05 part 1: Do's and Don'ts of shipping Subscription Boxes from the USA to Canada and internationally

:: 00:11:03

Hello, everybody.

:: 00:11:14

Welcome back to another episode of

“Outside the Box with Asendia USA”

:: 00:16:10

with my co-host, John Walsh.

:: 00:18:11

Hello Hello.

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Hello. We've got a very special guest

today by the name of John Haji.

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John, you want to say hi real quick,

and then I'll talk a little bit about you.

:: 00:27:01

Yeah, yeah.

:: 00:27:08

Thank you so much.

:: 00:28:05

Hey, everyone. How's everyone doing?

:: 00:31:05

We're doing good.

:: 00:31:12

Thank you.

:: 00:32:06

Yeah, thanks for asking. Yeah.

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Thank you. So. Okay, everybody.

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It's a very special day today.

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Today's topic is,

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the do's and don'ts of shipping

subscription boxes internationally.

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John is an absolute expert about it.

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And I want to give you a little background of

:: 00:45:01

why we have John Haji on our podcast.

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So John is a subscription guru

and a serial entrepreneur

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with a decade's worth of experience

in the subscription space.

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He co-founded SubSummit,

and which is the first and only conference

:: 00:58:04

devoted exclusively

:: 00:59:03

to those who work in or alongside

the subscription commerce industry.

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So SubSummit connects, today's industry

leaders, innovators, partners

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who are driving the rapid evolution

:: 01:08:04

of how consumers discover,

buy, and experience new products.

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His background, and he and I go a long way back,

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but his background and think tanks,

paired with his entrepreneurial

:: 01:16:13

spirit has positioned him for success

within the subscription industry.

:: 01:20:10

John has a serious passion

for creative thinking, strategy,

:: 01:25:03

design, e-commerce, and more,

and he also co-founded

:: 01:28:03

and served as president of Gentleman's

Box, the first premier subscription

:: 01:31:05

service for men, for which, yours truly

was a subscriber for quite some time.

:: 01:35:10

I still have a large number of ties and socks.

:: 01:37:14

I rarely wear ties anymore,

so if anybody's interested,

:: 01:40:13

please leave a comment,

:: 01:42:02

or submit an inquiry to the

:: 01:43:13

contact us today.

:: 01:45:00

Now, I did change this part of the bio

because it's an important highlight.

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But as a husband and father of two,

John balances his professional

:: 01:52:09

and personal life with grace and humor.

:: 01:54:03

He has been recognized by Crain's Detroit

as one of the 40 Under 40 Award

:: 01:57:12

recipients in 2019 for his outstanding

achievements and contributions.

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Man, that was quite the bio.

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When’s the Nobel Prize coming, my man.

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When is the Nobel Prize coming?

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Was this self promoted?

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You know, I mean. Who wrote this?

:: 02:12:06

I yeah, who wrote that bio?

:: 02:14:13

Was it Crain's maybe.

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I don't I don't know who wrote.

That was amazing.

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Wow wee. So...

Do you have one like that?

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But hey...

Glad to hear that you're still

you still have some Gentleman's Box items

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you know, shuffling around the house somewhere.

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They’re there for sure.

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Oh... He didn't say where, John.

:: 02:31:04

I know there's probably, you know, the

junk drawer of his kitchen or something.

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Who knows?

Sharvon could probably edit this...

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So Nickson pulled a watch

out of the drawer the other day

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and he goes, “Dad, where did you get this from?”

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And I said “that was a Gentleman's Box watch.”

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And he goes “I miss that box.”

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And I was like, “yeah, I know, buddy,

it's been a while, but I know.”

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Okay, so...

I remember you sending me

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videos of your kids opening that box,

and that was really nice,

:: 02:52:08

Christmas time.

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You remember by the tree?

You regifted your kids the sub box?

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It was advertisement for it.

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Oh, come on.

He can use it for advertising.

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Oh, I had really cute kids.

