With a nearly 3,000 percent growth rate in just the past three years, subscription-box retail has clearly emerged as a powerful force within e-commerce. And while the basic subscription-based model is hardly new, as consumer tastes change, smart retailers like UK’s Birchbox are finding ways to blend tradition and innovation to produce a powerful shopping environment built on convenience and a bit of “whimsy”. Retailers especially appreciate the recurring revenue streams, predictable volume, demand levels and cashflow-friendly payment model modern subscription-box retail provides.
But despite a long list of positives, subscription commerce can also create complexities and operational headaches for warehouse management, especially for retailers successful at scaling a strong subscription business. Regardless of which of the two emerging models you’ve deployed – a Curation approach that offers consumers a changing set of indulgence products each month or a Continuity model, which provides a more convenient way of shopping for consumables, you will likely end up dealing with some type of warehouse stress.
If you’re shipping discrete orders that change based on customer input or profile, you’ll likely need to account for carrying and processing many SKUs to meet customer expectations. This impacts inventory management, pick and ship performance and space requirements. And while you can minimize the complexity of managing the multiple product inventory issue if you’re following a continuity model, shipping a large volume of orders in a very tight window – typically same day – causes its own challenge.
For subscription commerce companies, the decision to install a cloud warehouse management system can save significant time and money in the long run.
Regardless of which model and unique challenge you face, two things that you absolutely must get right related to warehouse performance are order accuracy and on-time delivery. One of the best ways to maintain the strong customer experience that leads to increased orders and reduced customer churn is to be sure the customer gets at least what they expect, when they expect it. Finding ways to delight the customer with additional “surprise items” or offers can pay great dividends to your business but they won’t erase the disappointment if a customer doesn’t receive their anticipated order on time or it doesn’t contain what they expected. With many subscription-based retailers offering “cancel at any time” options, this can be disastrous to the bottom line.
As retailers see their business begin to scale and fulfillment moves from spreadsheet-based order processing in the garage to a more formal system and dedicated distribution environment, the longer-term questions about efficient warehouse management come to the top of the list. For many, it starts with a basic question – in or out?
Outsourcing order fulfillment to a third-party logistics provider (3PL) can be a very tempting idea, especially for retailers with minimal supply chain experience. But like most business options, the decision is often less than straightforward.
Outsourcing order fulfillment offers some advantages worth consideration. The most obvious is that it can help you avoid the labor and space requirements of managing a distribution center and can off-load the responsibility of managing order processing on a day-to-day basis. The downside of outsourcing, however, is that you’re introducing a new cost to your operation that might not be totally offset, with added costs for fees, storage, fulfillment and possibly shipping product to a 3PL location that might not be local.
The main consideration among many retailers for maintaining order processing in-house is that it allows you to maintain total control over your brand and the critical ongoing customer experience. In a challenging environment like subscription commerce, with a low barrier to competitor entry, thin margins and unpredictable customer desires, your brand and its associated positive equity may be your most important asset and differentiator – something you may not feel comfortable trusting to a third party.
The good news is that managing your own warehouse and order processing operation has gotten much easier with the advent of advanced warehouse management software. With the right software for warehouse management, retailers can easily establish automated processes and procedures that can ensure efficient pick, pack and ship operations, drive high levels of order accuracy and can scale as the business grows. The right WMS software, like that offered by Snapfulfil, offers extreme flexibility in both functionality and deployment options, which reduces the impact on operating capital – a key concern for growing businesses.
Warehouse managers working with subscription commerce retailers can use advanced warehouse software to set up strategies to drive bulk, replenishment, and forward pick locations where the warehouse space could be under-utilized. It can also facilitate batch picking multiple orders at a time using RF. This is the most efficient model as it allows multiple orders to be picked via one picker /one pick path. So regardless of what unique or hybrid subscription model you deploy and no matter how fast your business grows, Snapfulfil can support you and your customers.
To see how Snapfulfil helped a subscription-box retailer revamp its warehouse operation to drive growth and reduce cost, click here.