Shownotes
Our special guest, John Haji, Co-founder and Head of Partnerships, SubSummit, discusses the challenges of the subscription box industry - from costs, acquisition of customers and retention, the post purchase experience and more!
About John Haji:
John is a subscription guru and a serial entrepreneur with a decade's worth of experience in the subscription space. He co-founded SubSummit, the first and only conference devoted exclusively to those who work in or alongside the subscription commerce industry. SubSummit connects today's industry leaders, innovators, and partners who are driving the rapid evolution of how consumers discover, buy, and experience new products.
Learn more about this topic:
Transcripts
Hello, everybody.
::Welcome back to another episode of
“Outside the Box with Asendia USA”
::with my co-host, John Walsh.
::Hello Hello.
::Hello. We've got a very special guest
today by the name of John Haji.
::John, you want to say hi real quick,
and then I'll talk a little bit about you.
::Yeah, yeah.
::Thank you so much.
::Hey, everyone. How's everyone doing?
::We're doing good.
::Thank you.
::Yeah, thanks for asking. Yeah.
::Thank you. So. Okay, everybody.
::It's a very special day today.
::Today's topic is,
::the do's and don'ts of shipping
subscription boxes internationally.
::John is an absolute expert about it.
::And I want to give you a little background of
::why we have John Haji on our podcast.
::So John is a subscription guru
and a serial entrepreneur
::with a decade's worth of experience
in the subscription space.
::He co-founded SubSummit,
and which is the first and only conference
::devoted exclusively
::to those who work in or alongside
the subscription commerce industry.
::So SubSummit connects, today's industry
leaders, innovators, partners
::who are driving the rapid evolution
::of how consumers discover,
buy, and experience new products.
::His background, and he and I go a long way back,
::but his background and think tanks,
paired with his entrepreneurial
::spirit has positioned him for success
within the subscription industry.
::John has a serious passion
for creative thinking, strategy,
::design, e-commerce, and more,
and he also co-founded
::and served as president of Gentleman's
Box, the first premier subscription
::service for men, for which, yours truly
was a subscriber for quite some time.
::I still have a large number of ties and socks.
::I rarely wear ties anymore,
so if anybody's interested,
::please leave a comment,
::or submit an inquiry to the
::contact us today.
::Now, I did change this part of the bio
because it's an important highlight.
::But as a husband and father of two,
John balances his professional
::and personal life with grace and humor.
::He has been recognized by Crain's Detroit
as one of the 40 Under 40 Award
::recipients in 2019 for his outstanding
achievements and contributions.
::Man, that was quite the bio.
::When’s the Nobel Prize coming, my man.
::When is the Nobel Prize coming?
::Was this self promoted?
::You know, I mean. Who wrote this?
::I yeah, who wrote that bio?
::Was it Crain's maybe.
::I don't I don't know who wrote.
That was amazing.
::Wow wee. So...
Do you have one like that?
::But hey...
Glad to hear that you're still
you still have some Gentleman's Box items
::you know, shuffling around the house somewhere.
::They’re there for sure.
::Oh... He didn't say where, John.
::I know there's probably, you know, the
junk drawer of his kitchen or something.
::Who knows?
Sharvon could probably edit this...
::So Nickson pulled a watch
out of the drawer the other day
::and he goes, “Dad, where did you get this from?”
::And I said “that was a Gentleman's Box watch.”
::And he goes “I miss that box.”
::And I was like, “yeah, I know, buddy,
it's been a while, but I know.”
::Okay, so...
I remember you sending me
::videos of your kids opening that box,
and that was really nice,
::Christmas time.
::You remember by the tree?
You regifted your kids the sub box?
::It was advertisement for it.
::Oh, come on.
He can use it for advertising.
::Oh, I had really cute kids.
::I still have cute kids, but they changed.
::Know what I mean?
He was an ambassador.
::There was an affiliate link there.
An ambassador.
::It was pro-bono too, unfortunately.
All right.
::So, John is a fantastic resource.
::And so, you know, for the listeners out
there, what we focus on is really helping,
::you know, again, the online retailers,
subscription box companies, marketplace
::sellers, 3PLs, if you will,
really help them when it comes
::to navigating the e-commerce,
cross-border parcel delivery landscape.
