The subscription business model has been around for a long time, and not just for newspapers and magazines. A century ago, people got regular deliveries of dairy products. At that time, the subscription fulfillment service was the milkman who left quarts of milk in an insulated box by the front door.
In recent years, the subscription model has taken eCommerce by storm. Today, subscription eCommerce encompasses a wide range of products, from scheduled razor or toothbrush refills to curated collections of themed products, to Amazon’s subscription delivery services. If you need to buy an item regularly, you can probably find a subscription service to send it to you, so you don’t have to think about it.
Subscription boxes are a smart move for eCommerce businesses. Customers agree to make regular purchases in the future, and you have predictable sales, which can simplify your inventory planning. However, managing subscription eCommerce is complex, and you’ll need help beyond traditional eCommerce fulfillment. Your 3PL can be an excellent partner, providing subscription fulfillment services and more to make your subscription business a success.
Types of subscription boxes
There are no limits to the types of subscription box companies out there. Here are some of the most common types of subscription boxes:
- Curated subscription boxes. Curation or discovery is a popular type of eCommerce subscription that delivers a surprise to customers with each box. Curated subscriptions can include science projects for kids, clothing collections, or samples of beauty products. Meal kit services and vegetable boxes are also examples of this type of subscription eCommerce, as is a wine of the month club. Curated subscription boxes give you the advantage of flexibility, so you can source items for each box based on price and availability, keeping your eCommerce business profitable.
- Replenishment subscription. This type of eCommerce subscription is also called auto-ship. You’ll find staples such as diapers, pet food, coffee, and almost any consumable product in this category. For customers, replenishment subscriptions ensure they stay stocked up with essentials that they use regularly. You benefit by locking in that customer’s repeat business and reducing competition. Replenishment subscriptions are a service that delivers significant benefits for both consumers and eCommerce businesses.
- Subscribe and save. Customers usually pay a membership fee to access discounts and special deals in this subscription model. The discounted orders can be random and varied so that you can fill them with traditional order fulfillment services rather than subscription fulfillment. Amazon offers a variation on subscribe and save by giving Prime members discounts on products when they sign up for recurring deliveries.
Offering a subscription option is a terrific way to increase customer lifetime value and reduce churn. But getting subscription fulfillment right is essential to successful subscription eCommerce.
Factors that affect subscription box services
Several factors will affect your subscription fulfillment operations, including:
- Order frequency. Some subscription boxes ship monthly, but they may send more or less often. Some subscription box services ship at regular intervals set by the company, while others allow customers to choose how often to get their subscription.
- Ship dates. Will you ship all your boxes simultaneously each month, on staggered dates, or at different times based on when customers started their subscriptions?
- What’s in the box. Some companies send the same package to all subscribers, and that is particularly common for curated subscription boxes. In other cases, subscribers can customize what’s in their subscription, which is more common for replenishment subscriptions.
While the predictability of subscription eCommerce can help you stabilize your supply chain, subscription fulfillment also adds levels of difficulty. For example, your customers expect to get their subscriptions at specific times, so you must manage your supply and fulfillment operations to ensure you have enough lead time for each box. One of the biggest promises of subscription boxes is that customers will receive them at agreed-upon times, so failing to deliver on time is bad news for your subscription box business.
Also, accuracy is vital to subscribers. If your customer has a replenishment subscription for a 50-pound bag of dog food, it’s critical to send the right brand, flavor, and size. Predictability is one of the selling points of subscription boxes, so accurate fulfillment is essential.
The basics of subscription box fulfillment
When you partner with a 3PL to manage your subscription fulfillment, these are the basics to prep and ship each box:
- You send inventory to the fulfillment warehouse.
- Data on customer orders flow automatically to the subscription fulfillment center.
- The subscription boxes are picked and packed, using kitting services if desired.
- Your 3PL ships the parcel to your customer.
The subscription fulfillment process is similar to traditional order fulfillment. However, subscription fulfillment is more likely to benefit from kitting or pre-assembling products. The packages often need to be packed to create a delightful unboxing experience, and getting the right products to the right customers on time is even more critical.
Where to find subscription fulfillment services
You can handle your subscription fulfillment in-house. That offers the advantage of control: If you directly supervise pick and pack operations, you can ensure that every box is beautifully packed and includes little extras to make the subscription special. However, running your own warehouse is a big undertaking. As your business grows, outsourcing your fulfillment to a 3PL services company will free you from a huge task, so you have more time to curate fabulous products for your subscription boxes.
Not every 3PL offers subscription box fulfillment services. When you’re researching 3PLs, find out if they have other subscription box clients and whether those companies ship products similar to yours. Choosing a subscription box fulfillment company with experience shipping similar items is essential. Also, ask what additional services the company offers to support your fulfillment operations and make sure their systems integrate with your eCommerce platforms and order management system.
Your fulfillment company is your business partner, so it’s crucial to choose carefully. Red Stag Fulfillment has created a fulfillment company questionnaire. It will get you started and help you ask all the right questions when you outsource your subscription fulfillment.
