The subscription model was originally adopted by newspaper and magazine distributors in the 17th century, and in recent years, many firms have also applied this technique. This technique always provides services and products to ensure customer reliance and loyalty.
About ten years ago, the subscription box model emerged, led by Birchbox. This beauty box service established the trend and motivated many others to launch their subscription box services. Today, consumers can subscribe to nearly anything and enjoy the ease of having their subscription box or parcel delivered directly to their chosen address.
Subscription box fulfilment involves receiving, packing, and shipping the subscription order, all of which concern the retailer’s required brand aesthetics as well as customers’ preferences. Retail subscription requirements state that these companies have to maintain perfect stock, ensure that they deliver the ordered products within the agreed time, and take extreme measures to assure product quality to cater to the repeated orders that customers make.
A recent report shows that the world market for subscription boxes is anticipated to grow by 20% annually for the next five years. This growth arises from advancements in the need for fit-for-purpose shopping services and the convenience presented by automated delivery.
Role of Inventory Control in Subscription Boxes
Picking the right inventory management system is one of the most critical decisions subscription box firms should make to achieve efficient operations. From purchasing to stocking to order fulfilment and shipping, inventory and order information can be acquired at the touch of a button.
Real-Time Tracking:
It can assist you in monitoring your stocks, restocking them when they run out, or even looking for problems in your inventory before they get out of hand. Software should be able to sync with other business applications used in the company, such as e-commerce or shipment.
User-Friendly Interface:
Adopting the management system must be easy to work with and understand. A poll pointed out that 74% of users believe interfaces need to be friendly to boost productivity. The system should afford fast retrieval of required knowledge and prompt finishing of work; 68% of the enterprises observed a decrease in the time used in inventory when using user-friendly interfaces.
Advanced Reporting Features:
An inventory management system with reporting features can help make enormous decisions regarding the company by reporting which products are popular and which are less popular.
Roles Of Inventory Management In Business:
Inventory management remains central to how a business’s supply chain function interrelates with its financial priorities and customer service goals.
- Enhancing Cash Flow: Accurate inventory tracking control makes it possible to manage the funds properly and be tied up as required.
- Improving Customer Satisfaction: helps guarantee product availability to cater to customer needs.
- Reducing Inefficiency: help that there will be no more overstock or stockouts, which would otherwise slow business processes.
- Data Analysis: More helpful in predicting the demand and the magnitude of sales in the market.
- Good Inventory Management: Effective inventory management affects the entire business, from financial health to customer satisfaction.
Common Challenges With In-House Subscription Box Fulfilment:
Inventory Management:
When technology is not state-of-the-art, especially when personnel are not well-trained, it can be tricky to determine the right quantities of stock to order or to keep in-store. Failure to record accurate inventory can result in stockouts and slow order fulfilment, eroding consumers’ trust and confidence.
Changing Products:
The need to launch new products or modify the existing ones may affect the fulfilment operations and, thus, result in errors in subscription boxes and shipment delays. It could have to go through an explanation because this process may affect the order fulfilment, and researchers might receive the wrong items in their subscription boxes.
On-Time Delivery:
On-time delivery is vital for customers; often, transport disruptions or a high number of orders threaten on-time delivery, which ultimately erodes the brand as well as customer loyalty (and even the quality of the products the company provides, for example, through deteriorating food). Delivery delays mean that customers will be dissatisfied, they will want to write negative comments, and there is potential loss of customers.
Quality Control:
Product quality in subscription boxes is essential; otherwise, quality problems will lead to product returns, increased costs, and future business losses. Defects and other issues that may arise, for instance, customers receiving badly damaged goods, may lead to returns or additional charges, which are not beneficial to a business and may, in turn, destroy a brand’s reputation.
Subscription Cancellations:
Customer cancellations are inevitable. However, frequent shipment errors or delays are likely to increase the chances of subscription cancellation due to a lack of trust in the appropriate fulfilment practices. If process errors are not the issue, then retailers need to know why customers are cancelling to make the right changes.
Staffing:
The nature of the business requires that warehouse staff can meet varying orders and fulfil them properly; cases, where staffing could be better or proper training needs to be employed appropriately, may lead to many costs, such as increased cost of operation. Lack of staff or adequate training for the workers can result in mistakes with the orders, affecting the business’s general running.
Meeting these issues requires sophisticated technological application, clear working procedures, communication approaches, and organisational improvement.
