Six Signs That Your Subscription Box is Ready for a 3PL
In the past year, the number of subscription boxes has risen 40 percent, SUBTA co-founder, Paul Chambers, recently told Forbes magazine. While starting a subscription box company can be relatively simple, sustaining a subscription box service can be challenging – particularly when you’re fulfilling a barrage of incoming orders.
Responsible for one of those boxes? You might be feeling overwhelmed by the logistics of order fulfillment and distribution. Packing and shipping customer orders from your office space (or garage) worked fine when you were just starting out. Like many subscription companies, however, you may find that arrangement is less than ideal as your business begins to take off.
When & Why Should You Consider Outsourcing?
How do you know when you need outside fulfillment help? Here are six signs that it’s time to outsource.
1. Overwhelming order volume
Many subscription businesses reach a point where internal fulfillment processes are simply no match for their sales volume. While everyone has a different threshold, 5,000 orders a month (?) is a common tipping point.
With ample space and staffing, automated fulfillment solutions and knowledge of best practices, an experienced third-party provider can scale to accommodate your current needs – and future growth.
2. Cyclical space & labor issues
When you’re filling hundreds of thousands or even millions of orders with a shared drop date each month, it can be difficult to balance the intense peaks and valleys of the subscription business cycle. It simply doesn’t make good business sense to pay for space and staffing to accommodate the highest volume each month when operations are only at capacity for one week.
With a shared-space environment, a 3PL balances the needs of multiple customers, so you can meet peak requirements without having to invest in permanent resources.
3. Narrow window for delivery
Subscription box companies with an active social media following strive to generate a social buzz around unboxing, so it’s critical to ensure that subscribers across the country receive their orders at approximately the same time each month.
A knowledgeable 3PL can process orders strategically based on customer location to meet your tight window for synchronized deliveries.
4. Customer service failures
When you’re faced with high order volumes, it’s easy to fall down on service – inventory issues, inaccurate orders, delivery delays, etc. Unfortunately, subscription shoppers have high expectations and are quick to share dissatisfaction via social media where word spreads quickly.
An experienced fulfillment provider will pay careful attention to solution design and utilize proven processes to ensure a positive customer experience. Quality management programs can increase efficiency, improve accuracy and ensure continuous improvement.
5. Rising fulfillment costs
Subscription services typically have slim profit margins, so it’s critical to monitor costs closely. Transportation is one of the biggest expenses, and costs are expected to increase 10 percent in 2018, according to commercial real estate company JLL.
A 3PL can design a strategic distribution network that allows you to reach customers via cost-effective two-day ground service. They also can offer economies of scale, an established carrier network and relationships with major parcel carriers, so you can choose the best mode/service level for each shipment at the best price.
6. Inadequate technology
As business grows, visibility and inventory management are critical. Optimal technology solutions are essential for effective subscription fulfillment, but they can be expensive to implement and require frequent updates.
Outsourcing to a provider with state-of-the-art systems (i.e., OMS, WMS, TMS) in place allows you to benefit from the latest technology without unnecessary overhead.
Utilizing a 3PL will enable you to address common subscription fulfillment challenges and keep your eye on the ball in terms of marketing, sales and brand development.
Written by Saddle Creek Logistics
Learn more at http://www.sclogistics.com/
