The Care and Feeding of Your High-Growth Box Business

A Story

An entrepreneur (we’ll call her Susan) started a business in her garage. The model was simple. She would send a box of specially curated items to a select group of people each month. Susan always included unique items, special packaging and a personalized note in each box. Her customers loved the products and the personal touch.

Word of mouth and grassroots marketing soon boosted Susan’s subscriber numbers to 100, then to 1,000. Success!

As her business flourished, Susan realized she had outgrown her garage. Boxes were everywhere. She was spending too much time packaging and not enough time curating. It was time to move on to something that would better  accommodate the growing needs of her business. That something was a warehouse, conveniently located just 20 miles from her house (we’ll call it The Warehouse).

The Warehouse was exactly what Susan needed at this point in her business. It gave her space, peace of mind, and room to grow. Soon Susan’s business had 10,000 subscribers. Then it passed one million subscribers and the future seemed limitless. Not true, however. Susan’s business actually did have a limit – its supply chain. As the company continued to scale, The Warehouse couldn’t keep up. More orders were coming in than going out. Many orders left the warehouse with the wrong items in the boxes. Returns skyrocketed, and with them, costs.

Susan’s customers became frustrated. Some of them unsubscribed while others took to social media to voice their complaints. Susan realized that the only thing limiting her future was her inadequate supply chain. The Warehouse had been a great solution when her company first began to grow, but it could no longer fill the needs of her company today, and certainly not in the future.

Susan reviewed her options, and understood she had two choices: Build her own fulfillment center – expensive and not her company’s core competency. Or partner with a leading third-party logistics service provider (3PL) to deliver the scale and capacity she needed to grow. Profitably.

But Susan worried that she would lose control of her “baby” if she went to a large 3PL. She needed concrete reassurance this would not happen. Assurance that a large 3PL would value her business, and treat it and her customers the way she’d always treated both.

For successful subscription retail entrepreneurs, Susan’s story is all too familiar. Your goal is growth. But growth can be a double-edged sword if you’re not prepared for it.

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