The digital space has opened up room for a lot of subscriptions. Chances you have several digital subscriptions, a shipping subscription to a major big box store like Amazon or Walmart, and subscriptions with other product providers. As a company, subscription-based services are highly desirable because they create dependable revenue streams, but many CPG companies find that auto-replenishment subscriptions are even more effective at delivering services customers love while offering value-based rewards to companies as well.
What is Auto-Replenishment?
Auto-replenishment utilizes connected packing to monitor the inventory level of household items that are stored in smart bottles or containers. Once the container reaches a marked point, the company is able to send out a refill based on your subscription service. Some platforms also allow the customer to receive a notification if they wish that their product is going to be refilled. The aim of auto-replenishment is to only send out refills when needed without creating any gap in the available supply to a customer. For CPG companies this can be a game-changer because it allows them to monitor average customer usage which is useful data for marketing and internal studies, while also turning a one-time customer into a dedicated, repeat customer.
Auto-Replenishment Vs. Subscription Services
There are several key differences that differentiate auto-replenishment from typical subscription services. For starters, they utilize connected packaging technology to detect when you actually need a refill. Standard subscription services work on a time frame that is usually based on delivery every one to three months. This usually results in a customer having too much of one item or too little of another. Auto-replenishment and connected packaging solve this problem by creating a customized shipping plan for every consumer. The use of the digital platform also allows companies to harvest data from customers that can be used to further improve their product or shipping process.
Active management of subscriptions makes customers feel valued and caters to their direct needs. There is no replacement for real-time analytics, and the automatic refill process caters to the busy customer who generally only grabs a bottle when it’s convenient to him or her. CPG companies note that most customers purchase 6 to 8 bottles of product a year, but auto-replenishment changes that by increasing daily usage without gaps, therefore, increasing the average revenue collected from each customer.
Benefits of Auto-Replenishment
While a few of these benefits have already been addressed, they are worth reiterating for CPG companies that are still hesitant about adopting connected packaging for their products. First of all, outside of increasing revenues, the addition of a digital platform and app makes it easy for a company to build a self-sustaining community. In order to use the connected packaging fully, the consumer has to download an app to their phone. This establishes a constant line of communication between consumers and companies.
This allows a brand to reach out directly to their customers and offer unique marketing campaigns targeted at their needs and average supplement usage. For example, customers that purchase B12 supplements often are also interested in Vitamin D supplements. Therefore, reaching out to these subscribers over the platform can increase monthly orders and add new revenue streams.
Second, auto-replenishment makes it simpler for CPG companies to manage their logistics. Manufacturers can estimate projected needs much better and keep their stock properly managed which may reduce storage space and overall costs at the same time.
Third, connected packaging means that only one bottle is needed per customer for the lifetime of the product, versus one bottle per customer per month. The world produces around 380 million tons of plastic annually, and out of that, about 50% is from single-use plastics. Auto-replenishment drastically reduces the use of single-use plastics helping companies produce a green and more sustainable product.
Fourth, connected packaging makes customers happy while creating consumer stewardship within the CPG space. From cleaning supplies to supplements to any other single-use plastic product, connected packaging is the best way to create sustainable solutions that will attract consumers’ attention while improving your bottom line.
In the end, the simple truth is that it is hard to argue with a solution that allows you to make your customers happy, adopt new smart technology, streamline logistics, increase revenues, and save the earth all at the same time. If you are looking at a way to improve your product delivery, auto-replenishment and connected packaging may just be it.