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5 Logistical Challenges Limiting Subscription Box Companies (and How the Right Partner Can Help)

Subscription Box E-commerce business model

From cosmetics, clothes and snacks, to high-end golf supplies, dog treats and specialty socks, there seems to be a subscription box to meet nearly anyone’s – and presumably, everyone’s – preferences. In fact, by some industry estimates, more than 2,500 subscription box companies that have emerged in the last 3 years. This number is only expected to increase as consumers continue to demand customization and convenience.

But finicky consumers also expect to be wowed at every delivery, making it extremely difficult for subscription box brands to succeed. The supply chain has always been a complex part of selling products, but this is particularly true of subscription box businesses.

If you are one of those brands, you have likely come up against several – if not all – of the same challenges we are seeing in the market today. We’re here to help you get through them in order to continue to grow your business.

1. Leveraging e-Commerce best practices
One of the biggest challenges we see subscription box companies facing is treating their companies the same as a traditional e-Commerce brand. While online retail best practices would suggest making the most efficient use of warehouse spaces, automating as much of the shipping process as possible and repeating the same processes across nearly all consumers, we’ve found that attempting the tried-and-true approaches in this entirely new and different business model simply doesn’t work.

As The Wall Street Journal aptly reported, “monthly subscription services must defy some of the fundamental rules of e-commerce,” and we believe that starts with a fresh approach to the entire supply chain process—one that seamlessly bridges the end-to-end supply chain from the moment a consumer subscribes on your website through to when they are delighted by the box they receive on their doorstep.

2. Personalizing orders to consumers’ preferences
The entire subscription industry has boomed thanks to its ability to deliver a collection of products that are suited to a consumer’s individual—and often changing—taste. Not only does the product mix have to change every month or week, but it often also changes for each individual consumer.

This presents a number of very unique challenges: sourcing so many distinct products on a regular basis, matching those products to consumer requests and, of course, packing and shipping each box on time and with complete accuracy. While these tasks could cripple a small in-house team, partners like ModusLink have the proven processes, existing space and staffing set up to manage extremely complex sourcing, packing and shipping on both regular and intermittent schedules.

3. Packaging with Precision and Pizzazz
With subscription box companies, getting the right products at the right time is only part of the battle; consumers also want to be impressed and excited before they even peel back the packaging tape. From elaborate to uber-efficient, companies must put considerable thought into “box” and how it will be received and perceived by clients. Partners can play an important role in balancing the wow-factor of the box, tissue, bagging, labels and other packaging with practical considerations like cost, kitting, assembly and shipping.

4. Surpassing consumers expectations of good service
Even the best product selection and most exciting packaging often cannot make up for subpar customer service. This is particularly true in the subscription box business, where social media often provides a megaphone when a consumer has a negative experience. Customer service must be readily available on multiple channels, extremely responsive and empathetic, and most importantly, able to find a solution to whatever is getting in the way of a top-notch consumer experience—be it damaged goods, an inaccurate orders or the need to make a cancellation or return.

At ModusLink, we often work with customers across their entire, end-to-end supply chain process, which ensures we can offer top-notch customer service. When a consumer calls one of our call centers, we have insight into everything from their preferences and membership levels, to when their box left the warehouse and what was in it, and as a result, can more quickly resolve issues.

5. Managing the details of subscription cycles and returns
The old adage “the devil is in the details” could not be a more accurate way to describe the challenges faced by subscription box companies—particularly when it comes to managing the intricacies of a growing subscriber base. Many companies have expertise in their particular product segment or industry, but not always in the systems, data and analysis that goes in to the operations side of the business.

While there are many vendors who can assist with the sourcing, packaging and shipping details of the earlier challenges, few are equipped to do that and handle the details that go in to, say, taking back products consumers don’t want to keep or automating how their preferences are not only captured but then acted on when it comes time to select and pack product.

If you still need help overcoming the challenges of this burgeoning sector, check out our infographic The Anatomy of a Subscription Box: Breaking Down the Supply Chain Secrets to their Success or contact us to learn more about how we can help.

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