::So again,
::I'm going to just
::go back to we're going to talk today
about the do's and don'ts of shipping
::subscription boxes internationally.
::So so we've got John Haji, John Walsh.
::So I'm going to say John.
::And I'm going to figure out
how to navigate that... JW.
::JW. So... There you go.
::JW and I were looking today, John,
at some really interesting statistics.
::So just get your feedback
on what you're seeing out there.
::But I want to start with this number here
that we discovered today
::that the subscription box market ending
2023 is an approximate $33 billion market.
::I mean, I remember the first SubSummit.
It’s still growing.
::I mean, it's it's insane.
::So tell us a little bit about that.
::What what growth areas do you see in the
the subscription, the physical box space?
::I don't really want to spend
any time today on digital, if that's okay.
::Talk more about the box market,
in particular.
::Yeah.
::I mean, look, it
::almost seems like there's a subscription
box out there for everything.
::Sponges, toilet paper,
men's fashion accessories.
::the the food and beverage space
::seems to be a space that is growing
exponentially year over year.
::I think what you'll find
::in the subscription box space is anybody
that's incorporating some sort of product
::that is replenishable and depletable,
is seeing a lot of success.
::And, you know, e-commerce and consumer
brands that have a product
::that is consumable and depletable
::and replenishable are looking for ways
to pivot into the subscription model.
::and so that's where you're
seeing a lot of growth.
::I mean, yeah, you know it,
::SubSummit first year, 200 people
this year on pace for: ::So we've been seeing growth across
the subscription industry as a whole.
::Yeah.
::And congrats to you and Chris
and the team on the success
::that you guys have had as well.
::you know, and I look to myself
and between myself and my wife,
::you know, the number of subscriptions
that we have,
::and, I mean, every house is filled
with something at this point.
::JW was just talking about his wife
::just got something the other day.
::I forget already what the name is.
::But, you know, we don't need to promote
any names here on this, but,
::more importantly,
it's just to talk about, you know, people
::look at, oh,
::I think oftentimes that I'll talk
to people that are outside the industry
::and they'll say something like, is this,
you know, oh, are this is it a fad?
::You know, the subscription box?
::I'm sure you've heard that.
It is certainly not.
::No, it's certainly not.
::I mean, like
::there was there's always a time
within every industry
::where the question is like,
is this bubble going to burst?
::We're not seeing.
::Yeah, right. It's not a fad.
::It's only growing exponentially.
::I mean, the trends, you're saying
33 billion in the subscription
::box space, but the subscription industry
as a whole is going to hit $2 trillion
::in the next few years.
::So it's not a fad.
::I think we're seeing more and more
::again, it's nice to see,
but you even see some of these enterprise
::and legacy brands
figuring out ways to kind of pivot
::into the subscription model,
because who doesn't love recurring revenue?
::That I couldn't agree
more in the amount of companies
::and you know, and let me know if you know
this, you know, echoes with you
::a little bit too, with you
can you log in and see,
::you know, subscribe and save functions
and half the people
::you're going to buy from now,
which is, which is,
::in its own way, a subscription model,
you know what I mean?
::Like, you know, you go to buy a vitamin
from a vitamin company ever.
::And, you know,
you realize you're going to use it
::every month, subscribe and save,
boom, it's there.
::You know what I mean?
::So that's something, too. Okay.
::So we want to talk today
though about international.
::One thing I've had the great,
great pleasure of working with
::is a number of subscription based brands
to really help them get their box
::to subscribers that are located outside
the United States.
::there are plenty of challenges
in doing so.
::but there's also,
I think this, this weird veil
::that people look at
of saying that it's so daunting.
::I don't know how to get into it.
::I don't know, you know,
what to do, where to start.
::You know, this is, will be on, you know,
five, six episodes at this point.
::And we've talked, pretty extensively
about where we would make suggestions
::for top three markets, including,
you know, one, let's look at English
::speaking countries. Right.
::Let's look at, you know, Canada.
::Then we're going to look at,
you know, UK and Australia.
