The interesting model of the “surprise boxes”

One of the biggest problems for most logistics professionals is certainly unpredictability. The numerous uncertainties in the supply chain make companies work with several different items and packages (SKUs – Stock Keeping Units) that need to be produced and stocked in advance to meet specific demands, which may arise at any time, which brings high complexity and high costs.

In this sense, a relatively recent modality of commerce draws attention: subscription clubs that deliver “surprise” products to subscribers. One of the pioneers and most famous is Lootcrate, from the USA, which offers products such as books and dolls, but there are already varieties that deliver wines (the Wine Club), sports items and even products for pets, such as the DogBox, in Worldwide.

Figure 1 – Subscription club services deliver from magazines and dolls to wines (Source: LootCrate and Wine.com.br)

In general, these clubs or plans work as follows: the customer pays a monthly fee (or quarterly fee, or annuity) and periodically receives a box with one or more products, which he did not previously know which they would be. The value of the service lies in the convenience of the customer not having to constantly access a physical or online store, even more so with the difficulty of choosing products in the face of so many options that we have currently. In addition, there is still the surprise factor of the purchase itself, which is equivalent to the emotion of receiving a gift.

For companies that offer this type of service, it is possible to achieve a considerable decrease in the complexity of the service compared to a traditional online sale. Think about it: demand, which is a very important variable, but unpredictable when considering all available SKU, customer, location and time window fragmentation, becomes much simpler to manage once it is grouped into a number of “boxes”. -surprise". The variation happens to be only in the number of customers. In addition, most of the demand is seen well in advance, knowing exactly where the customers are, which facilitates the planning of operations such as transportation.

Finally, there is still the ease of supply. As the customer does not know the exact products that he can receive until the month of delivery, the company can afford to search the market for items that have a lower purchase cost, that were produced in excess, etc., as long as it manages to please the customers. your subscribers with choice, of course. Generally, the search for products is made several months in advance, aiming at more efficient planning, and the company can hire more consolidated supply freights and without the need for quick deadlines.

It should be noted, however, that complexity does not end with this type of business. Recently these services are becoming more diversified, offering different packages, with different options, for example, boxes that come only with T-shirts, or wines of a specific price range. There is also intense marketing work to understand the consumer's taste and offer the right items for each moment, and also to search for products on the market. The greater number of competitors naturally also increases the pressure for lower costs.

In any case, it seems to be an interesting model, where greater unpredictability for consumers translates into less uncertainty for sellers.

References

https://mashable.com/2013/08/14/loot-crate-gamers/#m9z_baEpKZqC

https://www.inc.com/jeff-haden/create-a-profitable-subscription-model-how-loot-cr.html

http://www.gazetadopovo.com.br/economia/10-clubes-de-assinatura-que-entregam-delicias-em-casa-cozbjqv60l6gjwl4ieiqjyp6z