One would hope. But that gets more difficult when e-commerce faces a decidedly low-tech hurdle: cardboard boxes.

Not only have box prices increased 5% to 10% since the pandemic began, Haggerty says, boxes are now tougher to get. It used to take a week to receive an order of boxes, and now it can take up to two months. “I’m either going to under-order, and I’ll be stuck because I don’t have boxes to ship orders in, or I’m going to over-order and pay the storage cost,” she says.

Because of the higher box prices, online retailers, at best, risk thinner profit margins. At worst, they face having to slow their operations and potentially lose money.

U.S. e-commerce has been on a tear since the pandemic, with quarterly year-over-year sales growth of 32% to 44%, according to the Census Bureau. That’s up from the 11.5% to 17% quarterly growth during the five years preceding COVID.

As COVID restrictions began to loosen, the economy started to pick up steam. But production didn’t increase as quickly. “Then, the winter storms hit,” Tom Ryan, a spokesman for International Paper, the top producer of cardboard boxes in the U.S., says in an email.

Supplies of fiber, recovered fiber, and petroleum derivatives needed for such things as adhesives all tightened. The result: The cost of paper pulp—the main component of cardboard—is up 10% to 15% so far this year, says Simon Geale, executive vice president of procurement for supply-chain consultancy Proxima Group.

Normally, getting cardboard from overseas would be a potential solution. But the cost to do so has soared. A year ago, transporting a shipping container from China cost $2,500. Now it’s $6,500, or as much as $20,000 for a rush shipment.

Recycled cardboard, an alternative to using new pulp, is also in short supply. “Boxes, specifically, are the most recycled packaging in the U.S.,” says Andrew Hogenson, global head of consumer goods, retail, and logistics at Infosys Consulting.

In reaction, some box producers are building their own recycling facilities. The goal is to increase access to fiber while overseas supplies are limited, says Tom Gildersleeve, a senior manager at management consulting firm Kearney.

Pre-pandemic business strategies haven’t helped. The packaging industry had tried to control expenses by creating just enough boxmaking capacity as needed, to avoid spending money on excess capacity or on storing inventory.
“The idea was drive cost down, drive cost down, and that’s great as long as nothing ever interrupts our plan,” says Hogenson.

Unlike smaller online retailers, Amazon and other large merchants have the money and business relationships to ensure they get boxes. Yet, even they have felt pressure.

Historically, Amazon has shipped items from the same order in multiple boxes because the items come from different facilities. Now the company is increasing efforts to get customers to purchase more in a single order to reduce the number of boxes per order, and also save on warehouse labor and shipping, says Shanton Wilcox, North American manufacturing lead for PA Consulting.

If large companies feel heat, smaller ones can find themselves on a stovetop burner. Nonprofit Alphapointe, a maker of molded plastic items including pill bottles, is among the largest employers of people with vision loss. Amy McCaslin, director of supply chain for the organization, says that box prices are rising—up 19% so far this year, adding $154,000 in extra costs. She expects an additional $81,000 in costs for the rest of the year because of higher box prices.

Although Alphapointe generates $66 million in annual revenue, the additional expense for boxes is “still a big number and definitely eats into our profit margin,” says McCaslin.

Meanwhile, Nutty Made, which produces plant milk concentrates—a paste that is mixed with water—under the brand name Joi, has seen a 7% hike in shipping costs because of higher cardboard box prices. “That’s a lot of cash out of pocket that you won’t see back into the business until you sell that inventory,” says CEO Hector Gutierrez. The impact is probably less than one percentage point of total profit margin, “but every fraction of a percentage counts,” he says.

The impact goes beyond the immediate box costs. A small change to a business can have a ripple effect. Boxes that are different shapes may not fit in racks or be compatible with certain packing systems. Larger packaging can also mean higher shipping costs due to extra weight and size, as well as requiring more trucks, drivers, and fuel. Swallowing the extra cost keeps customers happy, but it can cause low-margin businesses to run in the red. On the other hand, jacking up the price by a few cents on the dollar can be a reason for people not to buy a product, says Aimee Becker, senior vice president of strategic advisory at brand consultancy Daymon.

Whatever the case, the box problem looks as though it’s here to stay for at least the short term. And with online retailing still going strong, and holiday shopping just ahead, Santa can probably expect letters from e-commerce companies reading, “Please send boxes.”