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I still have cute kids, but they changed.

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Know what I mean?

He was an ambassador.

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There was an affiliate link there.

An ambassador.

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It was pro-bono too, unfortunately.

All right.

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So, John is a fantastic resource.

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And so, you know, for the listeners out

there, what we focus on is really helping,

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you know, again, the online retailers,

subscription box companies, marketplace

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sellers, 3PLs, if you will,

really help them when it comes

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to navigating the e-commerce,

cross-border parcel delivery landscape.

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So again,

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I'm going to just

:: 03:30:12

go back to we're going to talk today

about the do's and don'ts of shipping

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subscription boxes internationally.

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So so we've got John Haji, John Walsh.

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So I'm going to say John.

:: 03:38:14

And I'm going to figure out

how to navigate that... JW.

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JW. So... There you go.

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JW and I were looking today, John,

at some really interesting statistics.

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So just get your feedback

on what you're seeing out there.

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But I want to start with this number here

that we discovered today

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that the subscription box market ending

2023 is an approximate $33 billion market.

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I mean, I remember the first SubSummit.

It’s still growing.

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I mean, it's it's insane.

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So tell us a little bit about that.

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What what growth areas do you see in the

the subscription, the physical box space?

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I don't really want to spend

any time today on digital, if that's okay.

:: 04:14:10

Talk more about the box market,

in particular.

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Yeah.

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I mean, look, it

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almost seems like there's a subscription

box out there for everything.

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Sponges, toilet paper,

men's fashion accessories.

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the the food and beverage space

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seems to be a space that is growing

exponentially year over year.

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I think what you'll find

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in the subscription box space is anybody

that's incorporating some sort of product

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that is replenishable and depletable,

is seeing a lot of success.

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And, you know, e-commerce and consumer

brands that have a product

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that is consumable and depletable

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and replenishable are looking for ways

to pivot into the subscription model.

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and so that's where you're

seeing a lot of growth.

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I mean, yeah, you know it,

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SubSummit first year, 200 people

this year on pace for: 2000

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So we've been seeing growth across

the subscription industry as a whole.

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Yeah.

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And congrats to you and Chris

and the team on the success

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that you guys have had as well.

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you know, and I look to myself

and between myself and my wife,

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you know, the number of subscriptions

that we have,

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and, I mean, every house is filled

with something at this point.

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JW was just talking about his wife

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just got something the other day.

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I forget already what the name is.

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But, you know, we don't need to promote

any names here on this, but,

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more importantly,

it's just to talk about, you know, people

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look at, oh,

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I think oftentimes that I'll talk

to people that are outside the industry

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and they'll say something like, is this,

you know, oh, are this is it a fad?

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You know, the subscription box?

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I'm sure you've heard that.

It is certainly not.

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No, it's certainly not.

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I mean, like

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there was there's always a time

within every industry

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where the question is like,

is this bubble going to burst?

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We're not seeing.

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Yeah, right. It's not a fad.

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It's only growing exponentially.

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I mean, the trends, you're saying

33 billion in the subscription

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box space, but the subscription industry

as a whole is going to hit $2 trillion

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in the next few years.

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So it's not a fad.

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I think we're seeing more and more

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again, it's nice to see,

but you even see some of these enterprise

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and legacy brands

figuring out ways to kind of pivot

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into the subscription model,

because who doesn't love recurring revenue?

:: 06:12:10

That I couldn't agree

more in the amount of companies

:: 06:15:08

and you know, and let me know if you know

this, you know, echoes with you

:: 06:18:10

a little bit too, with you

can you log in and see,

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you know, subscribe and save functions

and half the people

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you're going to buy from now,

which is, which is,

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in its own way, a subscription model,

you know what I mean?

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Like, you know, you go to buy a vitamin

from a vitamin company ever.

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And, you know,

you realize you're going to use it

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every month, subscribe and save,

boom, it's there.

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You know what I mean?

