While subscription models for automated product replenishment have gained popularity over the past decade, they are not without challenges. Steep acquisition costs and high churn rates often leave brands questioning whether the subscription model is worth its costs. After all, many consumers abandon subscriptions after just a few months, sometimes prior to the brand “breaking even” on their acquisition costs.
Automating subscriptions can serve as a viable path to brand loyalty. The flaw in the traditional subscription model, however, comes down to one primary factor: timing. Traditional subscription models are structured based on an estimated cadence of when a consumer might need a refill, such as every month or quarter. However, actual consumption often looks quite different from the expected use that drives subscription schedules. This leads to instances where the consumer has too much or not enough of the product at any given point in time.
Smart Replenishment Provides Consumers Exactly What They Need, When They Need It.
Smart replenishment differs from traditional time-based auto replenishment, or subscription in that it is based on true demand rather than timing. Instead of auto-reordering based on a set schedule, smart replenishment relies on real-time product usage data to determine the precise moment when a consumer needs to replenish a product. It works by attaching an IoT-enabled smart label to a bin, bottle or container to monitor actual consumption as it happens. At the moment that the product is running low, auto-reorders or push notifications to notify the consumer of the need to reorder are triggered.
Smart Subscriptions are a Win-Win for Brands and Consumers
Smart replenishment-based subscriptions present an interesting opportunity for both brands and consumers. While brands can benefit from a richer understanding of consumer behavior and better results, such as an increase in LTV and a higher ROI on their subscription offering, smart replenishment brings about the convenience that consumers crave.
There are many benefits to brands when they use connected products for smart, auto-replenishment, such as an increase in lifetime value, longer subscription terms and better consumer satisfaction.
Smart replenishment allows brands to better serve consumers with products at the exact point in time it is needed. Thanks to smart labels, attached to bottles, bins or containers, brands can have their products automatically re-ordered (or notify consumers) when the product is running low.
This is a significant upgrade from the regular calendar-based auto-replenishment, where the consumers pre-select the delivery quantity and frequency and therefore, are often left with too much or not enough of the product. Smart replenishment, for the first time in history, automates the process of aligning consumer needs with replenishment.
In addition to the opportunity to elevate consumers’ experience with the brand, smart labels generate an unprecedented level of consumption data, which can be integrated with internal systems, fulfillment and e-commerce platforms in order to establish a deeper understanding of usage patterns and automate the reorder process.
Connected products give consumers, that opt-in with their smart product purchase choices, a range of options to understand their consumption patterns and better connect with the brands they love.
Image a world where products just reorder themselves at just the right time. When a container comes close to running out, it is added to the shopping cart. So, one less thing for consumers to have to remember.
Consumers still have as much control as they want. For instance, they can choose to initiate the reorder and also define the container volume that triggers a reorder, i.e., specifying a reorder when 20% of the olive oil or detergent remains in the bottle.
The convenience of the subscription is overshadowed by the inconvenience of the additional task of monitoring usage or remembering to update subscription settings. Consider your own experience with subscriptions - how many times have your unboxed yet another package of your favorite subscription product, when you’ve already got one or two in the pantry?
Depending on usage patterns, a “30 day” supply might not actually be used at the rate that the subscription is set for. This leaves it to the busy consumer to manage their subscription manually, logging on to skip or pause the subscription if they aren’t ready for the next shipment. This is the moment that the subscription model unravels.
Smart reordering solutions solve this problem with real-time product usage data to determine the precise moment when a consumer needs to replenish a product.
Put Smart Replenishment Into Action
The right smart packaging technology makes all the difference in the success of your smart replenishment programs; therefore it is imperative to choose the right technology to support your business goals.
One factor is choosing the right technology to launch a successful smart replenishment program. For help in getting started, get our checklist, Smart Replenishment: How to Evaluate & Choose the Right Technology to learn which questions you should ask when considering a solution to meet your smart replenishment needs.