The Price of Web-to-Pack: Our Analysis and Initial Advice
A few weeks ago, in our article “Record Fundraising by Packhelp: Why You Should Learn from Printers?“, we discussed the €40 million raised by one of the Web-to-Pack specialists: the Polish company Packhelp.
To recap, the company reported staggering numbers—in just 6 years of existence—in a Web-to-Pack sector that is still in its infancy (how many of you are selling your packaging online today?):
- Over 250 employees (with dozens of ongoing recruitments)
- More than 50,000 clients in around 30 countries (an average of nearly 10,000 new clients per year)
- We estimated their monthly turnover at around €1 million with likely triple-digit growth
Given the success of that article and your numerous feedbacks, we decided to dig deeper into the subject over the past few weeks to bring you valuable market data on the actual price of a Web-to-Pack order, with some real surprises (but also some confirmations), allowing us to offer our initial advice so that you can respond to the inevitable rise of Web-to-Pack.
We conducted our price study on two common packaging types that you know well:
- A die-cut corrugated box – FEFCO 427 (tuck-end box), standard size, printed
- A regular slotted container – FEFCO 201, custom size, unprinted
We consolidated our information by requesting prices from various market players to obtain a representative sample of the industry’s economic reality:
- Packhelp – Web-to-Pack solution – Poland
- Pack.ly – Web-to-Pack solution – Italy
- Aquitaine Packaging* – Traditional manufacturer – France
- Occitanie Packaging* – Traditional manufacturer – France
- Lusitanie Packaging* – Traditional manufacturer – Portugal
- Varsovie Packaging* – Traditional manufacturer – Poland
- Iberico Packaging* – Trader – Spain
*Company names have been changed
With 7 manufacturers, 2 common packaging types, and price requests for 3 different quantities each, we’ve gathered some insights, with key information for your future strategy. We also provide average lead times for these platforms and suppliers, as well as their tooling fees (if applicable).
Request #1 - FEFCO 427 (Tuck-End Box) Printed
Our first test request was as follows:
- A FEFCO 427 (Tuck-End Box)
- 210 x 180 x 90 mm
- E-flute, 30 kraft brown, test liner brown
- 1-color print, black on the front, 25% coverage
- For 2,500, 5,000, and 10,000 units
- Shortest possible lead time for delivery to postal code 64
Our FEFCO 427 Price Summary Table, with Full Transparency…
The table makes it very clear: if the customer isn’t in a hurry, Packhelp is, surprisingly, unbeatable on price.
Between 2,500 and 10,000 pieces, Packhelp manages to reduce its price per piece by nearly 30% even though it was already the lowest on the smallest order.
This is even more impressive when comparing the pure player (whose business is 100% online) to its Polish counterpart with whom we deal directly. Packhelp is simply 28% cheaper on the 2,500-piece order and up to 36% cheaper on the 10,000-piece order. Considering that delivery times are comparable and that the service quality alone cannot justify such a price difference (in which case a local supplier would be chosen), we can predict that Packhelp will start to eliminate all its traditional national competitors (or turn them into subcontractors) within the next few years.
Packhelp’s aggressive pricing is even more evident when we consider that shipping costs are included for all the tested manufacturers. So, there are no additional costs to expect beyond the prices we’ve provided.
Pack.ly seems out of touch with the market, with stratospheric prices, albeit justified by a very high level of service. With its Pack.ly Special rate, a customer can receive their order in just 8 days (including production and delivery!). But are they winning orders with these rates? Except in extreme cases (and only if the service is well-known), it’s doubtful.
The hopeful message for this type of packaging is that French manufacturers are very well-positioned and deliver nearly twice as fast. With high service levels, price competitiveness, transparency (knowing who manufactures your packaging and where), … a manufacturer that positions itself well online stands a strong chance of winning most orders in the French market.
Request #2 - FEFCO 201 (Regular Slotted Container) Unprinted
Our second test request was as follows:
- A FEFCO 201 (Regular Slotted Container)
- 625 x 290 x 475 mm
- BE-flute, 30 kraft brown, test liner brown
- No printing
- For 1,500, 3,000, and 5,000 pieces
- Shortest possible lead time for delivery to postal code 64
Our FEFCO 201 Price Summary Table, with Full Transparency…
First observation: 3 suppliers do not offer this product.
Pack.ly and the Portuguese manufacturer do not produce this item. The Polish manufacturer claims to be uncompetitive against local manufacturers (in this case, French) for this type of product. Expanding our search more broadly, foreign players (beyond neighboring countries) do not respond to this kind of request. The FEFCO 201 configured this way is a low-value product without tooling, and their economic relevance on these kinds of cases does not allow them to compete.
Packhelp is poorly positioned here. Additionally, they play on a lack of clarity regarding their fluting. The website states “Safe transport and handling thanks to sturdy corrugated cardboard (fluting E to EB)”, whereas the price and quality difference between E and EB fluting makes the comparison irrelevant. When we specified that we wanted EB 30, the prices skyrocketed. To make matters worse, Packhelp is completely out of sync with the timelines of the other three manufacturers.
French manufacturers perform the best, closely followed by the Spanish trader. However, caution is needed because the Spanish manufacturer—with tight pricing, transparency, and good service quality—could win the game with an e-commerce site in the French market.
French manufacturers should not wait to launch their Web-to-Pack offering; they are competitive not only in the national market but also in neighboring countries. It’s highly likely that those who start now—if they execute well—will be the winners of tomorrow.
To summarize
The positioning gap for Packhelp is substantial depending on the type of cutting (likely due to Packhelp working with manufacturers equipped with laser cutting for their flagship products).
Our biggest surprise comes from the difference between the Web-to-Pack leader and its Polish counterpart. How can a neighboring supplier, contacted directly, offer prices that are up to 50% higher? It’s even more striking when you consider that Packhelp is likely working with a direct competitor of this Polish supplier: What margin is left for this manufacturer? Is Packhelp losing money on these orders?
This raises questions about the strategy being used to dominate the European Web-to-Pack and broader packaging market. It seems clear that Packhelp, to gain customers, is either losing money or at best breaking even on these orders. When you review the tables, factor in the logistics costs, significant online advertising budgets (which you likely have little to none), the margin left to partners, numerous recruitments, … it becomes obvious why they need almost annual and increasingly large fundraising rounds (remember, €40 million in the latest round). Investors are covering the margin and funding the losses in exchange for double or even triple-digit growth.
The European packaging industry is thus experiencing a true “uberization,” where newcomers enter the market, slash prices to capture it, drain it, and eventually consolidate it.
Customers are seen in terms of “lifetime value” (LTV), and models are built around the total revenue these customers will generate throughout their “commercial life” with Packhelp. Demonstrating sustained growth, with an ever-increasing and cumulative recruitment of new customers (50,000 clients in 5 years), is the only thing that matters here.
So how can you compete?
We hope we’ve provided you with important and relevant information, and while we prepare our next article with further insights and advice, feel free to contact us to discuss your strategic vision on this topic.