:: 06:39:10

So that's something, too. Okay.

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So we want to talk today

though about international.

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One thing I've had the great,

great pleasure of working with

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is a number of subscription based brands

to really help them get their box

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to subscribers that are located outside

the United States.

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there are plenty of challenges

in doing so.

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but there's also,

I think this, this weird veil

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that people look at

of saying that it's so daunting.

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I don't know how to get into it.

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I don't know, you know,

what to do, where to start.

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You know, this is, will be on, you know,

five, six episodes at this point.

:: 07:11:00

And we've talked, pretty extensively

about where we would make suggestions

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for top three markets, including,

you know, one, let's look at English

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speaking countries. Right.

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Let's look at, you know, Canada.

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Then we're going to look at,

you know, UK and Australia.

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so you yourself was

you were my contact that

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I worked really closely with when it came

to working with Gentleman's Box.

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Okay.

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So while you guys owned the brand

and you really had your finger

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on the operation as a whole,

and so my question is, you know,

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what were some critical data points

when it came to international or Canadian,

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subscribers that you focused on in terms

of whether it was,

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you know, profitability,

you know, customer experience,

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ease of use, transit

times, that type of thing.

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I mean, it's really easy to say

all those buckets, to be honest.

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when we were thinking

about shipping internationally,

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I think the number one thing that came

to mind right off the rip was like, cost.

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Like, what does it cost

to ship internationally?

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and in cost, there's so many

different factors you have to think about.

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The size of the box,

the weight of the box.

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What are the goods inside?

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you know, do you want to

cover the cost of delivery duties

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paid to the consumer,

and then all of that has this,

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like, trickle effect on the experience

the consumer is going to have.

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And you don't want to

you don't want them to stop at your

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their local post office

and pay some sort of invoice.

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Right.

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That doesn't seem like a, a seamless or a

really good delivery experience for them.

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So there's a lot of factors,

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but I think

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I think cost was probably the first

and foremost the number one thing

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that we thought about first.

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Because Gentlemen’s Box,

we were shipping, obviously started off

:: 08:47:03

domestically for $25 a month, right.

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And for what we were delivering, which,

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which we promised 100, you know,

four times, 3 to 4 times the value, it was

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how are we going to deliver, you know,

3 to 4 times the value in the products

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without sacrificing quality?

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Of course, because that's not

that's the one thing you never want to do.

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You don't want to sacrifice quality

so that you can bake in more shipping cost

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within your, within your box.

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So without sacrificing quality or at $25,

how do we get this out internationally?

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And so we had to evaluate the costs.

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And I think that was probably

the number one thing that we thought

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about when trying to kind of enter

into international water.

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I, I had two questions down that road.

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So the first question is, all the sub box

:: 09:29:12

providers they use a 3PL traditionally.

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Right?

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So when you're choosing that... two things.

:: 09:35:01

So what's your thought

process of choosing that provider,

:: 09:38:01

number one, because there's a lot of costs involved.

:: 09:40:00

Pick and pack all that stuff.

:: 09:42:02

They're going to get you on overrides

and things like that.

:: 09:44:02

The second would be cost containment

because rates go up 5-6% every year,

:: 09:48:08

and you're trying to keep your box price

:: 09:50:08

within a manageable thing

so you don't lose, you know, customers.

:: 09:53:15

So how did you how do you recommend

to your people that you talk to industry?

:: 09:58:15

How do you recommend to handle that?

Well... That makes sense?

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Yeah, absolutely.

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To your questions.

:: 10:03:12

Cost containment.

Let me just address that first.

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You know, when you open up your doors

internationally,

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you're going to start to hit a market

that you were not going after initially.

:: 10:11:08

So the goal there

:: 10:13:00

and the hopes is that the acquisition

of more subscribers start to roll in.

:: 10:17:06

Right?

