Subscription boxes have been around for a while, and they definitely have their audience and customers since they tend to be very convenient and affordable. Starting a subscription box service has become a popular business model.
Before you embark on this journey, there are a few things you should know before starting a subscription box.
1. Find your niche
There are hundreds of monthly subscription boxes available today.
On top of that, there are thousands and thousands of eCommerce stores that could start building a subscription box tomorrow. For you to get ahead of the game, it’s time to find a niche.
Look at your existing competitors in the space and the customers that you have, plus those your competitors have. Plenty of research tools for leads and competition exist. Fire up a few and do your homework.
Within all that data, you want to look for opportunities and intersections that people aren’t targeting yet.
This can include specific subsets of product categories or broad themes that a lot of different goods can address (such as beach-themed towels, hand soap, flip-flops, table decorations, and on and on).
See what customers like and are looking for, then create a concept for your subscription box that addresses it.
2. Establish total costs
After you have the concept for your subscription box, it’s time to determine what’ll be in your box and how you can afford it.
Here, the big note is to research your total costs, not just monthly ones.
Establishing the price starts with two elements: what customers can afford and what your business can afford.
Customer price sensitivity can be determined by the quality of the goods you want to offer and the costs of similar subscription boxes — similar in quality, not necessarily in the concept area.
From there, you’ll start working backwards to see what products you can actually include and how fancy you can get with your subscription box.
Some of the big considerations people forget about when they start their subscription box include:
- Product cost ranges. Many boxes will have one or two premium items and then some smaller items. You’ll need to balance that each month, so you’ve got to have options in multiple price ranges.
- Box costs. Part of the monthly subscription box craze is how cool the boxes look when they show up. You’re probably going to want a custom box and packaging. Research how much this can cost. We have a guide to e-commerce packaging you can check out!
- Fulfillment and shipping costs to understand how much you need to include to get your products to people. The good news here is that once you grow large, these costs per box can decline. You might also consider a third-party fulfillment service that has good deals with carriers and can also use the custom boxes and packaging you created.
- Software fees. You’ll want an e-commerce store as well as payment and customer service support. There’s plenty of help out there even for a business of 1, but it’ll cost you.
- Email marketing, website maintenance, and other standard business operations.
- Customer acquisition. You’ll need to spend money regularly on ads and social media to acquire new customers. Work with a marketer to see what you might want to start with based on your brand.
- High-quality photos. If your photos look like junk, people will think you’re sending them junk.
That list is a lot to think about, so write it down and come back to it during your brainstorming process. Even if those costs seem high, they’re not usually prohibitive if done smartly.
3. Build a subscription box prototype first
Marketing requires a prototype subscription box, and you require marketing to get customers.
The first thing you want to do is put together a sample of your subscription box.
The best thing to do that is to build it out according to the budget you establish for your monthly boxes so that customers will get the quality they expect when they pre-order the first one.
Another reason to build out a prototype is that you can use it for video and photos.
It’ll give you a lot of great material to share online and you can use them for product demonstrations if you require.
For boxes that include clothes, prototypes also help because you have to create a relationship with a vendor — and then you can share their sizing charts to avoid upset subscribers getting the wrong sizes!
You wouldn’t buy a subscription box without seeing what’s on the inside, so don’t expect others to.
4. Know people’s first-box expectations
People expect the first box at a discount. A quick search will find that many companies offer up to 50% off a first subscription box, plus future discounts if a customer gets other people to become subscribers too.
It’s a trend that’s been going on for quite some time, with even some of the top search results stretching back to 2015 for posts about boxes you can try for free.
While the “free” offer is declining in popularity, most boxes still give some sort of discount on the first box. You might consider a cheaper first month, like the one offered by Bean Box.
A concern here is that you’ll have higher acquisition costs, which can feel a bit scary.
Depending on your profit margin, it can take multiple months to turn an individual into a profitable customer. Plan for this in your overall marketing and price setting.
If you figure out that a customer becomes profitable after a certain number of months or after a certain number of friends they bring to your service, target those metrics.
Automatic billing can make it easy to keep up the momentum and move people to the full price, giving you a little less worry at the end of the day.
5. Your business is a business
You are a traditional business too.
Don’t skimp on the regular business steps like having a business plan. While your business model may be very new, existing best practices are here to help.
Follow traditional steps, and you’ll best understand your big 3 Cs: company, customers, and competitors.
The steps to follow can vary based on your products, sourcing methods, niche, customer profiles, and so much more. Read about big players in your industry to learn where to start.
6. Keep it visual
Boxes are visual. You’ve got to show off products to generate excitement, whether you’re looking at custom colors and metallics, or a cute logo brandished across the top. You can even wrap an entire box with an image to make it look and feel awesome.
