Subscription boxes have grown in popularity, in large part because they offer a curated collection of items designed to delight recipients. With multiple components, however, order fulfillment can often be a complex, labor-intensive process. To ensure optimal efficiency and control costs, it is important to approach the subscription box kitting process strategically.
Kitting Best Practices Maximize Efficiency
To determine the best process for building your subscription box, start by thinking about your desired end result. What does your order profile look like? Do you have a large number of SKUs in the boxes, or to choose from? Do most of your orders include the same elements or is each one completely different? Do you send out a large batch of orders all at once or are you shipping smaller quantities more frequently?
The best approach to picking will depend on your order volume, average SKUs per order and average units per order. Here are some general guidelines for a few common scenarios.
Low Variability/Low Volume
This is subscription box fulfillment at its most basic, common for companies that are just starting out. Orders are picked and shipped all at once and might even be handled from a home office or garage for a time.
As your business grows, however, fulfillment needs are likely to become more complex. In this initial stage, consider the potential for growth and design your box to be easily picked and packed as order volume increases. For example, padded mailers are typically faster and simpler to assemble than boxes. Smaller and lighter weight products can be packed more easily and in a smaller work cell space.
High Variability/Low Volume
In this scenario, it’s tempting to offer more options, either more SKUs or through customization. With a small number of orders to process, building the box is still relatively straightforward. When orders drop, they can usually be picked one by one and shipped as needed. Each order can be touched just once, since storage isn’t required when you have enough time to complete the process within a short shipping window.
Subscribers appreciate personalized service and may be more loyal because of it. However, when adding extra touches like marketing materials or premium packaging, do so with an eye toward scalability. Test the process ahead of time to make sure it won’t become too cumbersome. There is an additional cost associated with every insertion, sticker and fold of the tissue. Weigh their value carefully.
Low Variability/High Volume
When you ship a high volume of identical orders, it usually makes sense to utilize a production line where you can gain economies of scale. Having a standardized process helps to increase productivity and reduce costs.
If you utilize a batch model and need to meet a narrow delivery window each month, you may find it helpful to pre-kit orders ahead of time based on the bill of materials and forecast. The need for put away to storage after kitting makes the process less efficient, but it is much more sustainable for higher order volumes in a short shipping window.
If you drop 100,000 orders to ship in one day, for example, you may not have the space, staff and equipment to pick, pack and ship them all at once. And it is not cost effective to invest in those resources for the full month when you may just use them for a single day.
High Variability/High Volume
If you have a significant volume of orders with varying profiles, a production line probably is not efficient. Orders will need to be picked and packed individually.
The most cost-effective approach depends on the number of SKUs. If you can limit the SKUs, it may be most efficient to create a work cell and bring the products to the workers or batch pick and sort. If you aren’t able to limit the SKU options available to the order, aisle picking could be necessary.
Ultimately, fulfilling orders with a very high level of variability can become cost prohibitive depending on your Average Order Value (AOV). Consider looking for opportunities to limit customization and/or focus on a smaller number of SKUs.
If high variability is essential, it may be wise to incorporate a technology solution. Options range from pick-to-light work cells and robotics to A-frames and automated put walls. The goal is to reduce labor dependency and increase quality. While technology can be utilized in other scenarios, it is most effective for consistent daily high-variable, high-volume operations because the volume allows you to recoup your investment faster.
A Hybrid Approach
For some subscription box companies, a blend of the above approaches can be effective. While this may be handled in-house, it is often managed more easily with help from a third-party fulfillment provider. They can share space, labor and equipment with multiple clients for greater efficiency and cost savings.
Regardless of your approach, designing fulfillment operations with the end result in mind will help to ensure a more efficient and cost-effective solution.
Nicole Lee is director of fulfillment for Saddle Creek Logistics Services