Category : Warehousing and Distribution

3 Signs It’s Time to Outsource Fulfillment for Your Subscription Box

Running a subscription box company comes with a lot of important decisions.

conveyor belt with cartons  for use in presentations, manuals, design, etc.

Figuring out your market and how to grow it are two obvious ones.

Another decision that is every bit as important, but less black and white, is knowing when you should consider outsourcing order fulfillment. As subscription box businesses grow fulfillment and shipping are areas with a direct impact on customer experience and operating margins – yet there are no hard rules on when outsourcing makes sense. The good (or bad) news is there will be signs. You just need to know what to look for.

Poor Inventory Planning:

The cost of the goods in your box are likely your biggest expense. This means you need to be very adept with your sourcing strategy, including inventory planning.

A professional warehouse will help you be better at tracking inventory, including inbound receiving, inspection, and counts. They’ll help ensure you have the products in-house each month so your box ships on time.

Shipping Late:

Of course, poor inventory management is not the only reason boxes may ship late. The order fulfillment process takes a lot of time. This is what fulfillment companies like Kable are experts at – being efficient with pick and pack.

They can provide a scalable source of skilled labor to accommodate any volume of shipments, and do so with accuracy and speed. At a point, packing boxes isn’t scalable for most subscription box companies to keep up with on their own. Outsourcing helps keep orders shipping on time and at the lowest fulfillment cost possible.

High Shipping Costs:

Shipping costs are largely a function of volume – so the more shipping volume you have the better shipping rates you will get from carriers. Growing subscription box companies can usually benefit from the rates offered by a larger fulfillment warehouse.

In many cases, the shipping savings will offset much or all of the costs they are paying for fulfillment services. This makes the decision an easy one.

Growth is a great thing for a subscription box company. But, it also forces the company to make a lot of tough decisions – like when and how to outsource their order fulfillment. If any of these 3 problems seems familiar the time may be right for you.

5 Quick Tips for How Subscription Box Companies Can Save on Packaging

It’s not surprising to say that packing materials are necessary to keep items from getting damaged when shipping – but they need to look good to. Unfortunately, they can quickly become a big expense for a subscription box company. Here are five ways that you can cut down the cost of packing materials without risking damage or the quality of your customer’s “un-boxing” experience. carton

  1. Buy in Bulk

Once you decide on the box sizes and types of packing materials you will need, purchase them in bulk to save money.  A simple search on the internet will show where you can purchase the items for the best price.  Amazon, ebay, and Walmart all offer shipping materials at reasonable prices.  If a certain item will require a different sized box, plan for that ahead of time so you can have it on hand when it comes time to ship that month.

  1. Use the Correct Size Box

It’s impossible to stress the importance of using a box that is the right size for your items enough.  Shipping in a box that is larger than necessary contributes to a much higher shipping charge, as well as extra packing material.  Reducing the box size by just an inch can make a difference in shipping costs, and if it can fit in the mailbox, even better!

  1. Recycle, Recycle, Recycle

Items such as boxes, bubble wrap, peanuts, plastic air bags, and envelopes can all be reused.  Just make sure the items are in very good condition and clean before using them again. Many “new” packaging materials are made from recycled materials as well. Using these types of products can have a great appeal to many potential customers.

  1. Free Shipping Supplies

If you are able to, take advantage of free shipping supplies from your carrier.  USPS, FedEx and UPS all offer some items for free.  For example, the USPS offers free flat rate boxes and free mailing tubes for Priority Mail.  If you find items that are suitable for your shipping needs, you’ll maybe even save enough to offset slightly higher shipping costs.

  1. Search for Sales

Sometimes, retailers run sales or promotions on certain shipping supplies.  Office Max and Office Depot offer coupons if you register on their website or at their stores.  These coupons can be used for tape guns, boxing tape, and tape guns.

 

With just a little effort, subscription box companies have many options for cutting down on the expensive packaging materials.

Starting a Subscription Box? Here’s 3 Ways to Save on Shipping

Shipping is a big expense for every subscription box company and is especially important to think about as you are first starting out.

USPSHowever, even established subscription box companies can benefit from evaluating their own shipping patterns and requirements on a regular basis. It’s a key exercise for any online retailer to prevent overspending on small parcel shipping.

Do the Research

There are several carriers available to help ship your customer orders, which gives you some leverage when negotiating rates.  Don’t assume any one is your only choice – there are many parcel consolidators and parcel delivery services that can complete with the USPS and other large carriers. Any established online business should discuss their shipping history with their current carrier to get better rates, or can use that data to negotiate with a new carrier.  Plus, the more knowledge you have about your own shipping patterns the better pricing carriers can offer.

Keep in mind that it may be cost-effective to use two different carriers if you are shipping packages that differ in size or weight, or to several areas of the country.  Knowing your company’s needs and considering all the options is the only way to get the best shipping rates.

