There’s no denying the huge popularity of subscription boxes, which has only risen steadily over the past decade. More companies every day are adding a subscription service to their business model, from entertainment and software to consumer goods. They see the huge demand – and an opportunity to create a predictable, recurring revenue stream. Now they just need to work out how best to handle subscription box fulfillment so that aspect of the venture doesn’t eat into profits.
The global subscription box market was estimated at $32.9 billion in 2023, according to market research firm IMARC Group. It’s projected to hit $105.4 billion by 2032, for a 14% CAGR between 2024 and 2032.
A huge part of the subscription box draw is its customer-centric focus. There is a built-in sense of exclusivity, a kid-on-Christmas-morning-like anticipation each month. Subscription commerce also offers the ability to add in several elements of personalization to each engagement, all of which resonate with today’s consumers. For starters, always keep your eye on the unboxing experience, in which adding some pizzazz and zing could even drive a viral customer post.
But to make it all work, brands need to bake in the idea of maximizing the entire process from concept to customer. This means optimizing everything from product development, market analysis, subscription management, fulfillment, and customer support to enhance efficiency, customer satisfaction, and loyalty. The end goal is creating an experience that’s so seamless and engaging that not only is it sticky, driving retention, but eminently sharable, creating a positive halo effect that racks up long-term sales.
And remember: Subscription fulfillment is not just pumping out orders, it’s an end-to-end strategy designed to surprise and delight customers on a recurring basis. Read on to learn about the entire business process.
To begin with, let’s consider the importance of understanding what customers are looking for, what resonates with them and drives purchase behavior in subscription commerce. While some brands might have the resources to bootstrap this process, it’s often best to find a reputable market research firm to help identify the core audience, create personas, and discover what makes them tick.
Use social channels and polling to get a better sense from your customers of what they’re looking for, what needs are unmet, and what brings them joy – or immediately turns them off. Once you have your subscription commerce business up and running, do this on a regular basis to tailor and tweak the offerings, making sure it still appeals to your audience.
Based on your market research, consider what product or line of products will make an ideal candidate to spin into a subscription offering. Ideally, there’s something already in your catalog that fits the bill.
Do some research into the top-performing subscription boxes in your category and learn about why they’re hot. What is their appeal? How niche or broad are they? How would your offering stack up? If there’s nothing in your current line, can you either develop a new product or purchase rights to one with great potential? How broad of a range of products should it be? What are some natural extensions into adjacent categories and audiences?
Once you’ve settled on a product, consider your marketing and branding strategy. What is your unique value proposition or at least a value add versus the competition? What are some of the key emotional triggers for your audience that drive conversions? What kinds of messaging appeal the most? In what channels? How does this vary from one demographic group to another?
Next, consider pricing for your subscription commerce offering. A successful strategy hinges on understanding customer value perception, competitive analysis, and your cost structure. Focus on setting a price that reflects the product’s value, is in line with competitors, and can drive profitability. Consider a tiered option approach that caters to different customer segments.
Regularly review and adjust prices based on market dynamics, customer feedback, and business costs to make sure you stay flexible and adaptable. Offering free trials and promotions are a good way to attract new subscribers. But while doing this, be mindful of pricing transparency and simplicity in order to enhance customer trust and reduce churn.
Subscription management software is designed to streamline and automate recurring billing and subscription processes. It handles everything from signup and billing to subscription renewals and cancellations, letting brands focus on growth and customer satisfaction.
The main value is enhancing the customer experience through creating a seamless, hassle-free subscription process. Subscribers get an easy signup process, flexible billing cycles, and intuitive tools for modification or cancellation. Subscription management technology removes friction, aiding in customer retention and long-term loyalty.
Brands can tailor the subscription experience by offering personalized plans, pricing tiers, and promotions. It also helps the business scale, supporting customer growth and enabling more complex subscription models without impacting performance. A user-friendly portal lets customers manage their subscriptions while brands can oversee operations.