The value that fulfillment companies bring to subscription box fulfillment services
When you use a 3PL for your subscription fulfillment, you get the benefits of a professional fulfillment operation. Here are some of the services that fulfillment companies can provide for your business.
If you send monthly, curated subscription boxes, you might need very little warehouse space at the beginning of the month. However, you might use a lot of space in the week before your monthly orders ship. When you work with a 3PL, you can easily flex the amount of space you use as needed.
In addition, flexibility in warehouse space can reduce your storage costs. For example, Red Stag Fulfillment uses a cubic storage model to charge clients for the exact amount of space they use.
Inventory management support is often part of 3PL services. Because fulfillment companies work with many different clients, your 3PL can share best practices based on what has worked for other subscription businesses. Improving your inventory forecasting and planning is a terrific way to reduce your overhead and prevent stockouts.
Seamless integration and omnichannel fulfillment for all your sales channels
Omnichannel selling is a must for eCommerce businesses, and subscription boxes are no exception. Your 3PL can provide seamless integration with all your sales channels, so your orders transmit instantly to the fulfillment warehouse. Make sure your fulfillment company can provide omnichannel fulfillment, so every customer has the same wonderful experience with your subscription box, no matter where they signed up.
Kitting is the process of pre-assembling groups of products that will ship together. It adds efficiency to subscription fulfillment by creating streamlined process flows for assembling curated boxes or pre-packing subscription items that often ship together.
For example, a D2C toothbrush company might offer several subscription packages containing different toothbrush heads, toothpaste, and floss combinations. With kitting, you can stock each package under a unique SKU, ready to ship to your customers.
Kitting also makes the pick and pack process faster and more efficient. Instead of picking several items to create a subscription box, the picker pulls only one thing: the pre-packed box. Kitting happens beforehand without the pressure of getting orders shipped. Therefore, it’s the perfect place in the process to ensure that your subscription boxes are beautifully packed. You can also include extra offers or items you want in the box during kitting.
Marketing fulfillment is adding marketing materials to your boxes. That could be a coupon for a discount on an additional purchase, a referral bonus offer, or a promotion for a new product. Since your subscription buyers are some of your most loyal customers, it’s critical to market to them. A best practice for subscription fulfillment is to add marketing materials during the kitting process, but you can also add them during picking. If you want to send different offers based on a customer’s profile, you can give your marketing fliers SKUs and add the SKU for the relevant offer to the order pick list.
Accurate fulfillment services
Accurate fulfillment drives repeat sales, no matter your business model. But it’s essential to the success of subscription eCommerce. Imagine a customer getting a monthly clothes box with items that aren’t her size or a wine of the month box with two bottles of white and no red. That can cause your customer to lose faith in your brand.
After all, part of what your subscription customers pay you for is reliability. They want to set a recurring purchase and forget about it. Suppose your subscription fulfillment is error-prone. At Red Stag Fulfillment, we know the value of getting it right the first time. That’s why we offer fulfillment guarantees that are unmatched in the industry — and we have one of the lowest error rates as well.
The beauty of a subscription business is that it levels off the seasonal spikes. Those changes in demand can be challenging to manage for many online stores. However, your subscription box business may still experience periods of high and low demand. For example, you might see a jump in volume around the holidays if your subscription box is a giftable item. Or your products could get featured on a national TV show, leading to a sudden rise in demand. Conversely, an economic downturn might lead to a loss in volume if many of your subscribers cancel.
No matter what your space needs, a 3PL will be better able to accommodate fluctuations in your inventory levels and fulfillment needs. Since 3PLs generally charge you for the space and services you use, your fulfillment costs will track with your order volume.
Variable carrier selection
Most 3PLs run large fulfillment operations; have relationships with FedEx, UPS, and USPS; and work with additional local, national, and international carriers. That gives you two benefits.
First, because fulfillment companies are large shipping clients, they might be able to negotiate discounted shipping costs. Some 3PLs will pass shipping discounts on to you. Second, you don’t have to lock into a contract with a single carrier to get discounted rates. Instead, your subscription fulfillment centers can choose the best carrier for each package.
Shipping discounts and variable carrier selection are two perks that Red Stag Fulfillment clients get. Carrier choice helps us bring you the best rate and the shortest delivery time for each package.
Save on shipping costs and shorten delivery times
When you use a third-party logistics company with national fulfillment warehouses, you put your products closer to your customers. That reduces the number of shipping zones that each subscription box travels through, which shortens delivery times and reduces your shipping costs. For instance, Red Stag Fulfillment can reach 96% of U.S. addresses from our warehouse locations in two days or less.
Bring us your fulfillment challenges
At Red Stag Fulfillment, we see each fulfillment challenge as an opportunity to solve a problem and deliver unparalleled fulfillment services. Whether you’re looking for subscription fulfillment services, high-value fulfillment, or oversized product storage and shipping, we’re up to the challenge. Let’s talk about how Red Stag Fulfillment can help your business grow.
More about subscription boxes and fulfillment:
- How To Start Your Own Subscription Box Business
- How to Find the Best Subscription Box Suppliers
- Kitting for Fun and Profit: Grow Sales, Cut Costs