Save on Packaging

Packaging for shipments can also be a large expense, particularly for smaller companies.  One way to reduce costs is to buy boxes and packing materials in bulk.  When possible, recycle boxes and packing material.  Not only are you helping the environment, but also your bottom line.

Also, make sure the box size is the correct size for your items.  Shipping in boxes that are too large can mean you are paying for extra shipping weight unnecessarily. Packaging that is too large, or too small, can also lead to expensive damages and returns. And unhappy customers.

Shipping Insurance

Depending on the value of your subscription box, it may not be worth paying extra to insure it.  If your carrier offers reliable service with few damaged or lost items, paying for the occasional damaged package might far outweigh insuring every box. Investigating your rate of returned packages can help you figure out if it is worth this extra expense.

Shipping can account for 10% or more of the operating expenses for a subscription box company. Making educated choices for how you manage shipping can often be the difference between a profit or losing money for your subscription box company.

Inventory Management Must-Do’s for Every Subscription Box Company

Aside from the obvious expense of purchasing inventory in the first place, failing to properly manage it can lead to shortages for customers, costly overages for product that sits unsold, and consume capital resources. warehouse Proper inventory management ensures your subscription box company is operating efficiently, while continuing to meet customer demand.

Here are 3 ways to keep your inventory management process working.

Conduct a Physical Inventory Count

In order to correctly assess inventory, you have to know what you have. This seems obvious, but accuracy with inventory is no simple thing for companies of any size. Take into account not only finished goods, but raw materials and works in progress.  Physical inventory counts should be compared against data records to see what discrepancies exist and how the process can be improved. For subscription companies that outsource fulfillment and warehousing, your provider should be performing regular cycle counts to insure inventory levels are accurate. It’s important their inventory counts and yours are reconciled regularly.

Forecasting

Optimal inventory levels means having enough of an item to fulfill a month’s worth of subscription boxes without being overstocked.  Inventory for subscription box companies is unique in that products are not typically forecasted by demand, but by number of box subscriptions sold. This means the growth and sales trends with your own business must be considered precisely each month – and not seasonally or annually as with other types of retail businesses.

Systems and Data Maintenance

For growing, larger, or more complex subscription box companies, inventory management can require a core team with the ability and tools to evaluate, analyze, and order product. It starts with a process and system that provides timely access to inventory data. At some point, a dedicated inventory control specialist may be required to oversee inventory operations. Implementing inventory management software, in the form of a WMS or ERP, is another way growing companies stay on top of the challenges that come with controlling inventory.

Getting good at inventory management is not the reason you started a subscription box company, but it can be the one thing that determines the success or failure of it. Implementing these ideas will help to ensure effective inventory management so you always have the correct amount of each item on hand and your customers stay happy.

What to Consider When Creating Packaging for Your Subscription Box

Part of the allure of receiving a subscription box is the packaging.   Great looking packaging drives your brand’s image, as well as increases the chances that the subscriber will be happy with their subscription, and continue to subscribe.

1.       Design

The design and style of your packaging should fit the theme of your subscription box.  For example, if your target audience is young women, make sure you pick colors, style, and lettering that will appeal to them.  After all, the packaging is the first impression the customer has of your box. carton-emballage

2.       Quantity

As a start-up, you probably will not have the money to invest in custom packaging right away, but once you have at least 300 subscribers per month (and some history on products being shipped), you can begin to research your options.  Most packaging companies require a minimum of 1,000 boxes for a custom-printed mailer, which is a large outlay of money.

3.       Size

Make sure you choose the right size box.  Resist choosing the larger size box, not only to save on shipping costs, but because subscribers will not be happy with a half-filled box.  This is where product history comes in handy.

4.       Sourcing

When deciding on a manufacturer, you should consider their location, fulfillment options, turnaround time, and of course, price.   When comparing manufacturers, have your box size and order quantity on hand so you can get the most accurate price quote.

5.       Cost

The price of your custom box is going to be based on the type of printing, box quality, and ink quality you choose.   Decide where you want to spend your budget and where you are willing to cut costs, especially in the beginning.  This will give you negotiating points when discussing price with your manufacturer and can help you get the best deal on your custom packaging.

Once you have placed a few orders, and are satisfied with your custom packaging, you can negotiate better rates on volume with your manufacturer.

Do You Have a Productive Pick and Pack Process?

Picking is the process of pulling inventory from one or more locations to be included in an order, and packing is the gathering of these items to be placed in packageswarehouse to be shipped to the customer.  An efficient pick and pack process means your company is operating optimally, while satisfying customer expectations.  To make sure your company’s shipping process is efficient, make sure you are doing the following:

Inventory Counts

A productive pick and pack process starts with a correct inventory count for each and every product.  Since miscounts result in oversells and understocking, it is important to start with an accurate inventory amount.  An automated counting system like a barcode scanner or RFID sensors will keep track of your items.

