21
Mar
2016
3

Subscription Box Fulfillment: Common Misconceptions

When I launched my first subscription box business back in 2011 the concept of outsourcing our subscription box fulfillment wasn’t even on our radar. Once a month, my two partners and I would round up our friends and family and spend the better part of a week packing and shipping our boxes. Eventually, as we got bigger and bigger we had to start hiring temp workers – still my co-founders and I were part of the monthly packing process (it never dawned on us that our time was better spent on other things). We were so convinced this was the right thing to do that we ended up leasing a 10,000 sf warehouse and hiring full time warehouse staff. Little did we know, we were running two businesses – a fulfillment operation and a subscription box company. We weren’t aware of how distracting fulfillment was. It wasn’t until l started my second subscription business that I realized keeping fulfillment in house was a bad idea. In this post, I’ll outline the thinking that got us into trouble.

No one can do it better than us, we’re quality freaks!

Even as my partners and I became aware of outsourced fulfillment options, we quickly wrote off the idea. Why? We thought that no would could have the quality control we did. After all, the ‘unboxing experience’ was the most important part of our product. We didn’t trust that anyone would have the same level of care and attention to detail that we put into packing our boxes.

This thinking was absolutely wrong. There are companies that have been doing fulfillment (pick & pick, assembly and kitting) professionally for over a hundred years. When I finally was forced to outsource fulfillment for my second subscription business I was immediately blown away by the quality and professionalism of my new fulfillment partner. My fulfillment partner takes care of the mundane, yet critical tasks that we simply let slip by during our in-house operation. Things like double checking quantities on new product arrival (to make sure the vendor didn’t short us), keeping track of inventory on ‘extras’, making it easy to ship out replacement boxes, staying in compliance with Global Foods Safety (GFSI) warehouse certification, pest control and more!

I’ll save money doing fulfillment myself, right?

Probably not. In-house fulfillment doesn’t really become cost effective until you get to an extremely large scale (100k+ monthly subscribers). As a new and growing subscription box business It’s likely you won’t save money on in-house fulfillment unless you’re sharing resources with a couple other businesses. Even if you’re technically lowering your cost of goods with in-house fulfillment, it’s still going to be a huge distraction for you and your team. It’s a once-a-month fiasco you’ll quickly start to dread! There are definitely some exceptions though. If you plan to keep your business at 100-200 packages a month, it’s totally doable to knock this out in a weekend with a few friends in your garage. It’s also important to note that many fulfillment companies have about a 300 box minimum (some will budge if you give em’ a good pitch though).

We have multiple variations and too much complexity to outsource.

Also not usually a good justification to keep fulfillment in-house. Complexity and logistical challenges are what quality fulfillment companies deal with every day. Each month I send my fulfillment company a list of all the inventory to expect in the door, along with a clear list of what to pack in each version of my box. They even send several pictures of different ways to arrange the products in the box for me to choose from. The one thing I do continue to control though, is my label processing. I use a batch postage processor to process my labels and send ready to print PDF’s directly to my fulfillment partner to print and stick on my boxes.

A few other pointers:

Look for fulfillment companies that also manufacture custom packaging.
A big added expense comes with shipping your custom boxes to your fulfillment house. Look for a fulfillment company that also prints custom packaging on the same campus. Not only will you save on shipping costs, they’ll keep an eye on your packaging inventory and do a new run whenever you’re getting low.

Make sure they have experience with ‘kitting’.
Look for a fulfilment company that has experience with ‘kitting runs’ and not just ‘pick and pack’. Traditional, one-off ecommerce pick and pack fulfillment doesn’t enjoy the efficiency of large bulk runs – there should be cost savings here! Some fulfillment companies will inappropriately quote you pick and pack pricing.

Don’t let the fulfillment company buy your postage.
Many fulfillment companies will try to tell you that buying and processing your postage for you is a requirement (obviously so they can mark it up). Unfortunately, many fulfillment companies don’t even enjoy the best pricing on postage and processing your postage is where there’s the most room for error. They won’t lose your business over this though, just be firm on your requirement to process your own labels and emailing them over each month! I recommend Pirate Ship for Subscription Box Shipping.

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6 Responses

  1. yasmine

    Hello Jameson

    I learned from reading your article about opening up a subscription business. I just wanted to run a few ideas by you to see which business I should open up. Instead of my just jumping right into it, I rather get some advice from you.

  2. Shampagne P

    Hi Just wanted to get clarity on on your last two points.

    I’m confused on the Kitting and Pick and Post processes and the part where you mentioned they will quote inappropriately the pick and pack pricing. can you go into more detail about this?

    Also the last point you talked about the fulfillment company buying the postage, may you go into detail about this as well. I kind of got lost on these parts.

    Thank you in advanced!

    1. Jameson Morris

      Hi Shampagne, sorry I missed your comment! What I was referring to was that I believe ‘kitting’ should have a savings over traditional pick & pack ecommerce fulfilment – especially for subscription box fulfillment because of the efficiency gained by packing a large, once a month shipment all at one time. I was pointing out in my article that I’ve seen fulfillment centers incorrectly try and charge the exact same rates as ‘one off’ pick and pack fulfillment.

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