August 19, 2020

When Should You Outsource Fulfillment for Subscription Boxes?

Ellis Williams

According to research by First Insight, 25% of American consumers currently utilize subscription box services. From food delivery companies like Blue Apron to deodorant refill businesses like Myro, there are plenty of companies using this model. 

Launching a subscription-based business means that you can rely on repeat business from your client base each month. It’s a fantastic model for building recurring income. Sure, some of your subscribers may bail out along the way, but if you keep accumulating new business, eventually, you’ll start to taste success. 

Subscription box fulfillment companies need to boost subscriber volume. However, when you first launch your business, you need to play a dangerous balancing act between managing your business and your fulfillment responsibilities. 

As your subscriber base grows, there are more deliverables to meet with each subscription date. Eventually, you’ll reach a point where you’re working more on your fulfillment obligations than marketing, promoting, or building your company. 

At this stage, you have a hard choice to make – continue going on with business as usual, or planning to deal with the new growth. 

Should you decide to stick your head in the sand, it results in your business’s demise. Eventually, you won’t be able to live up to your subscriber commitments. As a result, they’ll end up leaving you for the competition. 

So, do you try to manage this new growth in-house? That means hiring and training staff, adding more responsibilities to your company with the addition of payroll and employee management. Most eCommerce entrepreneurs run a lean business during the startup. Therefore, to fund that expansion, you’ll need investment from a third party. 

There must be an easier way for subscription box fulfillment companies to succeed with their business, without compromising on costs. The answer is with hiring a 3PL service provider. In this post, we’ll examine when you need to outsource your fulfillment service. 

 

What’s the Difference Between Regular eCommerce and Subscription Box Services? 

With a regular eCommerce business, you work with a continuous order flow that builds over time. You’re receiving orders virtually every day, and shipping them as you receive payment. 

With a subscription box model, you’re taking a batch-style approach to your logistics. Sure, you’ll be receiving orders during the month as people sign up, but your only deliverables happen over a few days at month-end. 

The subscription box fulfillment process is a tailored, highly labor-intensive process. The process receives guidance from the shipping deadlines, with fulfillment occurring in “waves.” With this strategy, customers who live the furthest from the fulfillment center have their orders shipped first, so they arrive on time. Customers closer to the distribution center will have orders shipped last. 

This approach lets you coordinate the mass-delivery of your subscription product, with all customers getting their order on roughly the same day, or in two or three days around the expected delivery date. The goal is to avoid creating a division between your customers. 

Can you imagine if someone receives their parcel early, and you include a special gift? They post it on social media, and it ruins the surprise for all your other customers. With optimized subscription box fulfillment companies, you get a coordinated delivery process, producing the same results every month. 

 

When Do You Need to Consider Outsourcing Subscription Box Fulfillment? 

When you start your eCommerce venture, you’re probably working from home by yourself. It’s a fun experience receiving orders, picking the merch, packing it, labeling it, and taking a trip to the post office to mail all your order at once. Every trip to the post office feels like a win, at least for the first few months. 

However, as your business grows, you’re going to start to dread that trip to the post office. There are so many responsibilities to deal with as things expand. According to research, most eCommerce subscription box companies start to experience challenges involving managing order flow around the 500-subscriber mark. 

It’s at this stage you need to start looking at 3PL partners. If you fail to act at finding a 3PL partner, you run the risk of your business hitting a significant bottleneck. You’ll find yourself spending more of your time in completing your fulfillment than in growing your business. 

Eventually, your new orders overwhelm your ability to fulfill all your customer orders timeously around the subscription date. As the owner of the company, you need to focus your energy on finding new products and driving sales. Worrying about fulfillment should not be a top priority for you. 

There are dozens of 3PL subscription box fulfillment companies available to help you with managing your business expansion. However, not all 3PL companies work with subscription box services, so make sure you do your due diligence on the right partner for your business. 

You need a 3PL service offering that understands to complexities of fulfillment for subscription box services. 

 

What are the Common Challenges Facing Subscription Box Fulfillment? 

With eCommerce subscription box models, you have a set of unique challenges that might not affect traditional eCommerce business. Here are the top issues you’ll need to contend with when assessing subscription box fulfillment companies to manage your business. 

 

Packaging Problems 

As a subscription company, you must deliver on your promise of quality and value with every box you send out. Using traditional packaging materials and boxes are not what you’re looking for with a subscription box. Your 3PLK partner should offer you the following. 

A customized box, with options for customized printing on the box. 

Look at custom sticker designs and other external packaging options. 

For internal packaging options, look for tissue paper, ribbons, and other unique options. 

Look for partners that offer customized packaging options based on your eCommerce preferences. 

You should have options to include customized content in your packaging, such as pairings with other products that uplift the value offering to your customers. 

Look for personalization offers, such as printing customer names on your packaging. 