Layout

Being able to find items to pick is important to operating an efficient warehouse.  High-selling items should be placed closest to the packing stations since they will be picked most often.  This increases productivity by cutting down on the time it takes for an employee to pick an order and process it.  If you have items that are purchased together, put them near each other for greater efficiencies.

Organized Areas

Your pick areas should be neatly organized so warehouse workers do not waste time searching for items.  Warehouse shelves should have bins that are easily accessible and are transparent.   At the packing stations, packers should have all supplies necessary to pack efficiently.  Have several box sizes that fit your products size and weights correctly to eliminate shipping overages.

Kitting

Kitting refers to the pre-assembly of individual products in a ready-to-ship package.  Putting items together saves time during the picking process, and cuts down on the materials necessary to pack the order.  This works especially well if you sell in bulk quantities or have products that are complementary and are often purchased together.

Plan

Sometimes, certain events happen that will affect your fulfillment processes.  Your pick and pack services should be flexible enough to handle these events, or a sudden surge in orders.  If you are a retailer that experiences a higher volume of orders during the holiday time, make sure you have a fulfillment plan for that season.  Your pick and pack processes should be well-documented to get through any challenging or busy periods.

Final Check

Mistakes are going to happen, but decreasing the chance that they do, will add to your bottom line.  For every incorrectly picked order, there is a significant cost associated with it with return shipping, and then re-shipping the correct item.  One error costs as much as shipping two or three products.  While automation is a great time-saving tool, an actual employee should do a final check of each shipment before it leaves.  This final double-check can catch costly errors before they leave the warehouse.

If your company’s pick and pack process is not operating optimally, it might be time to look to another resource.  Kable Fulfillment can handle your business’s fulfillment process from start to end.  To learn more, please visit our website at www.kablefulfillment.com.

How to Provide Efficient Fulfillment This Holiday Season

Ready or not, the holiday season is officially here.  Holiday fulfillment can present a whole range of logistics challenges if you are not prepared. ebay

Most business to consumer retailers experience a huge surge in sales during this time of year.  This is the time of year to gain new customers and to retain those who will become long-term buyers to your brand.  If your company is not ready to meet this increase in demand, however, the result can be unhappy customers whose gifts did not arrive on time and a hit to your brand’s reputation.

There are several things that can help you prepare for your company’s busiest season:

Determine Your Peak Days

Use data from past holiday seasons to figure out your company’s peak fulfillment days.  If you are a start-up, a 3PL partner can develop sales predictions for you.  A third-party logistics provider will combine data such as sales volume and customer behavior to determine the days you can expect the most orders during the holiday season.

Plan Fulfillment Around Your Peak Days

The inability to ship out the orders you receive in a timely manner during the holiday season can have catastrophic results for your company.  Staffing can be one of the biggest challenges during this time of year so provide additional training and cross-training to employees.  You can also consider hiring interns, for a lesser cost than a temporary employee, or temporary employees from a nonprofit organization in exchange for a donation to their charity.  Hiring additional staff is not the only solution to the peak season, all fulfillment operations must be planned to handle the increase in demand.

Stock Up

If you fulfill in-house, make sure you have an ample supply of boxes in several sizes, tape, packing materials, labels, and printer ink.  If your scales, tape guns, or packaging dispensers are worn, it might be a good idea to update them to handle the peak season.  Make sure there is enough space to accommodate the increase in sales and that it is organized for efficient order processing.

Systems Review

Now is the time to ensure all IT operations are effective and can handle the increase in volume.  Data-tracking systems should be updated to be able to address any issues quickly.  Review your order processing procedures with all employees to ensure they are fulfilling efficiently and correctly.

Shipping

Delivery options differ during the holiday season so you need to know your carriers’ specifics, such as cut-off dates, pick-up times, and delivery guarantees.  Understanding these details is necessary for providing realistic delivery expectations to your customers.

Consider Outsourcing

If you are a retailer that will see a significant increase in sales during the coming weeks, you need to make sure you can handle it without hurting customers.  If the spike in sales will cause customer service and delivery issues, consider using a 3PL for your fulfillment needs because today’s consumers demand correct orders on time for the holidays.  To make sure you can meet your increase in demand this season, visit www.kablefulfillment.com.

Small Parcel Shipping Just Got More Expensive

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For every retailer and manufacturer, small parcel shipping can account for a large expense. And shipping services won’t be getting any cheaper.  Last month, FedEx announced its GRI effective January 2, 2017, which includes a 3.9% increase in shipping rates for U.S. domestic, export, and import services.   In addition, the dimensional weight divisor is decreasing from 166 (which has been in effect since 2011) to 139.  FedEx uses this divisor to determine a base rate by multiplying the length, width, and height by inches and then dividing by the factor.

