6 Tips to Scale a Subscription Box Service
8/29/2018 Geraldine McLoughlin
If you’re passionate about anything from hot sauce to crazy socks, chances are there’s a subscription box service for it. The subscription box industry has grown rapidly in recent years, surpassing 11 million subscribers in 2017. The growing interest in subscription services hasn’t gone unnoticed, with investors pouring some $1.6 billion into subscription service companies — ranging from beauty product samples to retail shoe clubs.
Subscription boxes have tapped into consumer desire for surprise, personalization, and convenience. Subscription box companies have an incredible opportunity to capitalize on this consumer trend — however, as is the case in any fast-growing industry, their competition is fierce.
With over 2,000 subscription box services in the U.S., the market is delicately poised. In this landscape, a failure to meet consumer expectations can prove disastrous, as rival companies are ready and waiting to swoop up disillusioned subscribers. To help you avoid this scenario, we have put together a few tips to successfully scale your subscription box service.
1. Prioritize package design
Innovative packaging design is particularly important in the subscription box industry. Packaging is integral to your brand and is the first step in the customer experience. As a result, it must be consistent and should excite the customer. Every box tells its own story, and it is worth remembering that your box will feature in the unboxing videos that are regularly posted online. In addition, packaging that fails to excite the customer can overshadow its contents.
Packaging is integral to your brand and is the first step in the customer experience.
YouTube influencers will post unboxing videos that get thousands of views. Countless vloggers like these will even review subscription boxes to millions of subscribers:
2. Plan for a flexible demand schedule
As a relatively new market, seasonal surges and spikes in subscription box demand can be difficult to predict. It is important that your packaging production facilities — whether outsourced or in-house — are equipped to deal with a flexible demand schedule. Companies must meet the precise specification, timing, and quality standards expected by geographically dispersed subscribers. One way to succeed in this area is to leverage supply chain and packaging partners that have the global infrastructure and capabilities to deal with fluctuation in demand.
3. Optimize inventory
The importance of inventory is magnified in the subscription box industry, as inventory affects both customer experience and profitability. If inventory levels are unable to meet orders, customers are likely to cancel their subscription. On the other hand, capital tied up in excess inventory can devastate profit margins. To avoid this scenario, subscription companies should conduct monthly forecasting and ensure their data accurately tracks their physical inventory. As your company grows, you might also need to weigh the cost of managing your own inventory versus outsourcing to a third party with significant expertise in the area.
4. Develop a reliable order fulfillment process
Order fulfillment is an integral part of any subscription box service and cannot be left to chance. The success of a subscription box company is highly dependent on the ability of the supply chain partner to execute an efficient, effective and scalable fulfillment solution. Take care to find the most suitable partner for your business — and look to companies that can leverage transportation networks and provide full track and trace capabilities.
5. Maintain a high level of aftermarket care
Returns are a key operational concern for subscription box services. Some companies (e.g. Stitch Fix) even send out subscription boxes where customers only keep the items they want and return the others. As a company scales, returns management grows to be increasingly complex, as there are a number of moving parts to juggle — including logistics, credit processing, and integration of the various systems that capture return data.
Aftermarket issues like refund errors or undelivered replacements can quickly find themselves on social media creating unwanted negative PR. Be prepared by making sure you have the customer service you need.
6. Deploy a multichannel marketing strategy
Successful subscription box brands use highly targeted marketing across multiple channels, deploying direct mail, direct response, and digital media. For established brands launching a subscription box, the best way to find prospects is, of course, within your own customer base.
For more subscription-based tactics, download our white paper about subscription marketing.
Marketing will help you build awareness. However, the most successful way to market a subscription box service is by following the above tips to create a positive customer experience. A positive customer experience is the best way to build loyal customers who will keep unboxing for years to come.
Geraldine McLoughlin is a marketing development executive for RRD Supply Chain Solutions.
The subscription box industry is a fast-growing area that brings unique operational challenges. RRD offers wide-ranging capabilities to help subscription box companies develop the robust infrastructure needed to succeed today, including supply chain needs, packaging, marketing, logistics, and more. To learn more contact us.