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.
That said, 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 with 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.
A win-win for brands and their 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.
So, how can you put smart replenishment to use for your brand?
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. Check out our recent 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.