Compact by Design – Amazon’s tool for influencing more sustainable packaging
In 2019 Amazon gave a big commitment to their sustainability efforts and co-created the Climate Pledge – with the agenda of being net carbon zero by 2040.
Along with that pledge Amazon has introduced a series of efforts to achieve that goal, including the introduction of a sustainability logo – the Climate Pledge Friendly Badge. Alongside the 19 external certification partners (and counting) like Rainforest Alliance or Carbon Trust Amazon has also introduced their own certification, called Compact By Design.
Why would a Ecommerce company come up with a sustainability certification and is this badge something you should strive to obtain? Stay tuned.
Table of contents
What’s Behind the Compact by Design Badge?
The Compact By Design certification awards companies that have designed their products and product packaging in a more efficient way than their category competitors.
Amazon addresses several goals with that:
Less packaging size and weight mean lower carbon emissions. Although the amount saved by an individual product or even package is very small, at scale it makes a significant difference.
Increasing shipping efficiency
Efficiency is one of Amazon’s priorities. They know that even a small reduction in the size or weight of a product leads to cost savings in shipping that are significant at scale.
Reducing packaging waste
Ecommerce is responsible for a serious amount of waste and because of its size, Amazon is no small contributor to that. The Compact By Design badge fills the niche in sustainability certifications that focus on reducing the volume of packaging.
The idea behind adapting packaging for Ecommerce purposes stems from its different purpose than in an offline sales situation. In a regular store packaging is one of your main tools to make your product stand out and attract customers. Online there is less need for especially big, shiny and different-looking packaging (there is, however, an opportunity to create packaging that doesn’t frustrate customers). Therefore the packaging can be focused on serving more practical purposes.
How to Qualify for the Certification
For your product to be considered more efficient it must have a higher ‘unit efficiency’ than the category’s average.
This is Amazon’s general formula for calculating the unit efficiency, regardless of the product category:
Amazon considers the measurements of the product package and its weight and compares it to its actual content.
The lower the ‘unit efficiency’ value, the higher the efficiency of the product. The value is then compared to the established category threshold. If the value is below the category threshold, the product is considered ‘more efficient’ and earns the Compact By Design badge.
A Calculation Example
Let’s go through a calculation example to see how the formula works applied to real life products.
Applied to a product from the category ‘Laundry Detergents’:
‘Use’ unit (according to the Amazon category threshold document) = loads
Item Package Dimensions = 10 in x 5 in x 7 in
Product weight = 1 lb
Loads out of 1 product = 65
The formula applied: ( (10 in x 5 in x 7 in) / 65 ) x (1 lb / 65) = 0.082
Category threshold = 0.09
0.082 < 0.09 -> product is considered more efficient than its competitors and qualifies for the Compact By Design certification
So far so good. One of our clients, Ayurvedic body care company Auromere, has already received the Compact By Design badge for several of their products. Their Neem Balm product will serve as our real-life example for how the theory works in practice.
Amazon’s formula:
The formula applied to Auromere’s Neem Balm:
(Item Package Dimensions (1.75 in x 1.75 in x 1.7 in) / 2oz) x (2.1 oz / 2oz) = 2.803
According to this document the category threshold for moisturizing lotions bars / moisturizing creams is 0.201. If this value is correct, the Neem Balm would not be considered more efficient.
No surprise there. As experienced sellers know Amazon is not exactly known for its consistency. Packaging dimensions and weights for your product can be changed dozens of times a year without your knowledge. And while the publishing of this formula can be seen as transparent, the numbers they use are not totally clear, may vary across category and, unless you entered them in yourself (and regularly double-checked them) are probably wrong.
While that might make it seem tricky to evaluate whether your product is more efficient, Amazon has provided some guidelines you can use for orientation. Let’s look at them.
6 Ways for Your Products to be More Efficient
A smaller sized package is maybe the most obvious but not the only way for your product to be more efficient than its competitors.
Here are 6 different possibilities you may consider when evaluating your current products or designing new ones:
1. Less Packaging: It’s all about reducing the size of packaging on this one, keeping the packaging as close to the actual product size as possible.
2. Less Air in Container: Remember the big bags of chips that are only half-filled? Reducing the amount of air in a package is one way to be more efficient. There is no need to impress customers with the size of your packaging online anyways.
3. More Efficient Shape: The boxier the shape of the product / packaging, the easier it is to fill a shipping box in a Tetris-like fashion.
4. Less Weight: Using lighter packaging materials decreases the weight of your product, therefore making it more efficient for shipping.
5. Waterless Technology: The most popular product example in recent years is probably the shampoo that has been transformed into solid bars, reducing the volume of product for the same amount of usage drastically.
6. Concentrated Products: Let the customer increase the volume of your product at home while selling a concentrated version yourself.
The Advantages of the Compact By Design Badge
In this article we have outlined how Amazon’s umbrella certification ‘Climate Pledge Friendly’ can benefit your sales on Amazon. The benefits of this green label can include:
- Helping your products stand out
- Attracting the right customers
- Increasing your click through and conversion rate
There are additional benefits to Amazon’s Compact By Design certification that might make it especially attractive to obtain compared to others.
It’s cheap & easy
While most of the 3rd party certifications that qualify your products for the Climate Pledge Friendly badge come with lengthy processes and high auditing fees, the Compact by Design certification is free. There is not even an application process you have to go through. Simply by having designed your product in a more efficient way than your competitors you will receive the certification.
It might get more attention
Amazon has a high incentive to push their own initiatives and certifications since they serve their agenda most.
If you look at the amount of space the Compact By Design badge receives on the product detail page you will notice the difference to the other certifications. A big section below the product description is dedicated to displaying a lot of details:
The detailed information may lead to additional user trust in the label and positively influence their purchase decision.
Takeaways
Amazon is taking action to improve its sustainability efforts and lower carbon emissions while increasing efficiency at the same time. In this article we have explored the ins and outs of their recently introduced Compact By Design certification that will qualify you for their sought-after ‘green badge’.
In this article we have established:
- Why Amazon decided to come up with their own sustainability certification.
- How products qualify for receiving the certification.
- Why it is cheaper and easier to receive the Compact By Design badge than any other certification.
- Why you should make an effort to get the certification.
If you are interested in receiving assistance with Amazon’s sustainability certifications reach out to us and we will be happy to provide guidance.
