How To Navigate In-House vs. Outsourced Subscription Box Fulfillment (2024)

When you’re running an ecommerce business, it’s natural to want to spend all your time and energy making sales—but your work doesn’t end when a site visitor buys something. You still have to assemble the order, pack it, ship it, and ensure it lands at your customer’s door.

If you offer subscription options, the process is ongoing. Every new subscriber represents a theoretically infinite number of deliveries you need to assemble and deliver on time.

Here’s what you need to know about getting subscription boxes to customers—including insider tips from Britt Martin, head of partnerships at the custom sustainable packaging provider Arka and cofounder of subscription business Food Period.

What is subscription box fulfillment?

Subscription box fulfillment is the process of delivering orders to customers who have signed up for recurring shipments. It includes inventory management, return management, packing and shipping orders, and handling customer service issues.

Types of subscription box fulfillment

Whether you handle orders in-house or partner with a subscription fulfillment services provider, the subscription fulfillment process follows the same basic pattern. The key difference is who executes the necessary steps. Here’s a breakdown:

In-house fulfillment

If you do your own fulfillment, you’ll need to store inventory, receive orders in your online system, pack boxes, make and apply shipping labels, and ship packages through your carrier of choice. You’ll also be responsible for receiving returned merchandise, restocking or recycling products, and processing refunds.

Shopify customers can streamline these processes by purchasing and printing discounted shipping labels from Shopify Shipping and enabling self-serve returns from the Shopify admin dashboard.

Outsourced fulfillment

Should you opt for outsourcing, your fulfillment provider will hold inventory at one of their subscription fulfillment centers and receive orders from your online store—typically by using an ecommerce platform integration. They will then pack, label, and ship your boxes, process returns, and handle customer service.

You can use the Shopify Fulfillment Network app to sign up with Shopify’s fulfillment partner, Flexport, and monitor stock levels, transfer inventory, track orders and returns, and review fulfillment metrics.

Challenges of subscription box fulfillment

Fulfilling any type of ecommerce order can be challenging, but subscription box fulfillment is particularly complex. “With subscriptions, there’s often a specific customer journey,” says Britt. “Fulfilling à la carte orders is much easier.”

Britt cites changing product assortments, variable package styles, and the need to onboard new subscribers mid-cycle as three unique challenges subscription ecommerce business owners face. Here’s an overview of each:

Complex product assortments

Subscription box assortments allow companies to deliver unique, branded experiences. “What I love about a subscription box is that you’re able to actually take your customer on a journey through each box,” Britt says. This can be challenging for retailers.

Boxes often contain multiple products, and many companies vary package contents month to month or personalize assortments based on factors like customer preference, season, subscription type, or number of previous deliveries.

While this is great for your customers, it can complicate quality control. Providing curated subscription boxes based on multiple overlapping criteria requires care in determining what each package should contain. Sending a large volume and variety of products increases the time needed to ensure each shipment is correct.

Custom packaging requirements

Using branded boxes can provide a unique customer experience and boost customer loyalty. “Packaging is your first physical touchpoint with a new customer and your continued touchpoint with a subscriber,” Britt says. “When you think about marketing from a retention perspective or a referral or upsell perspective—the box and the packaging is really an opportunity.”

But it can also raise costs and limit your outsourcing to companies willing to work with your packaging provider. A business that sends a subscription customer’s first shipment in a box labeled “Welcome” and a second shipment in a box labeled “Get to know us,” for example, will need to identify the correct items for each order and monitor inventory levels across multiple packaging assets.

Delivery timing

Unlike à la carte items—which ship soon after an order is placed—subscription services involve recurring deliverieson a set schedule.

Your specific challenges will depend on the model you choose. If you ship all of your orders at the same time each month, for example, you may run into bottlenecks. If you stagger shipments—e.g., to correspond with a customer’s sign-up date—you’ll have a more consistent fulfillment workflow, but you’ll also need to manage different deadlines for each customer. Some businesses also let subscription customers pick specific delivery dates, which also leaves you juggling many different deadlines.

Should you outsource subscription box fulfillment?

1. Order volume
2. Customization requirements
3. Business resources

Britt recommends that all subscription box businesses initially handle fulfillment in-house. “If you haven’t kind of gone through all the pain points and made the mistakes yourself,” she says, “you’re never going to be able to teach someone else how your orders need to be fulfilled.”

Once you’re experienced enough to manage a third-party fulfillment provider, you can evaluate your options. Here are three factors to keep in mind:

1. Order volume

Outsourcing generally becomes more cost-effective as order volumes grow. Most fulfillment companies offer reduced shipping costs and pallet storage rates to customers with higher order volumes, and some require businesses to meet monthly minimums.

2. Customization requirements

The right provider for your business can handle the intricacies of your subscription model—and the more complex your shipments, the more you’ll need to pay for quality service. If your customers expect a handwritten note and a varied selection of products, you may struggle to find an affordable provider that meets your needs. If all of your customers get the same four bottles of wine at the same time each month, you’ll have an easier time finding a fit.

3. Business resources

Outsourcing fulfillment costs money, and fulfilling orders internally takes time, so consider your available resources. If you’re overstaffed, you might ask employees to help with fulfillment to make better use of your internal resources. If you’re flush with cash but short on time, you might outsource fulfillment and focus more on growing your business.

What to look for in subscription box fulfillment services

A good subscription box fulfillment company helps you save money, delivers quality customer experiences, and frees you up to focus on business growth. Consider these criteria as you research options:

Subscription box experience

Britt recommends finding a service provider with extensive subscription box order experience. “The key is finding a fulfillment partner that’s well-versed in subscription,” she says. “It’s not the same as fulfillment for à la carte purchases, so you need a provider that can understand and customize the fulfillment process to your unique product.”

Ecommerce platform integrations

Confirm that a fulfillment provider can integrate its data management systems with your online store. Many providers use software systems that are compatible with leading ecommerce platforms, which eliminates the need to transfer order information and reduces the risk of error. Integrations also let you sync customer data and inventory information.

Custom packaging options

Britt suggests inquiring about packaging, adding that many fulfillment companies prefer to use unbranded packaging. “The best fulfillment partners are the ones that can see that, for subscription companies in particular, retention and the customer experience are way more important than making a couple cents on unbranded boxes,” she says. Britt also recommends choosing a provider with a strong existing relationship with a custom packaging company.

Customer service

You’re trusting your fulfillment service provider with a critical part of your business, so look for a company that will respond to you and your customers quickly. Pay attention to how the company communicates during the sales process and ask who will manage your account, how to contact them, and what to do if you have a problem. You can also read reviews from business clients and end consumers to get a sense of the provider’s customer service performance.

Sustainability

Britt also recommends choosing a company that offers sustainable packaging and shipping options. “There’s an increasing focus—especially with Gen Z consumers—on sustainability,” she says, adding that wasteful practices such as shipping small items in oversized packages erode consumer confidence. You can boost loyalty and reduce shipping costs by selecting a partner with a sustainability plan in place.

Warehouse locations

Warehousing products closer to end users can lower shipping costs and cut emissions, so look for a partner with a warehouse located near your largest customer groups. If you service a distributed customer base or plan to expand into a new market, consider a provider with multiple locations.