Would you rather manage one long peak season or twelve mini-peak seasons?
That’s one of the questions retailers are asking themselves in the era of subscription commerce. A retail segment undergoing explosive growth – with more than 2,000 subscriptions operating in 2016, according to Shorr Packaging – subscription commerce gained traction to meet consumer demand for greater convenience and products picked by experts to meet their particular preferences.
No matter which style of subscription commerce you may choose to offer – curation (once-a-month boxes filled with novelty goods) or continuity (everyday necessities delivered on a set schedule) – your warehouse will have to adjust to a new shipping rhythm. But with some pre-planning and the right software, subscription commerce can be a profitable venture, filling the needs of the approximately 5.7 million subscription box subscribers in the U.S. today, as reported by Hitwise.
If you want to succeed at subscription commerce, you need a keen focus on three areas: Inventory management, labor management and technology support.
Inventory Management: Handling Peaks and Valleys
In the curation model, personalization is king. To make the subscription box truly unique, providers need not only an astute understanding of audience desires, but also meticulous inventory management to ensure all orders can be met and filled properly. Boxes typically contain different items based on the recipient’s tastes, and even the packaging should be part of the overall experience. With “unboxing” videos going viral on YouTube, your margin for design and packing errors is slim. You’ll need a proven tracking method to ensure the right items go into the right boxes, and that you’re not ordering too few, or too many, of a specific item.
In the continuity model, customers set up cycles for their orders, but the period between shipments could be every six or eight weeks rather than monthly. Because customers often control their own schedule, your stock counts will constantly shift. Maintaining each separate cycle on a paper-based system can cause inventory headaches.
Labor Management: Staff Efficiency
The once-a-month peak seasons caused by curation models aren’t just a challenge for your inventory management. Ensuring that you manage both the workload and workforce in the most efficient manner is fundamental to a successful and profitable operation. A real-time warehouse management system will drive highly efficient warehouse processes. It helps you ensure the right number of people doing exactly the right things, in the right way at the right time, helping you deliver the best possible service at the least possible cost.
The use of technology to monitor team and individual performance in the warehouse will also help you determine areas of above or below average productivity. By investigating and understanding the reasons for this, you can promote the former and improve the latter.
Technology: Backbone of Successful Subscription Commerce
Launching a subscription commerce offering can be a challenging and rewarding endeavor. To take advantage of the opportunities, you need the right strategies and tools.
While the proposition, brand and marketing strategy are fundamental to getting off the ground, warehouse and fulfillment operations are where the retail rubber meets the road. Getting it wrong and, equally, spending too much on getting it right can both be disastrous. Without an efficient and scalable fulfillment operation, it’s easy for a fast-growing sub-com business to become a victim of its own success. For every Loot Crate, there are likely many others that sank without a trace.
Before you launch a subscription commerce offering, dig a little deeper into how technology can support your warehouse operations. The right system can enable a truly excellent customer experience and make your operations a driver of value, not cost. Once you’ve fined-tuned your processes, you’ll be ready to catch that tiger by the tail and win at subscription commerce.
Kirk Anderson is Executive Vice President of Snapfulfil North America