The final design of your subscription box should match your customers.
Aim for a cute look if they understand what “kawaii” means, while you can turn to leather and chocolate colors for the “manlier” options. Your customers might love glitter or have a techy bend that needs sleek silver and clean lines to feel like the future.
The best marketing you’ll get comes from how your boxes look and feel, with the products clear and visible.
It is incredibly exciting and inviting when your subscription box matches the products too. Check out this one from Teknikio.
Put design and visuals first. It’ll generate great images for your ads as well as social media. Instagram and Pinterest are big, big places to share boxes and create a following around your style and content.
Funny enough, design starts with writing.
Here’s a smart PakFactory guide to help you understand the writing process that leads to quality images and boxes.
7. Smart software saves businesses
Let’s jump back to treating your company as a business for a second.
Once you have those images and designs ready, it’s time to build your software stack.
The great news for you right now is that there are plenty of e-commerce options that can do much of the heavy lifting for you.
Whether you go piecemeal or look for a total system from one provider, there are tools that can make it easy to build and launch your own website, incorporate automatic monthly or annual billing, support finding new products and just about everything else.
Top of your list should be a billing platform, either in your e-commerce suite or as a standalone accounting system.
It will keep your books straight and ensure you know your revenue for the next month. Plus, you can offer deals and discounts with the more advanced systems, even limiting a customer to one coupon or deal per subscription.
A few other items to consider are when starting your subscription box service:
- Website: Your service needs a place to live, so built it one! There are plenty of specific tools to create e-commerce sites that have specific tools for building monthly subscription box websites.
- Marketplace listings: Multiple companies and services help customers look for subscription boxes to try. These marketplaces have listings and pages that you can create!
- CRM: Customer relationship management tools are your big email and support platforms. They help you reach out to customers as well as your vendors and any other brands that you work with or are considering.
- Customer support tools: If you’re running a tight ship, you might not have enough time to answer every email or customer question quickly. Thankfully, there are website tools to add chats, FAQs, and automated answers to standard questions. It can keep people happy, and that means they stay subscribers.
- E-commerce platforms. In case you want a holistic approach, or you need the ability to sell some items individually as well, an e-commerce suite will typically offer software options that can do many of these services for you. Plus, they integrate well. So, grabbing a platform and then using its approved plug-ins or partners will mean that your CRM can talk to your accounting tools and email and much more, simplifying total management.
The exact software mix is up to you, how comfortable you are with software and service, and how many people are in your organization.
8. Foster community growth
Building a community is a terrific way to grow. After you launch, you’re going to have people asking questions and sharing products and images and more. Create a platform for them to do this ahead of time.
Allow for more than just an FAQ page. Try your hand at forums or blog posts with comments and other networks to help you reach out, collect feedback, and improve your operations.
Social networks are beneficial, especially if you ask people to post or tweet and mention your company name.
People want to share their opinions, and you can use this to your advantage. When you do things right, they’ll have a lot of wonderful things to say about you.
If you’re spending the time to create a custom box, you can design it in a way that people will actually film and share how are excited about opening it.
Unboxing videos are one of the biggest opportunities for subscription box viral marketing.
9. The Internet is forever
Take your time because the Internet is forever. Plan your name and website for something that you are interested in doing for the long-haul. Go for something that speaks to your passion and isn’t limited to a specific product.
Think of it this way: Dollar Shave Club is the name of a business idea, not the specific box.
You’re creating a brand that’s more than just the product in next month’s subscription box. Find a name that suits you without limiting you.
A word of warning: you want something that will work even in three years from now. Not only should it be something that will still be relevant, but also it should be something that you’re interested in for years to come.
For example, someone was selling a business on how to create subscription boxes, but the Start Your Own Subscription Box business now sits on a vacant site. However, it is still all over the Internet starting from about three years ago and shows up in some search results too.
10. Don’t stop at the first failure
It’s okay to fail.
That’s the hardest lesson for any entrepreneur to understand, but it’s the most vital.
People might not like a product, or you might be late getting things out. It’s okay.
The only way to learn is to try. Most people have some items they don’t like or always use — it’s why you can tell services like Blue Apron not to repeat recipes or to avoid certain foods.
The world has become a marvellous place where there is an audience for almost anything. Your job is to continually find your audience and resonate with them the best way.
If they are hard to find or not inclined to buy what you’re offering, it’s time to shift a little. Adjust marketing, pricing, or products to find the sweet spot.
Success is out there, and you can find it. Good luck.
Jake Rheude is the Director of Marketing for Red Stag Fulfillment, an e-commerce fulfilment warehouse that was born out of e-commerce. He has years of experience in e-commerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.