How to Start a Subscription Box Business

How to Start a Subscription Box Business

Subscription boxes are one of the latest trends in the ecommerce industry, and our friends at ShipStation have put together an eBook to walk you through how you can create your own successful subscription business.

The subscription ecommerce market has grown by more than 100% each year over the past five years, so learn how you can get a piece of the pie with the summary below.

1.   What is a Subscription Box, and Why Should I Offer It?

Subscription boxes are recurring deliveries of a product or group of products packaged together, usually following a theme or niche. Customers usually agree to make automatic, recurring payments for the duration of their subscription instead of making a one-time purchase.

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There are three types of subscriptions: curation, replenishment, and access.

Curation boxes are personalized based on consumer preferences, replenishment boxes automate frequently purchased items (razors or vitamins), and access subscriptions offer customers exclusive membership perks, making it a VIP experience.

Of course there are benefits and drawbacks for any business model.

Pros

·       Establish Brand Identity

·       Monthly Recurring Revenue (MRR)

·       Greater Predictability

·       Increased Lifetime Value

Cons

·       Sustaining Value

·       Competition

·       Stagnation

2.   Launching your Subscription Box

Identify Target Niche & Audience

Now that you know about subscription boxes, you need to decide what you want to sell and how to position it.

A great first step is looking at your own interests and passions to get inspiration. Once that is determined, you can now identify your target audience and niche.

The more specialized you are, the more tailored your subscription box can be for your target customers.

Choose Your Products

Selecting your specific products is the next step. Think about the type of subscription (curation, replenishment, access) and build your products based on the value you want to bring to your customers.

It is also important to keep in mind the look and size of the products since the unboxing experience is imperative to the success of a subscription box business.

Logistics

There are a lot of different options regarding the frequency and procurement of the boxes.

For example, you can provide your products weekly, bi-weekly, or quarterly, and you can allow your customers to prepay for boxes or even build their own box with a predetermined list of products.

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Pricing

Determining the price of your subscriptions is one of the most important aspects of the launching process.

If the price is too high, you may end up deterring customers, but if your price is too low, you may not be able to make enough profit to thrive and grow.

Sourcing your products is only part of the battle, as there are many other costs you should keep in mind:

·   Payment processing fees

·   Overall business cost

·   Transaction fees

·   Advertising and marketing costs

·   Fulfillment costs

·   Packing material

·   Box design

3.   Creating an “Unboxing” Experience

Due to the personal nature of subscription boxes, you can use packaging and the unboxing process to enhance your customers’ overall experience and brand perception.

In fact, 72% of customers agree that packaging design can influence their purchasing decision. Here are some options to consider:

Type of Box

Since you will be sending boxes often, make sure your packaging is cost-effective and efficient. For heavier items, use a Shipper Box, and use a Mailer Box for small products like clothing, food, etc.

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Box Printing Method

There are three main types of printing methods to customize your boxes: digital, flexographic, and lithographic.

Digital printing is the most economical option, but if you print large quantities, you can look to utilize flexographic or lithographic methods since they provide higher quality results.

Custom Packaging

The packaging you use can make a huge difference in your customers’ unboxing experiences. Try customizing your tissue paper, add branded stickers, use washi tape, and include a personalized message, like a thank you note or story about your company.

Choose a Sustainable Design

Consumers are becoming more concerned with how their purchases impact the planet, so ensuring that your packaging is sustainable can help set you apart from the competition.

Best practices include using renewable soy-based inks, recycled paper or cardboard, and using smaller boxes (this also helps make your box look fuller).

Build a Prototype

Not only will building a prototype help you determine how the finished product will look, it also gives you a chance to take pictures so you can start marketing it.

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4.   Shipping your Subscription Box

There are many different ways you can ship your boxes, so it may take time to determine which methods work best for your business.

If you’re able to keep your box under 16oz, USPS First Class is the most affordable option, while USPS Priority Mail will probably be the most affordable for packages that are 1-10 lbs. USPS Flat Rate Boxes are another great option since they can hold up to 70 lbs as long as the items fit in the chosen box.

Shipping with FedEx and UPS may cost more at first, but you can get discounts once you ship higher volumes. Using these services is beneficial since they have more express services.

We also recommend using a shipping software service, like ShipStation, to expedite the shipping process.

Some features to look for are the ability to automate workflows, batch your orders so you can print multiple shipping labels at once, and brand your labels and tracking pages.

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5.   Growing Your Service

You have now approached the final step in the subscription box process: scaling your business. There are a few different methods you can adopt to ease your customers into the business and keep them coming back for more.

Convertible Subscriptions

Allow your customers to test out sample size versions of your products on their first delivery and automatically convert them to the standard box after the first order.

The first box can be used to offer a special giveaway. For instance, if you have a wine subscription, you can offer a wine opener in the first box as a bonus.

Discounting

Discounts are one of the most popular ways to acquire and retain customers because who doesn’t love a deal?

Offer discounts on longer subscription periods and prepaying customers to drive more traction. You can also offer discounts at the four-month mark since that is when users are more likely to cancel their subscriptions.

Leverage Reviews & Social Media

Consumers use reviews to influence their online purchase decisions, especially for subscription boxes.

You can put reviews on your own website, but you will also want to make sure you engage with reviewers on other forums as well. How you react can make or break your business’s reputation.

Finally, don’t forget to get involved on social media. You will want all of your beautifully customized packaging to be displayed on social media to attract more buyers.

An easy way to drive conversations is to ask customers to share their order and tag you in it. Make sure your social media strategy aligns with your target customers. For instance, if you have a younger audience, use Instagram over Facebook.

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Conclusion

Starting a subscription box business may seem like a daunting task, but if you follow the steps above, you can build a successful and lasting business.

Customization and providing a unique value targeted to a niche audience is the name of the game, so make sure you do your homework so you can have the next big subscription business.

Check out the full eBook here.

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