Blog Posts How Can I Manage Rising Subscription Fulfillment Costs?
- Subscription box growth can lead to increased order fulfillment costs.
- To control costs, design fulfillment operations with scalability in mind.
- Find the optimal inventory level to satisfy subscribers without breaking your warehousing budget.
- A Multichannel Merchant blog details these cost-saving strategies and more.
In the past year, demand for subscription boxes has skyrocketed. While subscription companies welcome the growth in order volume, they often are caught off guard by a corresponding increase in subscription costs.
Saddle Creek’s Nicole Lee details these cost-saving strategies and more in a blog for Multichannel Merchant.
Following is an excerpt…
4 Strategies for Controlling Subscription Fulfillment Costs
1. Ensure scalability
Fulfilling subscription orders can be a labor-intensive process. Since boxes typically include a number of individual pieces, there’s greater need for picking, kitting and packaging.
Pay careful attention to the number of touches required to build your box. How many items are included in each box? How many folds does it take to make the box itself? How many marketing inserts must be added? Remember that there is a cost associated with every touch.
Look for ways to streamline the fulfillment process. Use a pop-up box instead of one that requires 10 folds. Bundle marketing materials at the printer rather than adding each item to the box individually.
As a rule of thumb, keep the complexity of your subscription offerings proportional to your order volume. You don’t want to offer hundreds of SKUs or product combinations until you can achieve economies of scale. Keep options to a minimum to start and then build in more variety as volume warrants.
As a rule of thumb, keep the complexity of your subscription offerings proportional to your order volume.
2. Manage inventory
With industrial warehouse space at a premium, effective inventory management is essential for controlling your storage footprint.
Keep an eye on your inbound volume. While it is important to have safety stock products on hand in case vendor issues arise, you likely don’t need to store six months of inventory. For most subscription companies, one-and-a-half to two months of stock is the sweet spot.
And don’t forget about managing inventory on the back end. The products left over after each run take up space. Find a way to use them in timely manner. Think mystery boxes, giveaways, ecommerce sales, et cetera.
For more cost-control strategies, read the full article on Multichannel Merchant.
Related to: Controlling Costs, Managing Growth, Subscription Box, Value-added Services