::so you yourself was
you were my contact that
::I worked really closely with when it came
to working with Gentleman's Box.
::Okay.
::So while you guys owned the brand
and you really had your finger
::on the operation as a whole,
and so my question is, you know,
::what were some critical data points
when it came to international or Canadian,
::subscribers that you focused on in terms
of whether it was,
::you know, profitability,
you know, customer experience,
::ease of use, transit
times, that type of thing.
::I mean, it's really easy to say
all those buckets, to be honest.
::when we were thinking
about shipping internationally,
::I think the number one thing that came
to mind right off the rip was like, cost.
::Like, what does it cost
to ship internationally?
::and in cost, there's so many
different factors you have to think about.
::The size of the box,
the weight of the box.
::What are the goods inside?
::you know, do you want to
cover the cost of delivery duties
::paid to the consumer,
and then all of that has this,
::like, trickle effect on the experience
the consumer is going to have.
::And you don't want to
you don't want them to stop at your
::their local post office
and pay some sort of invoice.
::Right.
::That doesn't seem like a, a seamless or a
really good delivery experience for them.
::So there's a lot of factors,
::but I think
::I think cost was probably the first
and foremost the number one thing
::that we thought about first.
::Because Gentlemen’s Box,
we were shipping, obviously started off
::domestically for $25 a month, right.
::And for what we were delivering, which,
::which we promised 100, you know,
four times, 3 to 4 times the value, it was
::how are we going to deliver, you know,
3 to 4 times the value in the products
::without sacrificing quality?
::Of course, because that's not
that's the one thing you never want to do.
::You don't want to sacrifice quality
so that you can bake in more shipping cost
::within your, within your box.
::So without sacrificing quality or at $25,
how do we get this out internationally?
::And so we had to evaluate the costs.
::And I think that was probably
the number one thing that we thought
::about when trying to kind of enter
into international water.
::I, I had two questions down that road.
::So the first question is, all the sub box
::providers they use a 3PL traditionally.
::Right?
::So when you're choosing that... two things.
::So what's your thought
process of choosing that provider,
::number one, because there's a lot of costs involved.
::Pick and pack all that stuff.
::They're going to get you on overrides
and things like that.
::The second would be cost containment
because rates go up 5-6% every year,
::and you're trying to keep your box price
::within a manageable thing
so you don't lose, you know, customers.
::So how did you how do you recommend
to your people that you talk to industry?
::How do you recommend to handle that?
Well... That makes sense?
::Yeah, absolutely.
::To your questions.
::Cost containment.
Let me just address that first.
::You know, when you open up your doors
internationally,
::you're going to start to hit a market
that you were not going after initially.
::So the goal there
::and the hopes is that the acquisition
of more subscribers start to roll in.
::Right?
::And with the acquisition of more
subscribers and growing your community
::and your subscriber base means
you now leverage the ability of scaling
::and, you know, ordering products,
whatever it is for your box, whether it's
::ordering more boxes, it's ordering
more products in the box at scale.
::Your costs start to go down. So
::we always found that it offset
that anyways.
::So the cost of containment with the rates
going up every year,
::it was never an issue
because we were growing anyways.
::We were scaling our prices
across the board for the product.
::The packaging were going down
::and so is is usually in typically
in most cases an offset.
::Now, you know, choosing
::you know for a lot of subscription brands it
::there's like a point
where I always at least suggest
::once you kind of graduate,
if you will, and move on to a 3PL
::I think that early on most folks are in,
if they're in the startup phase,
::they're taking it on themselves.
::A lot of 3PLs are not going to,
take on somebody with 100 boxes
::or it's just not cost effective
to work with a 3PL
::when you only have 100 boxes,
or a couple hundred a month.
::So you get to a point where it does seem
cost effective to switch to a 3PL
::when you do search and swtich to a 3PL
::which at some point
I think everybody should,
::because your whole goal
is to grow your company.
::You think about the marketing and
the creatives to grow and scale your company,
::to kind of take that load off
your shoulders.
::So when thinking about working with a 3PL...
What’s the hurdle rate, John?
::What was it? Three per day?
::Your hurdle rate, like you would make that recommend that move?
