How subscription-based e-commerce affects warehouse management

Posted in Inventory and warehousing.

The subscription-based e-commerce world is booming. Beauty and food are leading the way, although clothing, lifestyle, and pets all have a decent share of the market.

So just why are subscriptions the new ‘in’ thing? There are many possible reasons, but the most likely answers depend upon the type of subscription services. Generally, there are two different options:

Curation Services: ‘Mystery’ products are picked based upon customer preference

Continuity Services: Recurring orders of a particular product based on a pre-arranged schedule
For curation services, has shopping become too easy? Today, we can order anything, at any time of day, with the touch of a button. Compare this to pre-planned ‘retail therapy’ days; days of popping into store after store; days of window shopping. Technology has taken the excitement out of spending money, and subscription-based business models are putting it back, with shoppers not knowing what they’re getting.

For continuity services, is shopping easy enough? Busy lives mean we’re racing from one task to another, with little time to keep the house stocked with essential items, especially bulky products such as pet food. Even allowing for technological advancements that enable us to order the items we need with just a single click, hectic schedules are increasing the need for automation and continuity-based subscriptions.

Challenges of the Subscription-Based Business Model

What we know is this: subscription-based businesses are currently in high demand. What isn’t quite as clear, however, are the unique challenges that these business models bring, particularly in terms of warehouse management. There are certainly some special considerations to take into account when it comes to warehouse management, inventories, and forecasting for subscriptions. These include:

  • The need to stock and handle a wide range of SKUs for curation services
  • The need to process SKUs efficiently to ensure all curation orders are dispatched simultaneously
  • The need to make better use of available space due to an increase in the average order size
  • The need to ensure the right products are available at the right times for continuity services
  • Warehouse management software which is designed to handle high volume orders can be a sensible and cost effective solution. Most notably, this type of software can improve accuracy and enable forecasting.

Improved Accuracy

Inventory accuracy is one of the most important factors for subscription-based businesses, ensuring not only that the right products are available at the right times, but also that old stock is accounted for and monitored. This allows for old stock to be incorporated into curation services in an effort to minimise waste, and make more efficient use of available warehouse space through constant stock rotations.

Better Forecasting

Warehouse management software can also be instrumental in improving forecasting and prediction; two aspects that are essential for the success of a continuity-based subscription service. The software makes it simple to analyse buying trends and track order scheduling, giving businesses better insight into not only what products customers want to subscribe to, but how often they will will require deliveries.