Not only can non-compliant packaging can put your products at risk for damage, it can subject you to a 2% charge back.
In our Costco Packaging 101 series, we aim to educate with a goal of improving packaging, increasing sell-through and eliminating costly charge backs.
Costco Supply Chain operates on a "NO TOUCH" policy for pallets on the vast majority of products. Although we talk about the benefit of customers touching merchandise at a Costco warehouse, "NO TOUCH" in this case means that product on your pallets flows seamlessly into a Costco depot and is directed to a Costco warehouse without damage or any additional handling. This efficiency is so critical to Costco's business that on an on-going basis, Costco conducts random packaging compliance audits. Non-compliant packaging may be at risk to a 2% charge back.
In today's article, we are talking about pallet underhang and overhang requirements, what it is and why it's important your package is in compliance.
Costco requires that there is NO overhang on a pallet and limits excessive under hang.
Let's start with definitions. Overhang means that the package on the pallet extends past edge of the pallet. Underhang is when the package is smaller than the pallet. Keeping both within specification is critical since they can both cause issues.
It's recommended that the package size is 47.5" x 39.5" which is slightly smaller than the 48"x40" required Costco pallet. This ensures that even if the pallet is slightly out of tolerance in size that the packaging will still not overhang the pallet. Costco does allow for a package to a minimum size of 44" x 37" which is the maximum of allowable underhang. Is there NO overhang allowed by Costco. We'll go into the reasons for this below.
NO OVER OR UNDERHANG - THE IDEAL SITUATION
When packaging is properly designed, the pallet and the package are the same size. This ensures that when pallets are loaded into trailer or simply in normal handling that the wooden pallets are taking the impact when pallets bump into each other. Wooden pallets are far stronger than corrugated packaging and we aren't concerned with cosmetic damage to pallets which may occur during handling.
ISSUES WITH OVERHANG
When overhang exists the package is easily damaged and the compression strength of the package can also be reduced by up to 40%!
ISSUES WITH UNDERHANG
Costco does allow for some underhang, although it should be avoided. Any underhang can cause your products to shift easily on a pallet which can lead to damage. Additionally, underhang cosmetically does not allow your pallet to present itself optimally in a Costco Warehouse. Although wooden pallets can be beautiful in their own right (only said by a packaging guy), you want customers to see your product and packaging, not more of the pallet.
Knowing details such as over/underhang and ensuring they are implemented into your design is essential when dealing with Costco. Trust us, it will save you countless time, energy and money doing it right the first time.
Until next time,