This new divisor factor (DIM) can have a big impact on small businesses, as many shipments will now see a weight difference of about 20%.  Under the current DIM, a 10x10x10 box’s billable weight is about 6lbs.  With the new lower DIM, the same parcel is now calculated as 7lbs.  Because shippers pay the higher of either the parcel’s dimensional or actual weight, this seemingly small difference in billable weight is in reality, a big hit to the bottom line for millions of shippers.

FedEx also announced that beginning in February, 2017 fuel surcharges will be adjusted weekly, instead of monthly. This will most likely result in more variable fuel rates.   The DIM factor decrease, coupled with the higher shipping rates and surcharges, could lead to an overall rate increase of 25% or higher.

Unfortunately, these increases will hit smaller companies the hardest, as they do not have the shipment volume to negotiate lower rates.   Many smaller shippers may not understand the dynamics of dim-weight pricing, which means that they will not know to ask for the best rate.  Shippers who are not familiar with this pricing structure might now be affected by it as the lower divisor applies to more parcels, especially those that weigh less than 7lbs.

When carriers changed their rates from 194 down to the current 166 five years ago, small businesses took the brunt of the increase and big companies got a pass, even though many of them send oversized packages often.  It is expected that larger companies who are in the middle of their multiyear contracts will get waivers at the expense of the smaller ones this time as well.

If UPS, who has not yet announced its 2017 GRI pricing, follows FedEx’s lead, these increases will only put that much more pressure on small merchants, especially those who offer free shipping as part of a promotion or as their marketing hook.

However, there are some other options for businesses that do not do a large volume with either of these big carriers.  The U.S Postal Service or regional carriers may end up being able to give rates that are considerably more competitive than the larger, national carriers.  All businesses should evaluate their shipments, box sizes, and which carrier will offer the most cost-effective shipping services.

Concerned about how the upcoming shipping rate increases will affect your business?  Contact us today at www.kablefulfillment.com to find out how we can help.

Saving Money on Small Parcel Shipping Despite the Upcoming Rate Increases

For a small- or medium-sized e-retailer, shipping costs play a large role in overall profitability.  A shipping increase, suchFirst_FedEx_van_Memphis_TN_2013-05-17_003 as the GRI increase of about 5% just announced by UPS for next year, can have an impact on a small organization’s bottom line.  Businesses that do not sent large shipments of pallets at one time can be at a disadvantage from a cost perspective because they do not ship a high volume.  These guidelines can help your ecommerce business minimize the increases expected by UPS and FedEx for next year.

Choose Your Carrier Wisely

As a small e-retailer, it is worth the time to research which carrier or carriers will work best for your shipments.  With pending rate increases by UPS and FedEx, it might be the time to look at other shipping options.  Since the increases are usually different based on destination location and not an overall increase across the board, you may want to use different carriers for shipments to different areas of the country, based on the cheapest rates.  As your shipping volume grows, so does your negotiating power.

For small packages that do not weigh much, don’t forget about the USPS.  Their rates are usually the lowest for these types of packages, with delivery confirmation and tracking numbers at no cost.  Be sure to look into Priority Mail, Priority Mail Flat Rate, and Priority Mail Regional Rate to find which options will be most economical.

Determine Customer Shipping Fees

Create shipping policies for when the business will pay for shipping and when the customer will.  Will you offer free returns?  If so, find the easiest way for those to be sent back.  Once you have determined your shipping policy for purchases and returns, communicate them to the customer via your website and customer service.

Use a Small Business Specialist

Most carriers have a small business specialist that will work with your business to meet your shipping requirements.  Discussing mode of transportation and delivery timing can help to shave off at least 30% in fees.  For example, using ground services instead of air services might be better for certain sized packages instead of others, depending on weight and distance.

Use a Postage Meter

A postage meter is an invaluable tool for a small ecommerce business.  Use it to weigh packages, determine postage charges, and print shipping labels so you are paying exactly what you should, and nothing more. Pitney Bowes, a postage meter provider, estimates small businesses can save as much as 20 percent on shipping costs by using one.

Pay Attention to Additional Fees

Most likely, additional fees like extended delivery and fuel surcharges will increase in the coming year.  In addition, peak season surcharges are expected to go up.  During this time of year, an ecommerce business might try driving customer pick-up in its stores with incentives.

Analyze Carrier Performance

Whether you are using one shipping carrier or three separate carriers, it is important to understand the costs associated with each, as well as the service you are receiving.  Keeping a scorecard with metrics such as meeting pickup times, delivery reliability, customer service, and access to tracking data are all components that should be evaluated.  Overall costs should be compared among carriers, including baseline costs by weight and distance, cost by service level, and any additional fees.

To find out if you could be saving more on your ecommerce shipping, contact us at www.kablefulfillment.com.