to five steps, which saves a lot of time, and increases productivity by about 40 percent.” Additionally, we realized the use of protective bubble wrap was unnecessary owing to the strength of the eyeglass case.
Automation and the bottom line
Zenni confirmed their hunch: packaging automation at this scale saves money. The bubble mailers Zenni had previously used cost about $0.15 each. The PAC Rollbag R1285 Automatic Baggers use printed pre-opened poly mailers on a roll instead of bubble mailers, cutting the cost to under $0.05 per poly bag mailer. This represents a significant savings in material costs considering the escalating volume Zenni Optical manages daily.
Streamlining further still, the pack stations now use pre-opened poly mailers in just three sizes: small, medium, and large – with the small size accounting for 70% of volume. These sizes were optimized to carry their contents with minimal material usage.
To switch bag sizes, the operator makes simple adjustments to the machines via the easy-to-use HMI, and switches to a roll of the corresponding bag size. The changeover process takes seconds.
Eliminating steps means reducing cost
PAC Machinery’s Rollbag R1285 automatic bagging machines integrate PAC’s time-tested automatic bagger platform with a direct-to-bag printer operating under variable data software. The printer can apply almost any data needed directly to the poly mailer. This may include a postal delivery address, bar code, unique product info, return address, and more. For additional versatility, the bagger/software/printer integration has the capacity to store 20 job configurations – again saving time and effort. Equipped with a 7” HMI touchscreen interface and a 4” thermal transfer print capability printer, the Rollbag R1285 bagger is designed for “next-bag-out” printing, which is an efficient mail order fulfillment packaging approach using plain or custom-printed poly mailers on a roll. The next-bag-out printing feature enables the operator to scan a packing list and print the corresponding shipping label on the next bag that is dispensed from the bagger. The integrated Datamax thermal printer offers a broad range of connectivity to meet diverse application requirements and is able to use the ubiquitous ZPL label format. The entire system is easily integrated using virtually any warehouse management system.
The Rollbag R1285 Velocity in action
As soon as an operator scans the bar code for a single pair of glasses, software communicates the matching order number to the PAC Rollbag R1285’s thermal transfer printer. Shipping label information including address and postage is printed directly onto the poly mailer bag, saving time as well as another cent or two for the shipping label. Scanned, bagged, sealed and labeled (all on one compact machine), the shippers are then placed into a post office-issued mailing container for pickup by USPS.
Owing to the new poly mailer bag packaging method, Zenni was able to negotiate a better postage rate, plus the poly bags occupy less costly floor space than the bubble mailers that were used in the past. “When we compare the bubble mailer with the poly mailer bags, the difference is about a 50 percent dimensional savings, and 10% less weight,” Goh says. “They’re half as big, so we get a better deal from the carrier.”
As Zenni shifts from infrastructure building to customer acquisition mode, the company will be looking for new ways to automate, improve productivity, and do more with less. A second fulfillment center on the East Coast is planned to improve efficiency and to take advantage of the new USPS zone pricing. “The eye wear industry is still predominantly made up of the brick and mortar retail space,” Pate says. “Only about 10% of the global eyeglass wearing public do their eyeglass shopping online, we effectively own half of that by today’s volume, so there’s a lot of area to grow.”