As recently as a decade ago, subscription boxes as we know them hardly existed. It wasn’t until 2011 when subscription boxes started to take off, with brands like BirchBox, Dollar Shave Club, and NatureBox becoming household names. From 2011 to 2016, the subscription box industry grew nearly 100% per year according to McKinsey.
Because subscription box businesses are so hot right now, a lot of people want to cash in. You might be one of them since you’re reading this article! So let’s talk about how you can start a subscription box business in 10 easy steps.
As with any business, you need to thoroughly understand the market before you jump in. To help you do that, we’re going to go over the basics of the subscription box business model. This will help you determine whether it’s right for you.
Easyship said it best: “subscription boxes are recurring and physical deliveries of given products which are packaged with the aim of offering consumers additional value and a unique experience, added to the actual product contained within each box.”
Basically, subscription box buyers receive boxes full of unique and interesting products on a regular basis. Subscribers pay for a recurring subscription and receive boxes on a regular basis, usually every month. The boxes are full of physical items, many of which are surprises carefully curated to please the subscriber. Many subscription boxes show customers how much they saved on the retail value of the items contained within.
Last but not least, subscription boxes are almost always gorgeous. The packaging and the contents are often beautiful and made specifically for people to record unboxing videos.
From a business perspective, there are a lot of benefits to the subscription box business model. We can think of five.
Of course, the subscription box model isn’t perfect. We can think of five negative considerations that you need to weigh in as well.
In order to build a successful business of any type, you need to identify real needs in the market and come up with a wait to meet them. Otherwise, people have no reason to want to buy from you at all!
This is especially true in the subscription box business model. The reason for this is because getting someone to sign up for a subscription is harder than getting them to sign up for a single purchase. That means your subscription box needs to be so compelling that it overcomes customers’ objections so that they do not hesitate to subscribe.
Because the subscription box business is fairly crowded, you need to find a niche that stands out among similar subscriptions. Your customers have lots of different options, so you need to provide something popular in a way that no one else is. This is where market research is essential!
If you want to stand out among your competition, don’t try to create a new product entirely. It’s much easier to deliver better quality products than your competition than to completely forge your own path. One way that you can do this? Find good suppliers and form great relationships with them.
At this point, you will want to figure out what your subscription box itself will be like. Subbly suggests considering the following factors:
Naturally, this will be different for every industry and for each type of box. What you want to do here is figure out how to take several different items and figure out how you can tie them together and create a unique experience for the box opener.
Much of the magic of subscription boxes comes from the feeling your subscribers will have when they are opening the box. There is a reason why many people take videos of themselves unboxing subscription boxes and post them online. There’s a reason people watch these videos, too – vicarious pleasure is a very real thing and it compels many new people to subscribe to your box!
So how do you actually do that? We have a few suggestions:
Understanding the supply chain is one of the key success factors for subscription box businesses. You need to make sure the boxes are a reasonable size and weight, so you need to have all that information from your item suppliers in order to proceed. Hopefully, you will also receive a discount on the items themselves so that you have a healthy profit margin. You may need to tweak the items in the box in order to get them to fit or to get the price to be reasonable.
Especially important to subscription box businesses is having good relationships with custom packaging providers such as Noissue or Arka. While custom packaging definitely costs more, remember that the experience is the selling point, not the items themselves which can all be purchased individually.
Lastly, you will want to work with a fulfillment company that you trust. Odds are, the items and packaging will arrive separately and in large quantities. While you can pack and ship your own items, companies like Fulfillrite can take care of that for you. In particular, preparing subscription boxes in advance would be considered a kitting project. As far as receiving the supplies themselves and then sending out the subscription boxes, both of those are very routine tasks that can be cost-efficiently handled by a fulfillment company on your behalf.
Treat your subscription box service launch like you would any other product launch. You need to start marketing it long before you actually start shipping boxes. At a minimum, you need a good brand name, logo, and website. If you’re not sure where to start, you can always use Shopify.
Marketing for a service launch is more complicated than we can adequately discuss in a post like this, but we’ll give you a few tips here:
If you want to research this subject in more depth, we stumbled across this fantastic guide that will show you how to market your subscription box!
We touched on this before, but it’s especially important. If you have 500 subscribers, that means someone will need to receive all your supplies and packaging, prepare the subscription boxes, apply postage, and then send them to your subscribers. You can do this yourself, but it makes a lot more sense to work with a fulfillment company since they specialize in handling large quantities of orders at once.
If you go through a fulfillment company, you don’t have to worry about assembling the boxes by hand. All you have to do is design the packaging, pick the items, and go find customers. Everything else can be taken care of for you, leaving you with a lot more time to find subscribers and make money!
As with any business, once you start shipping your first few subscription boxes, you will need to gather customer feedback. Customer retention is essential, so try to incorporate feedback as much as you can. Make improvements when they are recommended. In the long run, it will pay off!
Customer retention is essential for a subscription-based model. That means that once you have started shipping boxes, you need to have excellent customer service in order to keep customers subscribed. Do anything and everything you can to keep customers happy. Be sure they can reach by phone, email, and – if you have the resources to adequately manage it – social media!
Subscription boxes provide customers with unique experiences and business owners with unique opportunities. If this is a business model that you want to pursue, follow the tips above and you’ll be well on your way to success!