:: 10:18:01

And with the acquisition of more

subscribers and growing your community

:: 10:21:09

and your subscriber base means

you now leverage the ability of scaling

:: 10:27:03

and, you know, ordering products,

whatever it is for your box, whether it's

:: 10:31:05

ordering more boxes, it's ordering

more products in the box at scale.

:: 10:35:05

Your costs start to go down. So

:: 10:37:14

we always found that it offset

that anyways.

:: 10:39:14

So the cost of containment with the rates

going up every year,

:: 10:43:00

it was never an issue

because we were growing anyways.

:: 10:45:00

We were scaling our prices

across the board for the product.

:: 10:48:10

The packaging were going down

:: 10:50:03

and so is is usually in typically

in most cases an offset.

:: 10:53:13

Now, you know, choosing

:: 10:56:15

you know for a lot of subscription brands it

:: 10:59:09

there's like a point

where I always at least suggest

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once you kind of graduate,

if you will, and move on to a 3PL

:: 11:07:01

I think that early on most folks are in,

if they're in the startup phase,

:: 11:11:01

they're taking it on themselves.

:: 11:12:15

A lot of 3PLs are not going to,

take on somebody with 100 boxes

:: 11:17:11

or it's just not cost effective

to work with a 3PL

:: 11:20:11

when you only have 100 boxes,

or a couple hundred a month.

:: 11:25:04

So you get to a point where it does seem

cost effective to switch to a 3PL

:: 11:28:08

when you do search and swtich to a 3PL

:: 11:30:09

which at some point

I think everybody should,

:: 11:32:07

because your whole goal

is to grow your company.

:: 11:35:01

You think about the marketing and

the creatives to grow and scale your company,

:: 11:38:04

to kind of take that load off

your shoulders.

:: 11:39:15

So when thinking about working with a 3PL...

What’s the hurdle rate, John?

:: 11:44:03

What was it? Three per day?

:: 11:45:05

Your hurdle rate, like you would make that recommend that move?

:: 11:49:14

For us...for us, it was, it was

:: 11:51:09

it was monthly

because a lot of subscription box

:: 11:53:02

companies, it's not so much

how much it's not so much

:: 11:56:05

what they're doing on a daily basis,

what they're doing on a monthly basis.

:: 11:58:10

Because a lot of the subscription

companies have a bulk renewal day...

Right.

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on a monthly basis.

:: 12:03:12

And so maybe that's,

:: 12:04:13

you know, the fifth to the 10th

is their peak period of shipping.

:: 12:08:03

And the rest of the month

is a few packages here and there.

:: 12:11:07

So really we looked at as a monthly basis

when we hit: 2000

:: 12:14:04

subscribers on a monthly basis,

well: 1500

:: 12:17:10

we started to shift over to a 3PL.

:: 12:20:15

Gotcha.

Some do it sooner nowadays.

:: 12:23:11

I think early in this was 2014

when we started Gentleman's Box.

:: 12:27:08

It was 2015ish, 16

when we looked to a 3PL,

:: 12:32:01

you know,

:: 12:32:12

and obviously every 3PL is different

:: 12:34:05

in terms of what they're bringing in

in terms of requirement for a minimum.

:: 12:37:09

A lot of 3PLs nowadays

have lowered their minimums

:: 12:40:06

because they've found

cost-effective strategies internally

:: 12:43:07

to be able to handle lesser

quantities on a monthly basis.

:: 12:47:03

But like the 3PL you work with,

you want to make sure that they,

:: 12:50:04

in my opinion, have a great relationship

with their carriers

:: 12:54:01

as a whole, domestically

and internationally,

:: 12:56:11

but while your international carrier

needs to be able to support,

:: 13:02:07

if you're working with international

carrier independently,

:: 13:05:08

you want them to be knowledged

:: 13:07:00

in the international space and be able to support

you and help you mitigate risks.

:: 13:10:14

But if you look at that independently,

you're hoping that a 3PL is also

:: 13:14:10

getting that same level of service

:: 13:15:12

from their international carrier

so they can pass that on to you.

