Wondering how to start a subscription box business? Aside from selecting a product niche from a list of subscription business ideas, the most important decisions you’ll make have to do with the actual logistics of packaging and sending your custom subscription boxes.
When you’re just starting a subscription box business, handling these operations yourself may be the easiest, most cost-effective approach. But in the long term, using a subscription box packaging service may increase your chances of business success. This article guides you through this aspect of starting a subscription business by explaining the pros and cons of both in-house and outsourced kitting and order fulfillment.
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 packaging and fulfillment?
If you want to know how to start a subscription business, one of the most fundamental questions has to do with order-filling and shipping. Here are the typical steps involved in custom subscription box packaging and fulfillment.
- Source products: The subscription box company sources and purchases inventory from vendors based on the theme/products featured in the upcoming box.
- Customize packaging: Any custom subscription box design elements, like branded tissue paper, stickers, or inserts, are developed and sourced.
- Kitting: Products are grouped together per subscriber. Each subscriber’s box is kitted with the correct items they are supposed to receive based on variations and personalizations.
- Assembly: The subscription boxes are assembled by placing the products inside along with any literature, custom inserts or promotional materials. Tissue paper, stickers and other packaging decor is added.
- Quality control: Assembled boxes are checked to ensure all contents are included and boxes are properly sealed.
- Labeling: Subscription boxes are labeled with the recipient’s name and address for shipping.
- Shipping: Completed subscription boxes are shipped out to subscribers. Tracking numbers are provided and shipping confirmations sent.
- Customer service: Any delivery issues, returns or subscriber inquiries are handled by the subscription box company’s customer service team.
- Data management: Subscriber data like new sign-ups, address changes, cancellations, and payment info is tracked and managed throughout the fulfillment process.
- Inventory management: Inventory levels are monitored and reordered as needed to meet subscription demand.
So in summary, the major steps involve procuring products, assembling, quality checking, shipping, and managing data and inventory to smoothly fulfill subscription box orders each month.
In-house subscription box packaging and fulfillment
In-house subscription box packaging and fulfillment refers to when a subscription box company manages the entire packaging and shipping process themselves rather than outsourcing it to a third-party.
Some of the key aspects of in-house subscription box fulfillment include:
- Having your own ecommerce fulfillment warehouses, equipment and employees to handle fulfillment operations. This requires an upfront investment in real estate, packaging machinery, supplies, and labor.
- Sourcing and purchasing all packaging materials, boxes, labels, etc., directly.
- Handling the kitting and assembly process in-house according to your own systems and quality standards.
- Completing final mile delivery either with your own fleet or by contracting with shipping carriers.
- Managing all subscriber data and inventory in-house with your own ecommerce fulfillment software and inventory tracking.
- Providing customer service and address any order issues directly with your own customer service team.
- Having full control over the customer experience from unboxing to delivery, as it is all handled in-house.
The benefits of in-house fulfillment include full control, customization, and the ability to oversee quality. But it requires more upfront capital and resources in the long run. Many subscription boxes start outsourcing fulfillment as they grow their subscriber base. Overall, in-house fulfillment is best suited for subscription boxes with the resources to fully manage packaging and shipping internally.
Outsourced subscription box packaging and fulfillment
So, exactly what is a subscription box packaging service from an outsourced provider? It’s when a subscription box company hires an external fulfillment partner to handle the packaging and shipping of their subscription boxes.
Some key aspects of outsourced services from the best ecommerce fulfillment companies:
- The subscription company contracts with a fulfillment center or 3PL (third-party logistics) provider that specializes in subscription fulfillment services.
- The products and packaging materials are shipped from the brand to the fulfillment center.
- The fulfillment provider stores inventory in their warehouses until it needs to be packaged.
- They source generic packaging like subscription boxes, bubble mailers, tape, etc. The brand provides any custom branded materials.
- The fulfillment center kits and assembles the subscription boxes per the brand’s specifications, usually using fulfillment software.
- Quality control and final mile delivery is handled by the fulfillment partner.
- The brand oversees the process but the fulfillment center manages the labor, warehouse space, supplies and shipping.
- Customer service and subscriber management is still owned by the subscription box company.
- Reporting and data sharing allows visibility into fulfillment operations.
Outsourcing allows subscription brands to leverage the expertise, labor and infrastructure of an ecommerce fulfillment specialist. It offers more flexibility and scalability as subscription volumes fluctuate. But the brand has less control over quality and branding.
Decision time: In-house vs outsourced fulfillment
The ideal fulfillment solution will depend on the size and stage of the subscription box company. Early stage companies just launching would benefit from outsourced fulfillment to avoid large upfront investments. More established subscription brands with the capital to build out fulfillment infrastructure may prefer in-house for greater control.
Subscription box companies should evaluate fulfilled subscription volume — both current and projected — to determine if it makes sense to handle fulfillment in-house or leverage the scale of a 3PL. Volume requirements and capabilities need to align.
They should compare the costs of each model — in-house vs outsourced — based on their specific operations. The breakeven point between the two models depends on subscription volume, staffing needs, and facility costs.
Brands need to assess how much customization, personalization and control over the unboxing experience matters for their specific subscription offering. More control comes with in-house fulfillment.
The company’s ecommerce and fulfillment technology capabilities also play a role. Sufficient software and integrations are crucial for managing orders across platforms with either model.
By carefully analyzing these factors — volume, cost, customization needs, and technology — subscription box companies can determine if in-house or outsourced fulfillment best fits their particular business needs and delivers the experience their subscribers expect.
Turn your subscription box business ideas into reality
Now that you have an idea of how to set up a subscription service box business, it’s time to get the ball rolling. If you decide to outsource your packaging and shipping operations, start by investigating some of the top ecommerce fulfillment companies.
Compare the usability of their ecommerce order fulfillment software and whether they’re able to design subscription boxes. Read ecommerce fulfillment services reviews, and seek out recommendations from experienced peers. Finally, review their ecommerce fulfillment pricing structures to ensure you’re getting the best deal for your specific needs.
FAQ
Subscription boxes are monthly packages of curated products or samples that get delivered directly to a subscriber’s doorstep. Subscribers pay a recurring fee and receive surprise boxes of goods tailored to their interests.
Subscription boxes can be quite profitable due to their recurring revenue model, with the most successful companies generating double digit profit margins once they scale. Profitability depends on effective cost management and maximizing lifetime value of subscribers.
The average monthly cost of a subscription box ranges from $15 to $50 per month, with many falling in the $25 to $35 range. Pricing varies based on the value of items included, brand, and target demographic.
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