The subscription ecommerce market has exploded in recent years, with over 30% of online shoppers now subscribing to curated product boxes. While the recurring subscription model is resonating with modern consumers, operating fulfillment can become complex for subscription startups.
This comprehensive guide will explain the ins and outs of subscription box fulfillment, from warehousing and order automation to packaging, shipping, and analytics. Follow these best practices to streamline your fulfillment operations, deliver exceptional subscriber experiences, and scale your recurring revenue business.
And when you’re finished reading, check out the other articles in our ‘Subscription box fulfillment’ series:
- Guide to subscription box fulfillment
- Insourcing vs outsourcing subscription box packaging services
- Best subscription box fulfillment company
- ShipBob vs ShipMonk
What is subscription box fulfillment?
Subscription box fulfillment is the process of managing recurring package assembly, shipping, and delivery for subscription box companies. Rather than handling fulfillment in-house, many subscription box sellers partner with third-party fulfillment providers to streamline operations.
Service providers store the various products and inventory for the boxes each month in their fulfillment warehouses. They integrate with the subscription box company’s ecommerce platform to automatically receive new subscriber orders, cancellations, and modifications on a recurring schedule.
When it’s time to assemble boxes for the next cycle, the fulfillment service utilizes the subscriber data to customize and pack each recipient’s items per their individual preferences and previous boxes received. This entails a fulfillment center warehouse associate pulling the correct products, packing them neatly into a shipping box, including any promotions or coupons, and applying the mailing label.
The fulfillment provider then coordinates quick, timely shipping of the subscriber boxes to meet monthly delivery deadlines. They track shipment status from the warehouse fulfillment center and provide updates to the subscription company for monitoring. The fulfillment partner also assists with customer service for delivery issues, returns processing, and subscription modifications.
In addition to warehousing, order management, and shipping, many subscription fulfillment services also provide data analytics like KPI reporting, inventory management, payment processing, and other solutions to streamline the recurring order operations. This enables the subscription company to focus on marketing, customer acquisition, and retention while leaving fulfillment to specialists.
Approaches to subscription box fulfillment
Here are some details on the various approaches to subscription box fulfillment:
Warehouse/3PL
This approach refers to using a third-party logistics provider that handles warehousing and shipping subscriber boxes. The entire process is completed in the 3PL’s subscription box fulfillment center using their own labor.
Pros: Handles end-to-end fulfillment, established infrastructure, experienced staff
Cons: Can be costly, may lack customization, less control
DIY
DIY fulfillment is when the subscription company handles their own fulfillment in-house instead of outsourcing subscription box fulfillment. This approach requires owning warehouse space and equipment.
Pros: Maximum oversight and control, customized processes, potentially less expensive than outsourced subscription box order fulfillment services
Cons: Large upfront investment, complex to manage, slower shipping
Hybrid
This type of fulfillment entails using a 3PL for warehousing while the subscription box company handles custom packaging and shipping internally. Fulfillment tasks essentially are split between the two.
Pros: Leverages 3PL infrastructure while customizing portions, balanced control
Cons: Complex coordination entailed, company may still require warehouse space and staff
Automated
Uses automated systems and robotics in a subscription fulfillment center to fill orders with minimal labor involved, but high upfront costs.
Pros: Very fast fulfillment, lower labor costs, high scalability
Cons: Expensive startup costs, lack of customization, technical issues
Regional
With this approach, local or regional fulfillment centers are able to provide faster subscription box shipping times to customers in specific geographic areas.
Pros: Faster shipping times, distributed inventory, local partnerships
Cons: Entails managing multiple sites, higher real estate costs
Dropshipping
Shipping subscription products directly from suppliers/vendors rather than warehousing. Low overhead but less control.
Pros: Minimal overhead, no warehousing costs, low startup investment
Cons: Longer shipping times, limited quality control, less branding
Co-packing
Partnering with a manufacturer to package private-label subscription products, and then shipping direct to consumers.
Pros: Specialized packing/assembly, product consistency, offload labor
Cons: Minimums and negotiation, less flexibility, bulk packaging
The best fulfillment centers for subscription boxes balance affordability, order volumes, shipping speed, customization needs, and company capabilities.
9 considerations in a subscription box fulfillment service decision
When researching fulfillment partners, seek providers experienced in handling subscription or recurring orders, not just one-time ecommerce shipments. Here are key capabilities to look for.
Warehousing and inventory management
The fulfillment service should have temperature regulated warehouses in strategic geographic regions to store your subscription box inventory. This is particularly important for perishable goods subject to governmental regulations. They provide real-time inventory tracking as products are received from your suppliers and pulled for subscription shipments.
Subscription order automation
Warehouse fulfillment companies should integrate with your ecommerce platform via API to automatically pull in new subscriber orders, cancellations, address changes, and modifications on your recurring schedule (monthly, bi-monthly, etc.). This seamless data exchange is essential.
Custom box assembly
Look for services efficient at handling any customization needed for your boxes each cycle. Configurable box packing is a prime advantage of outsourced fulfillment.
Kitting and packaging
The ideal partner will kit and package your boxes in an appealing way that reinforces your brand. This can include custom inserts, branded packaging, personalized notes, and more.
Integrations
Leverage a fulfillment provider with shipping integrations to leading carriers like USPS, UPS, and FedEx for discounted rates. They can optimize carrier selection based on factors like delivery speed, cost, destination and package characteristics.
Shipment tracking and monitoring
Your service should provide shipment tracking and status updates as boxes leave their facilities en route to your subscribers. Monitoring delivery pace is important for subscriber satisfaction.
Returns processing
Look for a partner capable of efficiently handling any returns, exchanges or refunds associated with your subscription orders. This includes receipt of returned items, notification, and shipment of replacements.
Subscription reporting and analytics
A key benefit of outsourced fulfillment is gaining access to data and analytics on critical subscription KPIs like orders processed, cycle times, shipping costs, packaging efficiency and more. Reviewing this data helps identify areas for operational improvement.
Customer support
Choose subscription fulfillment companies that can capably handle subscriber inquiries about order status, delivery, account changes, cancellations and other issues, ideally with branded customer service touchpoints.
As you evaluate potential partners, take a close look at their experience, clientele, location network, technology capabilities and service level. Meeting volume demands during peak cycles like the holidays is crucial. Visit their facilities in person if possible to inspect firsthand.
Benefit from subscription box fulfillment services
The intricacies of shipping subscription boxes to subscribers each month on schedule can quickly overwhelm young subscription startups. By leveraging the infrastructure, warehouse fulfillment software and expertise of a specialized subscription fulfillment provider, you can rapidly scale up your operations to meet growth while delivering a top-notch experience subscribers have come to expect from today’s brands. The best subscription box fulfillment companies can enable your recurring revenue business to flourish.
FAQ
Subscription boxes can be quite profitable businesses with reported average profit margins between 30-50%, however success depends heavily on keeping customer acquisition costs low and subscriber retention high.
Yes, dropshipping is entirely legal as long as you are truthful about shipping times and your supplier relationships when marketing products to customers.
Branded dropshipping involves setting up an independent branded storefront to market products that are fulfilled via dropshipping, allowing retailers to sell products without holding inventory.
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