June 2019 | News | Takeaways

Subcoms Focused on the Future

Tags: Retail, E-commerce, Supply Chain

In a retail environment focused on customer experience and convenience, subscription commerce (subcom) companies are maintaining a foothold. According to the 2019 SnapFulfil and Subscription Trade Association (SUBTA) State of Subscription Commerce survey, 46% of today's subcom offerings now have 2-5 years of operational experience; 40% have more than 5,000 customers, and 29% have more than 10,000 customers.

The industry is growing at a healthy rate, with 37% of subcom offerings predicting revenue growth of 26% to 100% in 2019, and 65% predicting at least doubled sales over the next five years.

But now that consumers are more familiar with the industry, some boxes are considering expansion outside the subscription. Thirty-four percent have expanded into traditional e-commerce in the past year, while another 30% are considering a similar move soon. Eighteen percent are considering an expansion into brick-and-mortar operations.

Despite plans to expand into other channels, some subcom offerings aren't sure how they'll meet increased customer expectations. Nearly half say demand forecasting is one of their greatest fulfillment challenges.

Among other challenges keeping subcom professionals up at night:

  • On-time shipping: 32% of respondents
  • Inventory accuracy: 24% of respondents
  • Kitting: 24% of respondents
  • Inventory obsolescence: 16% of respondents

However, many subcom companies don't plan on significantly changing their operations from today. They're keeping their teams small—60% regularly employ five or fewer people in their fulfillment operations. Seventy-two percent keep their operations in-house, and two-thirds of those aren't considering a 3PL. Of the 28% that contract a 3PL, 64% have no plans to end their relationship.

When it comes to reverse logistics, most subcom offerings (73%) are willing to work with customers on returns, but it's all-or-nothing: 75% won't offer partial refunds for returning only select items.