:: 13:18:13

Gotcha.

:: 13:21:00

There was a lot that was

brought up there that I'm, like,

:: 13:23:06

scribbling ideas in my head, scribbling

ideas down here that that highlight.

:: 13:26:10

But, you know,

one of the resounding themes

:: 13:28:07

that I've seen, whether it's with, again,

:: 13:29:15

just an online shipper, you know,

e-com company, subscription box company.

:: 13:33:14

Subscription has almost

always been resoundingly about this,

:: 13:36:12

but customer experience.

:: 13:38:00

You know, any time I am in conversation

with more of a high level

:: 13:42:05

subscription box brand or subscription

based brand or,

:: 13:45:10

you know, a lot of times these terms

that maybe that you can touch on John,

:: 13:48:08

while we're here is, you know,

subscriber churn, LTV,

:: 13:51:09

and then we can kind of peel that back

and bring it around to, you know,

:: 13:54:14

again, we're focused on the

the international US outbound logistics.

:: 13:58:03

But why logistics is an important factor

in impacting those areas?

:: 14:03:11

Yeah I mean, first of all,

the customer experience

:: 14:06:02

is across the entire journey of a brand

from when the from the moment

:: 14:10:06

they come across your ad on social media

:: 14:13:07

to the moment they land on your website,

purchasing the product, and it just

:: 14:17:13

it doesn't stop

when they purchase the product.

:: 14:19:06

It's what's the post

purchase experience.

:: 14:22:09

And that's actually a huge factor

:: 14:25:05

in it plays a huge role in churn, right.

:: 14:28:11

Like, if I order a product

:: 14:31:00

and, you know, we live in this world

where we're expecting things to arrive

:: 14:35:04

or we expect and we hope

that arrives in 2 or 3 days, right?

:: 14:38:10

Right.

:: 14:39:07

But in a world

where we are expecting things

:: 14:41:03

to be delivered so quickly,

if it arrives three,

:: 14:44:12

four days later than your expectations,

that's a horrible experience.

:: 14:47:15

You haven't even received the product yet.

:: 14:50:00

and so you're already judging your

experience based on, say, transit time.

:: 14:53:05

So post-purchase experiences,

:: 14:56:08

whether it's on the logistics side

or the fulfillment side,

:: 14:59:11

even the way that you're, sending over

information from the tracking information,

:: 15:04:05

the emails, it's all very

important post-purchase. But,

:: 15:08:07

you know,

on the logistics side of things,

:: 15:11:10

I think every consumer

wants to see in real time

:: 15:15:05

where their package is,

the second that they make that purchase.

:: 15:19:02

So from the moment

it leaves a certain person's warehouse,

:: 15:22:11

where it is every step of the way,

:: 15:25:02

I've always recommended to brands

that I've spoke to that

:: 15:28:08

you make sure that the carrier that you're

working with, the service class,

:: 15:31:00

the service that you're using has,

you know, door-to-door tracking.

:: 15:35:02

Because if you don't have

door-to-door tracking, the

:: 15:36:14

the moment it enters into the country,

if tracking is lost,

:: 15:40:01

you know, the customer is kind of like

left in the dark.

:: 15:42:02

And that creates a horrible experience

for the customer

:: 15:44:05

because they don't know

what's going on with their package,

:: 15:46:00

is it going to arrive in two days,

three days,

:: 15:48:00

and sometimes even the merchant doesn't

even know when enters into the country,

:: 15:51:11

like what's happening with this package.

:: 15:53:07

So I think, there's a lot of facets of logistics

:: 15:57:11

that play into the post-purchase experience

:: 15:59:09

that are very important to hone in on.

:: 16:01:10

Hey everybody, thanks so much for listening to part one,

:: 16:04:10

episode five “Outside the Box with Asendia USA” podcast.

:: 16:08:07

Stay tuned for part two dropping May 22nd.