Integrating a subscriber management platform with CRM and ERP provides a unified view of subscriber data, financial information, and performance metrics. Analytics and insights allow for better decision-making, improved customer service, and targeted marketing.
The main thing to bear in mind with subscription box fulfillment is to take advantage of its potential for repeatable processes and predictability. Unlike standard e-commerce, fulfilling subscription orders can be simplified based on a limited SKU count. Orders can be preset in the warehouse management system (WMS) so you can transfer inventory from reserve to active stock in advance.
There are of course still demand peaks and valleys based on seasonality and the promotional calendar. But inventory management and product staging is generally easier to manage by the very nature of subscription commerce. Predictive analytics and demand forecasting tools can also help businesses adjust inventory levels to reduce stockouts or excess inventory.
Subscription box fulfillment often means kitting and assembly, with multiple pieces pulled together to complete a single order. Prepacking and preassembly of orders makes for greater fulfillment efficiency, as does an engineered process designed with flow in mind to reduce bottlenecks.
Warehouse layout, including inventory placement, is key to success in kitting and assembly. Stage the component parts as close to associate workstations or conveyors as possible to eliminate walk time. Keep the team working at a consistent pace, and watch for bottlenecks and places where process improvements can be implemented. Include checkpoints and inspectors to ensure order accuracy and quality.
Prepackaging kitted orders is another smart move, helping you prepare for demand surges and speed up time to customer by improving efficiency. Overall in subscription box fulfillment, stage products based on popularity, renewal dates, and subscription tiers, enabling faster assembly and packing while reducing error rates.
Barcode scanning also greatly improves order accuracy. Using custom-fitted packaging reduces shipping costs (less cube in the truck). It also cuts down on the waste of unnecessary void fill or cardboard, helping you meet sustainability goals while keeping environmentally minded customers happy.
The value of reliable carrier partnerships cannot be overstated. Using a rate shopping software tool for carrier selection that performs “least-cost routing” can help you find significant savings on transportation costs. Alternatively, a third-party logistics (3PL) provider can offer access to discounted shipping rates based on its multiclient volume pricing. At checkout, always be sure to offer a variety of shipping options and tiers, and provide real-time tracking information to boost customer trust and satisfaction.
“Rule #1: The customer is always right,” the old adage reads, followed by a later addendum: “Rule #2: When in doubt, see rule #1.” As the cost of customer acquisition can be five times higher (or more) than customer retention, it behooves you to do everything in your power to treat your subscribers right. As a side note, getting a handle on your average customer acquisition cost (CAC), as well as customer lifetime value (CLV), is a worthwhile exercise.
Your customer support team is tasked with maintaining subscriber satisfaction. The team is on the front line for quickly handling issues, making good on errors, and generally improving the quality of the experience through perks and special offers.
Make every communication touch as personalized as possible. From the messaging inside the box to order history and other customer information on the associate’s screen, give them the royal treatment – always.
Offering (and paying attention to) feedback loops and active social listening are two important ways to keep your finger on the pulse of what matters to customers, enabling you to proactively deal with potential problems.
Engage in community-building exercises whenever possible. This can include exclusive online forums, social media challenges, and live unboxing events. Host a podcast and bring on an influencer or brand champion to share product use tips or how it’s integrated into their lives. Use customer spotlights and shared experiences to build a loyal, enthusiastic community.
As you map out your new subscription commerce business – or refine an existing one – remember that the concept of “subscription fulfillment” is much more than just packing a box and tossing it on a truck. It touches every aspect, from concept through customer.
Fulfillment is a holistic, all-encompassing term that goes beyond orders to fulfilling the needs, wants and desires of your valuable subscribers. You could even think of it as wish fulfillment; be their genie, and they don’t even have to rub the box!
But when you find yourself overwhelmed as fulfillment is not a core capability, and you need a reliable partner, ShipBots can easily fill the bill. We can easily import and sync your product catalog into our warehouse network; you ship us your inventory and we take care of the rest! ShipBots provides fast order processing times, special handling, branded packaging, and high-quality kitting and assembly for a peerless CX. Contact us today to learn more.