::For us...for us, it was, it was
::it was monthly
because a lot of subscription box
::companies, it's not so much
how much it's not so much
::what they're doing on a daily basis,
what they're doing on a monthly basis.
::Because a lot of the subscription
companies have a bulk renewal day...
Right.
::on a monthly basis.
::And so maybe that's,
::you know, the fifth to the 10th
is their peak period of shipping.
::And the rest of the month
is a few packages here and there.
::So really we looked at as a monthly basis
when we hit: ::subscribers on a monthly basis,
well: ::we started to shift over to a 3PL.
::Gotcha.
Some do it sooner nowadays.
::I think early in this was 2014
when we started Gentleman's Box.
::It was 2015ish, 16
when we looked to a 3PL,
::you know,
::and obviously every 3PL is different
::in terms of what they're bringing in
in terms of requirement for a minimum.
::A lot of 3PLs nowadays
have lowered their minimums
::because they've found
cost-effective strategies internally
::to be able to handle lesser
quantities on a monthly basis.
::But like the 3PL you work with,
you want to make sure that they,
::in my opinion, have a great relationship
with their carriers
::as a whole, domestically
and internationally,
::but while your international carrier
needs to be able to support,
::if you're working with international
carrier independently,
::you want them to be knowledged
::in the international space and be able to support
you and help you mitigate risks.
::But if you look at that independently,
you're hoping that a 3PL is also
::getting that same level of service
::from their international carrier
so they can pass that on to you.
::Gotcha.
::There was a lot that was
brought up there that I'm, like,
::scribbling ideas in my head, scribbling
ideas down here that that highlight.
::But, you know,
one of the resounding themes
::that I've seen, whether it's with, again,
::just an online shipper, you know,
e-com company, subscription box company.
::Subscription has almost
always been resoundingly about this,
::but customer experience.
::You know, any time I am in conversation
with more of a high level
::subscription box brand or subscription
based brand or,
::you know, a lot of times these terms
that maybe that you can touch on John,
::while we're here is, you know,
subscriber churn, LTV,
::and then we can kind of peel that back
and bring it around to, you know,
::again, we're focused on the
the international US outbound logistics.
::But why logistics is an important factor
in impacting those areas?
::Yeah I mean, first of all,
the customer experience
::is across the entire journey of a brand
from when the from the moment
::they come across your ad on social media
::to the moment they land on your website,
purchasing the product, and it just
::it doesn't stop
when they purchase the product.
::It's what's the post
purchase experience.
::And that's actually a huge factor
::in it plays a huge role in churn, right.
::Like, if I order a product
::and, you know, we live in this world
where we're expecting things to arrive
::or we expect and we hope
that arrives in 2 or 3 days, right?
::Right.
::But in a world
where we are expecting things
::to be delivered so quickly,
if it arrives three,
::four days later than your expectations,
that's a horrible experience.
::You haven't even received the product yet.
::and so you're already judging your
experience based on, say, transit time.
::So post-purchase experiences,
::whether it's on the logistics side
or the fulfillment side,
::even the way that you're, sending over
information from the tracking information,
::the emails, it's all very
important post-purchase. But,
::you know,
on the logistics side of things,
::I think every consumer
wants to see in real time
::where their package is,
the second that they make that purchase.
::So from the moment
it leaves a certain person's warehouse,
::where it is every step of the way,
::I've always recommended to brands
that I've spoke to that
::you make sure that the carrier that you're
working with, the service class,
::the service that you're using has,
you know, door-to-door tracking.
::Because if you don't have
door-to-door tracking, the
::the moment it enters into the country,
if tracking is lost,
::you know, the customer is kind of like
left in the dark.
::And that creates a horrible experience
for the customer
::because they don't know
what's going on with their package,
::is it going to arrive in two days,
three days,
::and sometimes even the merchant doesn't
even know when enters into the country,
::like what's happening with this package.
::So I think, there's a lot of facets of logistics
::that play into the post-purchase experience
::that are very important to hone in on.
::Hey everybody, thanks so much for listening to part one,
::episode five “Outside the Box with Asendia USA” podcast.
::Stay tuned for part two dropping May 22nd.
