The amount of subscription box retailers has grown in recent years, with specialty options ranging from food to fashion and everything in between. This may give some entrepreneurs the perception that its easy to start this kind of company. However, starting a subscription box company is no small feat. You need to procure the products, invest in storage space, manage shipping materials and processes, and hire help for all of the fulfillment and distribution. That amount of work leaves many new subscription box business owners wondering if they should invest in more third-party help.
The truth is that partnering with a fulfillment center or 3PL can lower costs and make the entire process more efficient. By making box assembly more effective and streamlining other aspects of the supply chain, you can be sure that your customers are getting high-quality, on time orders. How do you know if it’s time to seek out such a partner? Here are a few key areas that may signal that it’s time to outsource subscription box fulfillment.
- Storage limitations – How many items does your subscription box have, and how often do you send one? If you have a monthly box with 6 items, you can see how those products add up quickly. Where will you store all of that inventory? This is especially true for offerings that change month over month. As your subscriber base grows, so will your need for more space. A fulfillment center can help you to meet increased demand. They’re likely to have more flexible storage options than you do, which will reduce delays from an inventory shortage. You’ll want to ask if the fulfillment center’s minimum for storage is less than your needed storage space. If it is, then it’s worth looking into outsourcing fulfillment services.
- Order processing hurdles – One struggle new subscription box services face is shipping orders fast enough. The “Amazon effect” has changed the way consumers feel about receiving products – they expect them in just a day or two. Furthermore, 68% of consumers said that fast shipping would encourage them to make a purchase. That means it’s essential to process orders quickly (but effectively) and get them out the door. If you end up getting more orders than you can manage quickly, then you need to think about procuring some assistance. A 3PL can manage the entire order process from initial processing to warehouse integrations to training new employees on best practices. Plus, a 3PL is likely to have discounted small parcel rates with carriers that you wouldn’t have access to on your own.
- You need more time for marketing – The whole model of subscription boxes is based on growing your subscriber base. Without getting more people signed up for your program, your company isn’t sustainable. In order to attract new customers, marketing is crucial. This means that owners can’t afford to spend a significant portion of time on things like order processing and other internal operations. Savvy subscription box owners know that they need to have a growth mindset and put most of their attention on acquiring new customers and adding value. If you are growth-driven and really want to avoid plateaus that can become common in expanding businesses, then it’s time to reach out to a 3PL partner. They will take care of supply chain activities like inventory management, returns management, order processing, payment processing, kitting, labeling, and much more. This way you can focus on improving and growing your business instead of day-to-day operations.
There’s no question that daily operations are going to take up a significant amount of time in a new subscription box business. When the amount of time that you’re spending on order fulfillment is holding you back from working toward a larger customer base, it’s time to look at partnering with a 3PL. They’ll manage day-to-day supply chain activity so that you can focus on what matters: growing your subscription box business.