What is Autoship?

by
Jay Leisner
President, Sylvina Consulting

Autoship is an automatic ordering program whereby representatives or customers of a direct selling company can place orders with the company that are shipped automatically on a periodic basis (usually monthly).

What can Autoship do for my business?

Autoship accomplishes several company goals:

1. It encourages the placement of orders on a regular basis by its sales representatives.
2. Since effort is required to cancel an autoship, representatives will order products over a longer period of time than they would otherwise.
3. Sales representatives don’t need to remember to order to meet their personal sales volume requirement.
4. When offered to customers of representatives, autoship increases the value of the distributor’s business by providing a recurring income on recurring sales between the company and the customers.
5. Autoship can be used to help balance the volumes of orders to be packed and shipped throughout the month.
6. Autoship helps to increase the rate of retention of both sales representatives and customers.
7. When you know the percentage of company sales attributable to autoship, you can predict next month’s total sales volume.

What types of products can be sold through Autoship?

Products offered through an autoship program ideally should be those that are consumed within one month so that when the next month arrives, another autoship order will be needed.

Autoship can also be used to ship a series of products over a period of months.  One could be shipped item A this month, item B next month, item C the following month, etc.  Collectible products, wine, books, home décor items, clothing… all of these items that would not be ordered identically each month could be ordered through an Autoship series program.

Autoship can be used to provide representatives with new products.  As products are introduced periodically (perhaps monthly or quarterly), representatives who signed up for the “new product autoship” could receive these items first before they are available for standard orders.

Representatives and customers should be offered the ability to change the items ordered so that if they wish to add an item to their autoship order (for one month or for all future months), they can do easily and quickly.  The best way to do this is to provide your sales representatives and their customers with the ability to modify their autoships both online and by telephone.

Autoships should also offer the participant the ability to place the order “on hold” for a month or perhaps an indefinite period of time.

How can a company encourage Autoship orders?

Companies can promote an Autoship program in many ways.

1. You can offer discounted or free shipping on Autoship orders.
2. You can offer lower prices on items ordered through Autoship.  You can choose to extend Autoship prices to all orders placed that month or limit Autoship prices to items ordered on an Autoship order.
3. You could offer all of your products through Autoship or only a select group of products.
4. You could create special program of “packs” (groups of products that are company-defined or selected by the person ordering) which are available only for Autoship orders.
5. You could offer a special incentive for those who enroll on Autoship – perhaps a free product of choice on a second or third monthly shipment.
6. You could promote Autoship as an “insurance” program whereby an Autoship order is created only if the representative does not have enough personal sales volume in the month, by a specific date in the month.  Autoship orders would be created only to ensure that the personal sales volume requirement of a sales representative is met for bonus eligibility.
7. You can pay bonuses differently on the first autoship orders to sales representatives, each of whom must also have an active autoship order.
8. You can set different requirements for personal sales volume – for example, a lower volume requirement for autoship volume than for volume created from regular orders.
9. You can require autoship volume for bonus eligibility of some or all of your bonuses.
10. You can offer the customers of representatives an opportunity to purchase at prices lower than retail, but higher than representative price, when they, too, enroll on Autoship.

While you can see there are many options available to you, it isn’t practical to implement all of them.  Just like pickles and ice cream, some combinations don’t work well together.

In our work with direct selling companies, we design and recommend autoship program features based on the needs of each client.

What is a successful Autoship program?

A successful Autoship program is one that produces the following results:

1. It produces a higher rate of order placement from sales representatives and customers.
2. New representatives have more than one reason to signup with an Autoship order.
3. The percentage of the company’s sales attributed to Autoship is significant and growing.
4. The rate of retention of your sales representatives is high relative to businesses selling similar products but without an Autoship program.
5. The shipment of Autoship orders does not cause a bottleneck in fulfillment.

Conclusion

For many direct selling companies, Autoship is one of the most powerful fuels in the engine for success.

It’s easiest to offer an Autoship program if you are selling nutritional products, as they are packaged typically for a month’s daily use.

However, when packaged and marketed appropriately, Autoship can be used effectively to sell many other types of products.

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For help creating or rejuvenating your autoship program, contact Sylvina Consulting at 503.244.8787 or visit www.sylvina.com.

Jay Leisner is the president of Sylvina Consulting (www.sylvina.com). Sylvina provides business development and technology consulting services to all direct selling companies, from startups at the concept stage to large multinational firms. As of December 2006, Sylvina Consulting has assisted more than 170 companies.

For a complimentary 30-minute consultation or to request information on launching and growing a direct selling company, visit www.sylvina.com or contact Sylvina Consulting directly at 503.244.8787.