Customers love convenience and ecommerce brands love predictable revenue. Offering a subscription service is a fast track to have both. Some of the more famous brands who made the subscription model popular include Dollar Shave Club, Blue Apron, and Stitch Fix.
A recent McKinsey study states that the subscription ecommerce market is projected to reach $473 billion by 2025, up from $15 billion in 2019. It’s a hot market to be in right now—and very competitive. To keep customers happy and reduce customer turn-over, brands need to get their fulfillment right. Here are the best ways to keep subscribers happy.
What are the Types of Subscription Service?
A subscription service is an ecommerce business model when the merchant offers to ship products on a set timeline—monthly, quarterly, or weekly, for example. This type of service is often set up as a membership payment system, where the customer pays monthly or annually for the products they will get throughout the subscription period.
Depending on the product, ecommerce brands can choose from a few types of subscription service models:
- Curation: the merchant puts together an assortment of flavors, products, or types of goods that are different each iteration. Think: flavored sodas or an assortment of various accessories. There might be a Spring box, and a Winter box, both very different from each other.
- Replenishment: only applicable to consumer packaged goods (CPG), the merchant sends the same product to the customer at a regular interval to replenish the old product. Think: razor blades or toothbrush heads for an electric toothbrush.
- Access: the merchant can provide specific goods or content to subscribers who opt into an “access” membership. This is more applicable to digital goods. Think: streaming content.
The Benefits of Ecommerce Subscription Services
There are many obvious perks to a subscription of goods. Customers get the convenience of a more personalized way to buy products and get access to new things before they might see them in stores. While it may be difficult operationally for brands, they benefit as well.
- With a loyalty program like a monthly subscription service, you’ll spend less on customer acquisition (also called customer acquisition costs, or CAC).
- Your customers will likely buy from your brand a bit longer, reducing churn by keeping the customer excited by your product offerings.
- The word-of-mouth referrals might go up, because some subscription service types (like, access) lends itself to customers posting new content on social media.
- Upsells become easier, if your customers pay annually, it might feel like less of a spend to add-on to their box every few months.
- It’s easy to use a subscription service to get rid of older products or goods that didn’t sell well when they launched. Just don’t lean too hard on your subscribers to absorb all of your deadstock.
Outsourcing Fulfillment vs. Doing It Yourself
Picking, packaging, and preparing products to ship is the most time-consuming aspect of fulfillment. If you are planning to offer your customers a subscription to your products, expect your time doing fulfillment to grow exponentially.
While it may seem like handling fulfillment in-house is the best way to go (more control over product placement and general order flow) there is a tipping point. The first sign that your in-house fulfillment operation is maxed out will be customer complaints. Is in-house fulfillment really worth losing customers because of delayed or mis-packaged orders?
By outsourcing your subscription products to an experienced fulfillment provider, you will be freeing up your time to focus on other aspects of the business. Plus, you’ll have access to better tools to process subscription orders separately than new-customer orders.
Packaging and the Unboxing Experience
A subscription comes with a bit more pressure than a one-time purchase. If you are sending a box of your products to each customer every single month, you’ll want to strike the right balance between consistent brand recognition and a delightful surprise each month.
Consider custom packaging. You can use shippable boxes (think, just the one simple box around your product, no overpack or carton) to keep the fulfillment streamlined. A bonus to using shippable boxes is that with less wasted packing materials, your brand is being more eco-friendly.
Working with a 3PL to outsource your fulfillment it will be important to sync with them on the packing materials you choose. Especially if you plan to change anything for each month, or season.
Order Processing and Warehouse Management Systems
It may seem like a breeze to net a new subscriber and know that you don’t have to work very hard to keep that customer. Just automate the flow so they get a new box each month, right? Yes, and no. Operationally, processing subscription boxes isn’t that straightforward.
You have to think about these customers from an inventory and order management perspective. Subscribers already paid for your product. You need the right technology suite to ensure your subscribers are always getting the first available inventory. Any one-time purchasers should be put on a wait list or shown a “back-ordered” flag when ordering products.
To do this you’ll need a modern warehouse management system (WMS) that integrates seamlessly with all of your online portals for customers (Shopify, your own website, Amazon, etc). A good WMS will be able to make sure your subscribers get their packages, but if inventory is running low, new customers will have to wait for that product.
Great Integrations Mean Higher Customer Satisfaction
Does your ecommerce platform have the capacity to manage other aspects of subscriptions? For example, subscriptions require a very different way to process payments, special add-ons, anomalies like dietary restrictions, and cancellations or people who unsubscribe.
There are many online platforms that help integrate customer orders with the fulfillment, Shopify, WooCommerce, Magento, for example, but these also need to be programmed to take the right actions for any anomalies that come up.
With proper integrations you’ll not only have a smoother operations experience, but you’ll also have much higher customer satisfaction. Customers who get what they ask for (even if that’s to not receive your products anymore) will think positively of your brand if you can execute their wishes effortlessly and accurately.
If you are an ecommerce brand with a subscription model, looking for fulfillment support, reach out to DCL Logistics for a quote. We support high-growth, trendsetting brands in many verticals. We have the experience to support subscription services, retail fulfillment, direct-to-consumer fulfillment, and much more.