There are 5.7 million subscription box shoppers in the U.S. today, according to Hitwise. Think more and more consumers are embracing subscription boxes? Whether they want the delight of a monthly surprise, the convenience of replenishing commodity items, or access to members-only perks, consumers are flocking to the phenomenon of subscription box services.
As the industry gets more crowded and companies compete for market share, it becomes increasingly challenging for subscription box companies to hang on to those subscribers. Nearly 40 percent of e-commerce subscribers have canceled their subscriptions, a recent report by McKinsey & Company shows.
Tap Your 3PL to Improve the Subscriber Experience and Reduce Churn
So how can you make your subscribers’ experience more “sticky”? Give them what they want. Of course, to do that, you need to understand what makes them tick.
Here are three hot buttons for today’s subscription box customers – and ways your 3PL can help you hit them.
Subscribers are looking for an experience tailored to their preferences. For 28 percent of those surveyed, a personalized experience is the most important reason for maintaining their subscription, the McKinsey report shows.
Subscribers aren’t satisfied with one-size-fits-all packages. They’re looking for beauty products that match their skin tone, vinyl records to fit their musical tastes, food items to suit their discerning palates… They want to pick and choose the contents of their box to suit their personal preferences. And they may want to place ecommerce orders for additional items as well.
Providing that level of customization can be space and labor intensive. That may be manageable for smaller companies, but, as business grows, many companies reach a tipping point where they simply can’t sustain the necessary service levels on their own.
Often, companies turn to third-party fulfillment providers for assistance. An experienced 3PL will have flexible resources (space, staffing) and proven processes in place to handle a variety of configurations based on client profiles, wants, interests, etc. They can scale to provide significant product customization and accommodate increasing order volume without losing the personal touch. They’re also likely to offer value-added services (engraving, embroidery, kitting, etc.) and can help you delay product configuration until the last possible minute to meet current demand.
Providers typically have robust systems and technology expertise in order to track all the various product configurations, orders from multiple sales channels, etc.
To keep subscribers coming back, it is critical that they feel the box is worth the subscription cost. In fact, 29 percent of subscribers say the top driver for subscription cancellations is “value for the money,” according to the McKinsey study.
Since subscription companies typically have slim margins, they need to seek out every opportunity to reduce costs. While the product in the box is the centerpiece of a subscription order, but it is not the only contributing factor when it comes to value. Shipping costs actually tend to be higher than production costs and can inflate the subscription cost if not managed carefully.
A 3PL can help to keep costs down. With proven processes and fulfillment automation, they’re able to increase efficiency and improve accuracy. With multiple distribution centers, they can ship products from the facility closest to subscribers, often via economical two-day ground service.
Third-party providers also offer economies of scale, an established carrier network and relationships with major parcel carriers – giving you the flexibility to choose the best mode/ service level for each shipment at the best price. Their ability to negotiate rates, plan shipping volume and coordinate zone skipping to specific sortation hubs can further help to control costs.
3. Customer Experience.
Sticky subscriptions are dependent on the customer’s experience. Subscribers expect to be delighted when they open their box.
With so much on the line, order accuracy and quality are top priorities. An experienced fulfillment provider will pay careful attention to solution design and utilize proven processes to ensure a positive customer experience. They’ll typically offer inbound component inspection and a variety of outbound quality programs as well as repackaging and return handling. They’ll also incorporate methodologies like Lean and Six Sigma to ensure continuous improvement.
The prominence of social media in this sales channel makes order accuracy and quality particularly important. If subscribers are disappointed with their orders, they won’t hesitate to share the news on social outlets. Word travels fast and subscriptions can drop off quickly.
With a very active social media following, many subscription companies want to time deliveries so that there’s a social buzz around unboxing each month. To ensure that subscribers across the country receive their orders at approximately the same time, a 3PL can process orders strategically based on customer location to meet the tight delivery window.
More than 30 percent of consumers surveyed by AYTM Market Research in 2017 said they were “likely” or “very likely” to subscribe to a new subscription box service in the next two years. Want to tap that potential customer base? Work with an experienced 3PL, and your subscribers will stick around.
Saddle Creek client ipsy is one of the top five most popular subscription boxes, according to the McKinsey report. Watch the video to see how we help manage their order fulfillment.