Inside Logistics

Subcom facing challenges

Fulfillment is a rising cost for small companies

August 20, 2019

Subscription commerce –automatic replenishment services for households, also known as subcom – is growing in popularity with adults in the 25 to 34 demographic. Most companies expect to grow, with 37 percent anticipating growth of 26 to 100 percent, and 21 percent expecting to grow more than 100 percent.

While these companies remain relatively small, with 74 percent earning less than US$5 million in 2018 and with 60 percent employing five or fewer staff in their fulfillment operations, they are facing significant fulfillment challenges, according to a recent study by the Subscription Trade Association (SUBTA) and Snapfulfil.

Demand forecasting, on-time shipping, inventory accuracy and kitting are the largest challenges these companies report. Meanwhile, only 28 percent use third party logistics services to manage fulfillment and two thirds don’t plan to engage one in the foreseeable future.

Of those that do use a 3PL, 79 percent report improved efficiency, 50 percent say performance has improved and 43 percent report lower costs.