4 Benefits of Outsourcing Your Subscription Box FulfillmentBy Alex Ullrich Read Time: 7 min.
Subscriptions have been around for years, from milk delivered to your door to magazines and newspapers delivered to the home. E‑commerce has given rise to a new channel: the subscription box.
Millions of consumers sign up to receive regular shipments based on a unique customer experience. There's a subscription box for just about any product imaginable: pet supplies, beauty products, toys and collectibles just to name a few. Today, more than 2,000 subscription boxes are available from a wide range of companies, from retail giants like Walmart to mom-and-pop startups operating out of their garage. Birchbox, one of the first subscription boxes, has grown to more than 1 million subscribers. Overall, business-to-consumer box services have acquired more than 11 million subscribers in 2017.
Since their inception, consumers become attached to receiving a unique arrangements of products curated to their taste, with the average subscriber using up to seven services.
Many subscription box services started small and have scaled quickly due to the booming popularity of subscription boxes. Customer acquisition is relatively inexpensive through online advertising and social media influencers. But the experience is high-touch, with customized product and shipping choices and little surprises tucked into each box.
Once a subscription box service begins to scale, fulfillment can become a challenge to maintain the high level of experience customers expect.
How do subscription boxes differ from regular e-commerce?
E-commerce is based on allowing customers to choose the products they want and shipping those unique orders individually. For an e-commerce retailer, there's a constant flow of order fulfillment and shipments.
On the other hand, subscription box fulfillment and shipping is more of a batch approach. A subscription box delivers an array of products to customers on a regular basis, usually monthly. Subscription box fulfillment is a customized, labor-intensive process guided by the shipping deadline.
Subscription box fulfillment is typically done in waves, so boxes for customers who live farther from the distribution enter are shipped first. The goal is to coordinate delivery within a day or two across the country so that subscribers won't spoil the surprises for those who may receive their boxes later.
What exactly is involved in the subscription box fulfillment process?
Subscription box fulfillment occurs on a compressed timeline - the pressure of meeting monthly or quarterly shipping deadlines leads to brief periods of intense activity.
Unlike e-commerce, the presentation of the box and packing materials are part of the value for a subscription box. A generic corrugated box just won't do. Often the boxes are bespoke designs, or at least bear custom stickers or imprinting. Packaging may include tissues, labels and ribbons to make each box unique.
Many subscription providers offer customized products based on a customer's preferences. For example, a miniature dachshund wouldn't be delivered the same chew toys as a Rottweiler, or even the same type of toys as a cat in their monthly Chewy Box. In each subscription period, there could be dozens of potential combinations to follow to suit customers' tastes. There may be custom content for each combination. For example, a wine subscription box could include a list of food pairings based on the wines in the box. The personalization makes subscription box fulfillment a labor-intensive manual process.
Common subscription box fulfillment challenges
Customers value the unique products and experiences they get with each box. Any lapse in quality could break the spell that your brand has woven. Even subscription box veterans face fulfillment challenges, including:
- Inventory management
- You must be able to keep track of inbound product shipments and have real-time visibility into the products you have on hand. You don't want to be surprised by stock-outs on shipping day. This all starts with choosing the right inventory management system for your business.
- Remember, the experience that your customers have with their subscription is a direct reflection of your brand. Your boxes must be packed right every time, and inaccurate orders or damaged products can lead to dissatisfaction with the brand. Customers are quick to share their feedback on social media, so that a minor lapse could turn into a major problem.
- Particularly with perishable products, speedy delivery is essential. The boxes must go out on schedule, and any delays could lead to damaged or spoiled products. Many companies promote their delivery schedules on social media, so it's vital that shipments are highly coordinated to meet customer expectations.
When should you consider outsourcing your fulfillment process?
Starting a subscription box service as a side gig sounds like fun. But if you're successful, it will soon scale to the point where it's too big to handle with the help of friends, family or part-time workers.
Some experts find that the 500-subscriber level is when companies start looking for outsourcing partners. If you find yourself scrambling to find enough workers and a large enough space to meet your deadlines efficiently, it might be time to consider outsourcing your fulfillment process.
You may find you're spending more time on fulfillment than growing the business. The owners and managers should be able to concentrate on marketing, customer service, and finding new products to put in your boxes.
Trying to keep everything in-house could limit your growth potential. With more time to focus on big-picture items, your company could start new services targeted to a different client base. But to do so, you'll need help to take your business to the next level.
If you're looking for an outsourcing partner, make sure they have subscription box experience. It is a unique discipline compared to e-commerce or brick-and-mortar retailing. Warehouse Anywhere has the experience and nationwide footprint to manage all the details that make your subscription box service stand out in the crowded marketplace. You can concentrate on the details that your customers love while leaving the rest to the fulfillment experts.
Are there benefits of outsourcing your fulfillment services to a third party?
It's common for companies to outsource subscription box fulfillment services to third parties. Many retailers, distributors and e-commerce companies rely on third-party logistics services for their fulfillment services. It's an effective strategy to scale a business and manage the financial investment required to succeed.
Here are some of the top reasons that successful subscription box services have outsourced to a third-party fulfillment solution:
- Lower overhead
- By partnering with a third-party company, you won't have to hire, train and manage warehouse staff. You also won't have to worry about doing all of the legwork that accompanies renting a warehouse space and overhead expenses like insurance and technology. All of these items are bundled into a single fulfillment contract to make it easier to manage. Basically, you pay only for the staff and services when you need them and as long as you need them.
- Look for a third-party fulfillment service that can grow with your business. As your business expands into new markets, your fulfillment service should be able to scale accordingly. Your 3PL partner should have inventory and staffing capacity to keep your products stocked and ready to ship as demand shifts.
- Inventory management
- The fulfillment center will handle storage, along with pick, pack and ship services, with the infrastructure and technology to match. They will also have the management systems in place to provide real-time reports on sales and inventory.
- A fulfillment provider will have contracts with the major delivery carriers so your boxes will enjoy lower shipping rates.
If you're looking for a fulfillment partner for your subscription box business, contact the experts at Warehouse Anywhere.