How to Start a Subscription Box Business

How to Start a Subscription Box Business

29th September 2020, 3:03am in Business by Cassie Puah

If you've landed on this page, you are probably considering starting a subscription box business.

The subscription box business model has taken off like a rocket in the eCommerce world in recent years. You've probably heard of HelloFresh, Dollar Shave Club, BarkBox and Lootcrate, which combined, have a total subscriber count of more than five million. People have come to see subscription boxes as a trendy way to shop for unique items, especially fashion, lifestyle and beauty products.

We've drafted this guide which covers everything you need to know about launching and building your subscription box empire.

What is a subscription box?

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. Subscription boxes generally include:

  • Physical items
  • A recurring subscription
  • Surprise items within a given box
  • Curated content
  • The opportunity to see clear savings from the subscription price
  • Visually-appealing presentation and packaging

How big is the subscription market in 2020?

Subscription boxes have been around since as early as 2004. And it's been on the rise ever since.

The popularity of the subscription box business model can be attributed to three major customer concerns: convenience and recurrence, variety and special access. This year, the subscription eCommerce market is valued at $7.5 billion. In five years, between September 2014 to September 2018, the industry has grown by 625%.

Step 1: Conceptualising your subscription box

Like with any business, if you want to create a subscription box, you first need an idea. There are few things to ask yourself here:

  • What is your passion?
  • Is someone else already doing it?
  • What will make you different?

The key with any subscription box business is to get specific within your target industry. Say that your passion is beauty and personal care, your niche could be organic and vegan products. If it's fashion, your niche could be colorful, statement jewelry.

When choosing your niche make sure it is something you can source (and sell) enough of to keep the interest of your customers, but also to ensure that it is a stable source of monthly revenue. If your niche is colour treated hair products, then you can supply shampoo, conditioner, hair masks, styling products and brushes.

Once you've got your niche down you can then research your customers and pricing strategy. These two areas of research will allow you to flesh out your subscription box business.

How do I get products for my Subscription Box?

Remember, the whole point of a Subscription Box is to deliver high-quality products to your consumer. In this day and age, there's no lack of websites to source your products from. Some of the big guns include:

  • Alibaba
  • Etsy
  • Amazon
  • Flipkart
  • eBay

But you can also source quality products at conferences, trade events, exhibitions or expos. Most of the time, manufacturers and vendors themselves will be at the event, so it's your chance to forge a professional relationship with them.

Step 2: What is your pricing strategy

We don't need to tell you that pricing your products is vital to your success. You need to settle on a price that is competitive within your market but allows you to maintain a healthy profit.

When setting a price point consider the overall costs:

  • Product costs (how much it takes to make/supply them)
  • Packaging costs (box/mailer, tissue, bubble-wrap, stickers, inserts)
  • Postage costs
  • Transaction fees (eBay/Etsy selling fees or Paypal transaction fees)
  • Any additional costs (marketing, eCommerce website subscription fees)

Your prices can get you noticed so make sure to factor in your target demographic's income when deciding. Make sure you base this price point off your competitors.

Step 3: Defining your customer personas

Before you start to prototype, you want to understand your customer as a person.

Who are you selling to?

We can't stress this enough, this part is crucial to make sure you're advertising to the right market and stretching your money out as much as possible. You'll want to understand a few things about your customers:

  • Interests
  • Motivations and triggers for purchasing
  • Median disposable income
  • Buying habits

The great thing about the internet, today, is you can find a group or forum for any type of person or group of people. Your job is to find these groups, and use polls and surveys to get an idea of all the things listed above.

Step 4: Create a prototype box

Now it's time to put together an example of what your subscription box will look like (the exciting part). You will need this prototype to take great quality pictures of, so your customers can see what they are getting.

Here are some things to cover:

  • Products: 5-7 items is usually recommended to give a good range
  • Box: choose consistent packaging
  • Pictures: start taking good quality pictures of your products and packaging to share on social media

Remember, your subscription box business should feel like a little gift on your customer's doorstep every month, so make sure you have some style. Creating a unique packaging and unboxing experience that adds to the luxury can entice customers to keep subscribing.

Step 5: Open an eCommerce store

Online shoppers are most likely your target customers for a subscription box. Many of the best subscription services started on eCommerce platforms as they can save you time and stress by helping you process orders quickly and easily.

We have found that the best eCommerce platforms around for your subscription box services are:

  • Squarespace: with their Advanced plan users can set up recurring billing cycles, edit subscription products, and manage all customer payments with you in one, easy to use area.
  • WooCommerce: with their Subscriptions Plugin sellers can fully customise their subscription plan(s), manage recurring payments, and even set up product-of-the-month boxes
  • BigCommerce: with their convenient subscription component, users can manage subscribers, billing, and fulfillment, and even set up a finance model (buy now, pay later)

Step 6: Organise a shipping solution

A major part of providing the best subscription service is ensuring you can deliver regularly and reliably. That's where we can help. Interparcel only partners with the globe's most recognised and trusted courier companies, so small businesses can offer a range of cost-effective parcel delivery options to their customers.

Our services integrate with all of the major eCommerce platforms and can ensure your subscription boxes reach your customers on time every month in perfect condition. Interparcel's Shipping Manager makes running a subscription service simple. Our users benefit from:

  • Advanced shipping manager: collate orders from multiple eCommerce platforms into one place
  • In-built address verification and correction, no more manual errors or unprofessional mistakes
  • New branded tracking, create a seamless brand experience when customers track orders
  • Despatch orders in a few clicks from the comfort of your home

Integrating your eCommerce subscription box service with our Shipping Manager is free - all you need to do is create an account with us and connect to your store. By having a shipping service that your customers can trust you'll be able to improve customer loyalty and retention, ensuring they subscribe to your boxes for much longer!

Step 7: Create a marketing strategy

As the subscription box market becomes increasingly saturated, staying competitive is key. Marketing your subscription boxes can create an exciting buzz around your products and prime customers to buy! Setting up an eCommerce marketing strategy can make your business stand out from your competitors and draw in new customers.

When marketing your new subscription box service, think about trying:

  • Email marketing: send a newsletter about upcoming subscription bundles
  • Social media marketing: post pictures/videos of boxes to entice
  • Giveaway marketing: start a giveaway to boost awareness and get customers trying products
  • Offer discounts: promote discounts for the first three months or 'first box for free' to convert customers
  • Free gifts: offer a free gift to all new subscribers
  • Referral discounts/gifts: offer something to customers who introduce their friends to your service

Once you get your first few orders safely sent out give yourself a pat on the back for all your hard work! Each month be sure to check-in and review your order fulfillment process, keep track of your supply chain and finances. Once you start to grow it's worth seeing if you can obtain bulk discounts for your products and packaging materials.

Check if customers are still interested in the products you include, to be sure you're providing the best subscription service. It's important to keep checking in with your customers to increase customer loyalty and keep those happy customers subscribed.

Keep it up and you'll have subscribers for life!

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