 

Handling Growth 

When you start to lose control of your fulfillment process, and orders are coming in faster than you can fill them, you’re in a dangerous position. You don’t have the time to hire and train people while building systems for your business. 

If you don’t manage to get a handle on the increasing sales volume and fulfillment, your customers will start complaining. In the online world, you only get one chance. If you mess up your delivery, chances are your customer will leave you for the competition. 

By working with subscription box fulfillment companies, you manage your growth sustainably, handing off your logistics’ responsibility to a third party. This strategy for handling growth provides the best opportunity to learn about the fulfillment demands of your business. 

 

Fluctuations in Order Volumes 

Subscription box services can deliver weekly, bi-weekly, or monthly, depending on your preference. During the periods between your delivery cycle, you have lulls where you can work on other business priorities, like driving more sales. 

However, you need a 3PL partner that understands your business model. You’ll need a partner that can accommodate you holding stock in their warehouse while waiting for your fulfillment date. Paying for warehousing space and labor to supply the highest order volumes for only a week out of each month can crush your profit margin. 

A 3PL should offer you a shared-storage space, with a scalable environment. The partner needs to provide your company with the ability to meet peak order requirements without any permanent overhead costs or investment from you. 

 

Narrow Delivery Times 

Part of a subscription box marketing strategy involves creating hype on social media for the delivery of your next box. Therefore, all your subscribers must receive their boxes around the same date. 

Knowledgeable and experienced subscription box fulfillment companies process your orders strategically. They send out your orders based on the customer location, to time your deliveries right. Using established networks, they narrow the delivery window, ensuring your customers get their boxes at the same time each month. 

 

Service Issues 

When you’re so busy with the fulfillment of your orders, there’s a chance you end up skipping over your customer returns and customer service inquiries. If you want to sink the reputation of your brand, you ignore these requests at your peril. 

Disgruntled customers are quick to take to social media and slander your company. One person moaning about your subscription box is bad enough, but if there are dozens of complaints on your Twitter and Instagram, you’re going to see a drop in your new business. 

No-one wants to sign up with a service that doesn’t deliver. Working with a 3PL partner helps to manage your customer returns and customer service. The 3PL takes these duties off your hands, remaining accountable to you for fulfillment performance. 

 

Inadequate Logistics Technology 

As your business starts to receive more orders, you need to manage the effects of this growth. Your inventory is the first place you’ll notice your current systems slipping. Effective inventory control is essential for the effective management of your logistics process. 

Taking the time to develop a software solution yourself is costly, and we doubt you’re proficient at programming. As a result, most entrepreneurs resort to licensing expensive software solutions for inventory management. 

By working with a 3PL, you get access to their software systems. Accessing top robust tech solutions for managing inventory and the logistics process is essential for your company’s proper growth. Outsourcing your fulfillment to 3PL partners allows you to leverage its existing systems. 

The 3PL provides you with a cloud-based solution that you access remotely from your laptop or mobile device. Look for partners that offer top-notch systems covering OMS, WMS, and TMS. Most providers will issue you with training to learn the system, and options to customize your subscription box fulfillment. 

A robust tech solution helps you manage inventory in real-time, checking stock levels at multiple warehouses across the country. You get a birds-eye view of the entire logistics process and instant access to your inventory. 

 

Logistics Quality 

When starting your eCommerce strategy from ground-level, you need to focus on delivering your customers a timeous, high-value service, or product offering. The customer experience is a direct reflection of your clients interacting with your brand. 

Inaccurate packaging of your products, missed deliveries, or lost shipments can cause plenty of problems. You need to work with subscription box fulfillment companies that have a solid track record of performance. 

It’s almost impossible for subscription box fulfillment companies to maintain a 100% success record with every delivery. However, some can get close to that mark. The key is to effectively handle your customer complaints and act on errors before they have time to flare and cause you problems. 

Your 3PL partner takes this responsibility off your hands, removing your need for a customer returns department. Why spend time dealing with angry customers – leave it to the professionals that have the training to handle these situations. 

Remember, customers will be quick to share their dissatisfaction on social media. Therefore, your 3P{L should have set policies and procedures in place to manage these customer issues. 

 

Speed of Execution 

If your subscription box service involves the delivery of perishable products, fast and efficient delivery is essential for customer satisfaction. 

Your boxes must go out to customers on time, with delays leading to spoiled or damaged products, and plenty of customer dissatisfaction. Ensure your 3PL partner offers timeous delivery. The speed of execution is critical to keep your brand reputation and profitability intact. 

 

Wrapping Up – Your Future with Subscription Box Fulfillment Companies 

Choosing a subscription box fulfillment company can revolutionize your eCommerce company. Remember to do your due diligence before selecting your 3PL. 

By learning to delegate your business responsibilities, you have time to focus on the other aspects of your business that drive sales and increase income. 

Knowing when to turn things over to a 3PL is essential for the optimal growth of your company. Don’t wait until it’s too late – take action on securing the future of your company today, and hire a 3PL. 

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