Subscription fulfillment services are a hit with consumers, and they’re among the fastest-growing private U.S. companies. The Subscription Trade Association estimates the number of subscription box companies in the United States alone is well into the thousands.
With all of this growth, one of the top challenges facing subscription fulfillment services is how to fulfill orders accurately and on time while still offering shipping and returns best practices. The rapid growth of this industry has also left many companies wondering how to provide a truly unique unboxing experience in the midst of near-dizzying growth. In this blog, we’ll explore how partnering with a 3PL (third-party logistics) provider is the answer to these questions.
What Are Subscription Fulfillment Services?
Subscription fulfillment services refer to e-commerce companies that offer products on a recurring (usually monthly) basis. These products can range from clothes and grooming items to groceries and gadgets.
For example, brands like Ipsy and Birchbox sell beauty products for women, Blue Apron and Home Chef deliver ingredients for a complete meal that you cook at home, and Dollar Shave Club sells men’s shaving products.
The Growing Industry of Subscription Box Companies
Before we dive into how a 3PL can help your subscription fulfillment services, it’s important to take a look at the top industries driving growth in this sector:
- Beauty and fashion. Along with more traditional health and wellness products, the demand for beauty and fashion items continues to grow. This is likely due to a decline in traditional brick and mortar fashion stores, and a wider acceptance of makeup as a hobby (partly fueled by viral Internet makeup tutorials).
- Snacks and pantry boxes. As more people work remotely and spend more time at home than going out, snack and food subscription services are finding favor amongst the Millennial and Gen X demographics.
- Grooming products. Grooming services are another trend popping up in subscription services. As self-care becomes a more normalized movement, men’s grooming products are moving beyond the simple shaving cream and razor product offerings for men. Plus, companies are recognizing products traditionally marketed to men have value across the board for everyone. Companies like Billie razors (marketed towards women) are carving their own niche in this product category, too.
- Fitness and wellness. The fitness and wellness industries are perhaps the biggest drivers of subscription fulfillment services. As a holistic approach to wellness grows, brands like Gainful are capitalizing on the consumer demand for health supplements and custom subscription box packaging for a unique unboxing experience.
Why Are Subscription Companies Growing?
While the COVID-19 pandemic is a driving force behind the growth of subscription box companies, it isn’t the only reason. Another primary reason contributing to the growth is a change in consumer behavior. It’s no longer enough to just offer a customer a product or service, as modern shoppers can get whatever they want with the click of a button.
Instead, people are looking for excitement and a sense of adventure, much like they used to get from a traditional brick-and-mortar experience before the retail market was less saturated. To pique a customer’s interest, subscription companies are focusing on elements like custom subscription box packaging and subscription box design to create a personalized and memorable unboxing experience.
Challenges Facing Subscription Box Companies
While it’s an opportune time for subscription box companies, the e-commerce industry is not without its challenges. As with any business, growth brings a lot of positives, but with that comes the potential for more mistakes, missed or late orders, and disgruntled customers. In this next section, we’ll explore the challenges facing subscription box companies and how a 3PL can help mitigate and resolve these obstacles.
Inventory Management
One of the biggest challenges facing subscription box companies is a lack of space. As a growing company, acting as your own subscription box fulfillment center can prove unnecessarily complicated. Often, businesses don’t have the space in their own facility to store their stock of products. This is especially true for companies that offer sensitive materials that need to be kept and shipped at precise temperatures.
Custom Subscription Box Packaging
Packaging is another area many subscription fulfillment services struggle with. This is true for a number of reasons, including the inability to:
- Properly ensure and track order picking accuracy.
- Create a truly unique unboxing experience, which often suffers when an in-house team must handle a sudden influx of orders.
Shipping Subscription Boxes
Shipping products sounds easy enough, but a high rate of incoming orders could turn the positives of growth into a major headache. More than that, failing to fulfill and ship an order on time results in customer dissatisfaction. This then turns into lost revenue through costly returns and lost customers if allowed to persist.
The Benefits of a 3PL for Subscription Services
The reason so many subscription box companies fail when it comes to order fulfillment is not for lack of trying. Most companies simply don’t have the time, resources, and knowledge necessary to succeed.
By partnering with a 3PL that focuses on core components like advanced technology, warehouse optimization, and expert order picking, you can avoid the mess that is in-house order fulfillment. We’ll explore the benefits in greater detail below.
Managing and Storing Inventory
One of the major benefits of working with a 3PL is the ability to utilize newfound space for storing and stocking inventory. Plus, if you’re a subscription box company that deals with temperature-sensitive products, it’s important to find a temperature-controlled 3PL to ensure your products are protected in storage.
The other benefit of working with a technologically-focused 3PL is the ability to receive up-to-date information on inventory, making it easier for you to avoid stock-outs or over-purchasing.
Picking, Packing, and Kitting
The number one cause of returns in the subscription fulfillment industry is incorrect orders. By relying on a 3PL that prioritizes warehouse optimization and technologies like pick-to-pack systems, you can avoid a lot of wasted time and money.
Order Fulfillment
Partnering with a 3PL experienced in order fulfillment allows you to avoid incorrect orders, unnecessary returns, and shipping-related damages. Also, if your demographic is spread across the United States, partnering with a 3PL with multiple fulfillment centers can help cut down on order time, something very important to today’s market of online shoppers.
Easy and Efficient Returns
Returns processing refers to when a product is returned to the manufacturer or provider by the recipient. 3PLs call this reverse logistics. Having processes in place to efficiently manage returns is a crucial (though less glamorous) part of the fulfillment process.
When planning the customer experience, the best companies know that the more flexible they can be with this policy and the simpler they can make the process, the better. Reverse logistics can also include refurbishment, repair, and remanufacturing services to help reduce operating costs and eliminate high levels of waste by extending the useful life of products.
Easy E-Commerce Integrations
Finding a 3PL that offers simple integrations with online shopping carts such as Magento, Shopify, WoocCommerce, etc. is very important. These integrations link brands to the provider’s dedicated warehouse management systems to accurately execute across inventory, labor, and space. This automation supports on-time shipping and inventory accuracy rates, while also saving brands money.
Your success as an e-commerce company rests on your ability to fulfill orders accurately and on time while offering the best shipping and returns policies. By partnering with a 3PL experienced in these core tenets, you can deliver a truly great customer experience from start to finish.
Fulfilling orders on time and accurately is stressful. To improve the fulfillment process and build a loyal customer following, contact us to see how we can help you grow your subscription fulfillment service.
This blog was originally published on February 5, 2019. It was updated on November 9, 2021.
