In a saturated industry, subscription box companies need a differentiator to succeed.
Birchbox, Blue Apron, FabFitFun, Dollar Shave Club, Stitch Fix and BarkBox. While all offer consumers very different items, they have one thing in common: Subscribers. These companies took normal, everyday products and turned them into a $2 billion-plus industry by simply offering convenience and cost savings. And it’s only the beginning.
The number of available subscription boxes continues to grow year over year. In fact, the industry recently exploded as nearly 47% of subscription boxes have entered the market since 2017. This means there are more than 3,500 subscription box services offered today. Not all of them are from small or midsized companies either. Not surprisingly, big retailers like Amazon, Target and Walmart are getting in on the action as well.
But in a saturated industry, subscription box companies need a differentiator to succeed. From Blue Apron’s first-ever experiential retail popup shop offering cooking classes to Birchbox’s partnership with Walgreens, subscription box companies are looking for ways to grow their business and meet consumer demands.
The biggest challenge subscription box companies face
Unlike most retailers, subscription box companies typically aren’t burdened with storefronts or numerous product lines. Instead, the main challenge is shipping. This last step of the fulfillment process is the main point of customer contact for subscription boxes, making it vital for success. However, it is also one of the costliest expenses in the supply chain and directly impacts a subscription box’s bottom line. This forces many companies to put a priority on the cost, reliability, deliverability and ease of tracking when customers choose the shipping method and carrier.
A common mistake most subscription box companies make is using a single carrier for most or all of their shipments, which can be a risky business. Without a multi-carrier shipping strategy, many subscription box companies lack the option to choose the cheapest shipping method per order. [3 Ways Going Multi-Carrier Saves More than Just Peak Season]
Crafting a winning shipping strategy for subscription boxes
In order to overcome these shipping challenges, more subscription box companies are leveraging carrier-agnostic shipping software that automatically rate shops hundreds of carriers and services to identify the best option for every customer. They have found this can save them a minimum of 6% in shipping costs. Advanced rate shopping tools allow them to save by delivering from facilities nearest to the end customer, with the option of express services if there’s a longer fulfillment time or greater distance. They can also save by easily onboarding many different regional carriers and services, even without established contracts.
Rate shopping also provides subscription box companies with greater leverage at carrier negotiation time. By finding the best shipping method for every order, companies can meet delivery promises and create a positive customer experience while boosting the bottom line.
With subscription boxes and convenience going hand in hand, merchants must be sure shipping and delivery is just as easy as ordering. If customers have to spend time tracking down late or mishandled shipments, the benefits of these boxes are lost. That’s why the way to succeed in this industry is to think outside of the subscription box.
This article was originally published by Multichannel Merchant on June 4, 2019. View original article.
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