While the subscription economy was thriving well before the pandemic, people stuck in their homes during the height of COVID-19 increased their spending on subscription box deliveries, accelerating this trend. Today, whether it’s a monthly delivery of clothing, a curated box of skin care or a handpicked collection of pet treats — the average American pays for two or more subscriptions.
Financial services firm UBS projects the subscription market to be worth $1.5 trillion by 2025, doubling the $650 billion it’s worth today. Even as the pandemic’s restrictions loosen, the subscription box trend is proving its stickiness, while the supply chain supporting this boom scrambles to deliver on-time and secure capacity to keep up with increasing demand.
Roger Heil, senior business solutions manager at logistics solutions provider Elanders, spoke with FreightWaves about sustaining 10-20% month-over-month growth over the last year. He also shared insight into his role as an industry change agent and how Elanders’ partnership with Convoy has been instrumental in helping him secure last-minute capacity.
“COVID-19 was a surprise and a challenge,” said Heil. “We were actually preparing for a reduction in demand, and then lo and behold, it took off. We were looking for every partner in this town to help us put all the different packages together. Then the freight just blew up along with it. We’re watching the numbers very closely now to see if the market maintains this growth pattern, but people can get hooked on their subscription boxes.”
The Georgia branch of the global logistics group Elanders launched the subscription box solutions arm of its business in 2016, and in the past two years alone, its outbound full truckload volume grew 300% — from 25 truckloads a month to nearly 70. Today, Elanders assembles, ships and prints marketing materials for monthly subscription boxes in the lifestyle, cosmetics and food industries, managing inbound freight from China, Europe and Italy.
“When we started, we were accepting a large volume of product as inbound truckload freight and then sending out the boxes through parcel carriers like USPS, FedEx and UPS,” said Heil. “However, as freight costs went up, it became apparent we needed to provide some relief to our clients. We came up with a plan working with FedEx to induct product directly into their distribution centers throughout the United States. At that point, we became a truck freight logistics company as well, and that’s where Convoy fits in.”
Since 2019, Elanders has been using Convoy’s cloud-based TMS to manage its freight and booking capacity. Before, it relied on spreadsheets, which worked well to communicate each day the arrival schedule of inbound trucks, but the TMS provides an automated auction that collects pricing on each shipment from each of Elanders’ carriers, as well as historical data on loads.
“The entire process for those 60-70 trucks that we push out monthly is like eBay,” he said. “We like the feature in the TMS where we can just go out to everybody we know and say, ‘Hey, we got this truck going to Allentown, Pennsylvania. Who wants it?’ Unlike months ago, now every truck gets covered the same day. I could tell them what I need in three weeks, but they’re not going to try to cover it until that day, because what’s the point? Trucks won’t show up anyway. They’re going to fall off and take a load that they get paid more for.”
Because the subscription box market is in hyper-growth mode, forecasting is nearly impossible. Elanders’ customers are so excited by their unbridled growth, Heil said, that they don’t often consider the logistical repercussions like capacity constraints, storage requirements and late deliveries. While the cost associated with late fees is nominal from a financial standpoint, a slew of bad reviews is detrimental to a company’s growing customer base. Convoy’s TMS helps Elanders quickly secure capacity — even last-minute loads.
“Convoy’s TMS helps us maintain consistency and recognize who is performing best in certain lanes and rate shops. Because we are so diffused in our different departments and responsibilities, this brings that together. If I find a better rate going into a certain lane, our shipping manager who might need to ship into that region or that specific lane later on can pick up on it. We don’t have to have a conversation around it or have to share 42 emails. She can just go in there and look and see what I did or vice versa. So it really helps in the collaboration of our team and it helps us create best practices.”
Heil saw early in his career the importance of driving innovation in an organization. Years ago, when he worked to pivot a printing company in the throes of Xerox’s disruption, he recognized the benefit of embracing technology and was able to save jobs at his company. He learned that management isn’t always immediately on board with innovative strategies, and that sometimes, change agents must act quietly.
“The culture of technology adoption and efficiency at Elanders is very strong, but you have to have somebody who’s willing to be an advocate for it and push it. I enjoy being one of those advocates that tries to implement stuff without fanfare and kind of quietly under the radar. Then once it works and the proof of concept is there, everybody eagerly embraces it and we’re ready to roll it out. It starts as a bit of an underground effort.”
This article is published jointly with our partners at Convoy. To view more Future of Freight content, click here.