Accurate Inventory Management Can Drive Growth:
Cost Reduction
- Prevents overstock and stockouts
- Reduces costs of waste materials and storing material
Improved Customer Satisfaction
- Aids in achieving on-time delivery of orders or critical products and services
- Creates loyalty and develops a bond with the customer
Boosted Repeat Business
- Encourage customers to purchase the products, which may compel them to subscribe again.
- Encourage them to give more positive comments and suggestions
Advantages of Effective Inventory Management
Using effective inventory management helps businesses align their processes accurately. You can take advantage of the following benefits:
Enhanced Collaboration Through Effective Inventory Management
Inventory management ensures the sales department can quickly switch to the warehouse to check whether a particular product is in stock. In addition to good cooperation, stock management ensures that processes are easily optimised, making it possible to automate order advice.
Respond Quickly To Undesirable Situations
Another advantage of stock management is responding more quickly to obsolete stock. By balancing, you know your loss costs, so you can determine how to keep them low. This also allows you to manage profit margins better. Finding a balance between the right products and suppliers is essential when determining product promotions.
Investments In Time And Costs Remain Low
When setting priorities, you ensure that costs remain low. You have more money left over to invest in other things, and in addition to saving costs, you also save more time.
Case Study: A Beauty Subscription Box Company
Let’s discuss GlamBox, which used to have multiple problems with stock management. Whenever there was an order for several lines, they would often underestimate the quantity of each product they needed to order and end up ordering too much stock, which would either take up space or spoil it before it could be sold. Instead, overly popular items would sell out within the shortest time possible, thus causing inconveniences to the customers and delays in restocking.
To solve such problems, GlamBox integrated sophisticated software to control stock and anticipate product needs. This enabled it to have optimal inventory and not too much stock. Therefore, it helped to greatly reduce storage costs, reduce product waste, and enhance customer satisfaction. This brought about better consumer retention and positive feedback after the enhancement of inventory management.
Working with an expert such as Prolog Fulfilment transforms one’s operations significantly. They know a great deal, have new techniques and can guarantee perfect inventory control.
By outsourcing this function, subscription box companies can concentrate on their core strengths: delivering outstanding products and delighting customers.
How Do You Choose An Order fulfilment Strategy?
Businesses have several choices when deciding on an order fulfilment strategy. Depending on the skills and resources available in your company, you may prefer either internal fulfilment or outsourced fulfilment.
If you have the means in-house, you gain more control over operations and costs by handling fulfilment internally. If your company’s in-house talent and resources are somewhere in the middle, you may opt for a hybrid model to give you some of the benefits of both worlds.
If fulfilment is not easy, the ability to do logistics efficiently and materials are not easy to come by, so outsourcing order fulfilment may be more cost-effective. That means that while your team is involved in the production and sales of the product, predictability tends to improve. Internal fulfilment means that you hire all the company’s staff, own the warehouse, and make sure that all the orders are correctly processed. When you outsource order fulfilment, many challenges are no longer your problem.
To make the right decision for your business, look at the product, potential fulfilment options, and fulfilment costs. A detailed financial analysis should guide you to the best solution.
Order Fulfilment Types
In-House Order Fulfilment:
The in-house model targets all order fulfilment tasks such as warehousing, picking, packing, and shipping to be performed within the company only to have full control of the entire process.
Third-Party Order Fulfilment:
The third-party model is a process in which a third party carries out all order fulfilment methods, including packing, picking, warehousing, and shipping.
Drop Shipping Order Fulfilment:
The order is produced and shipped by the manufacturer. On the pro side, this lowers the barrier to entry and minimises overhead costs, which is critical for startups and e-commerce companies. It also eliminates the middleman, which can potentially save the buyer money. On the cons side, it can also strip merchants of control, particularly regarding inventory management and order fulfilment. It can also significantly delay customer shipments since many manufacturers are in other countries, far from the merchant’s customer base. In that case, shipping may take longer and cost more, or a distribution centre may be set up, and items may ship from there.
Hybrid Order Fulfilment:
A hybrid model is created when two or more of the above mentioned models are incorporated. For instance, while order fulfilment of a firm’s entire inventory or specific best-selling products may be performed internally, it is not uncommon for the firm to outsource during busy periods like the holiday season or when direct shipment of large and heavy items is made from the manufacturer.
Conclusion
This shows why picking inventory management for subscription boxes is important. Accurately handling inventory and cutting costs are the only ways to meet customers’ requirements and build brand awareness. As the number of people who sign up for subscription boxes grows, the issue of keeping track of inventory and delivering boxes should remain the same.
If keeping track of their inventory is difficult, they should hire a company like Prolog Fulfilment. They have the staff and tools to make running the business easier and take less time.
