Guide

The essentials of starting a Subscription Box Service

By June 24, 2020 No Comments

If you buy products online, you have undoubtedly heard the buzz about subscription boxes.

Perhaps you’ve even subscribed to a box yourself.  From fashion to makeup, wine and pet food the subscription box industry is booming.  The question is, could you capitalise on their popularity and sell products on subscription too?  Do you already have an offering that consumers would subscribe to?  

Before we help you answer that question, let’s backup and define exactly what a subscription box service is… 

What is a subscription box service?

Simply put, a subscription box is a curated (or surprise) box of products that a consumer agrees to receive from you on a regular basis (weekly, monthly, quarterly).  An ecommerce business may choose to only sell products via subscription, or incorporate the model into its existing marketing and product distribution strategy.

Products that are commonly sold via subscription boxes include razors, wine, hair and beauty products, coffee, pet food and clothing.  There are also a growing number of special interest subscription boxes; for example, My Box of Magic for magic lovers.

Subscription box services are booming

Subscription boxes are popular because they appeal to consumers’ desire for convenient, novel experiences.

The Clutch Report published in 2019 found that more than half of online shoppers (54%) say they subscribe to a subscription box service.  And from April 2014 to April 2018, the industry grew by 890%.

Whilst subscriptions existed well before Internet shopping took off, the popularity of subscription box services kicked up a notch from around 2010.   Birchbox, a cosmetics monthly sample box service, launched around this time and in less than a year, had 45,000 members and 25 employees.  Birchbox is now the sixth most-popular subscription box service globally. 

Should I offer a subscription box service?

There are some significant benefits of adopting a subscription business model which we have summarised for you below.

Monthly Recurring Revenue (MRR)
Subscription boxes offer a steady stream of profit from customers you’ve already attained, giving you a great ROI on your marketing efforts.  When subscribers sign up to receive their goods on a fortnightly, monthly, or quarterly basis, you are guaranteed a consistent source of revenue.

A more consistent source of revenue enables you to manage stock levels and plan for the growth of your business.  Steady income allows you to budget for expected costs, predict orders, and control inventory. 

More Manageable Stock Control
With a subscription box business you can more easily predict the volume of orders you’ll need to fulfill and send out in a given period. This means you can plan your stock and inventory easier and reduce wastage. For businesses who offer food or drink samples in their box this can prove to be a very important advantage.

Low, One-Time Acquisition Costs and Increased Lifetime Value
It costs up to 7 times more to get a new customer than to retain your existing ones, which makes this one of the most significant benefits for your business of adopting a subscription business model.

With subscription-based services, you only have to pay once to secure the customer. Yes, you will need to put the work in up front to get a customer to opt-in, but once they do, as long as you continue to deliver value and fulfill a need, they stay subscribed, which produces recurring revenue for your brand and makes that one time acquisition so much more valuable to your business.

Features of a successful subscription box service

With so many subscription box services now in existence there is a wide range of features and benefits with each, but generally speaking all subscription box services incorporate these key elements:

  • Physical items
  • A recurring subscription
  • Surprise items within a given box
  • Curated content
  • Savings on products in return for subscribing
  • Visually-appealing presentation and packaging

Steps to Create a Subscription Box Service

1. Start with a unique Idea
Every good business starts with a good idea.  To know if your idea is good you will need to do market research, which includes understanding your niche and your ideal customer.  Also consider your passions, expertise/skill set and what you already sell if you have an existing business.

2. Research and price your box right
Once you have your idea and a good understanding of who your ideal customer is, do some competitive research to gain an understanding of the budget for your subscription box service. Remember consumers subscribe for convenience (or to be surprised) and value.  To be successful you will need to crunch the numbers so you can deliver value and still make a profit.  And you must make your offer attractive enough for a consumer to stop looking at your competitors and instead, build a long-term relationship with you.

3. Create a Prototype Box
Now it’s time to think about packaging.  Create a prototype subscription box in order to determine what packing materials to use and what box dimensions and packaging design works best.  And remember, for almost all subscription box services, part of the reason a customer will keep subscribing is that you make it attractive for them to do so  – which includes the thrill they get from seeing your subscription box arrive on their doorstep.

4. Open your shop
You will need a user-friendly website that engages consumers and makes it easy for them to purchase your subscription box.  Keesubscriptions is an app which makes it easy for you to sell products on subscription via your Neto store.  Don’t have a store – this video will help you to understand more about selling online, or just contact us.

5. Market Your Subscription Box Business
Once your website and store is up and running you need to spread the word so consumers know your open for business.  Blogging, social media marketing, SEO and paid advertising campaigns should all be part of your marketing strategy.  As should building your email mailing list so you can continue to build relationships with your clients and let them know about new offerings.  We offer a great solution for this with Mailchimp for Neto which also syncs seamlessly with Keesubscriptions.

6. Ship the Ordered Boxes to Customers
Once you’re up and running and making sales it’s time to put your subscription boxes into the hands of consumers.  You will want to map out the client journey from purchase to delivery and give careful consideration to each stage to ensure you’re delivering an exceptional customer experience to your subscribers – this is one of the key factors in retaining their business into the future.

7. Keep Growing Your Subscriber Base
Keep marketing and promoting your business, collecting emails and innovating your product. As we outlined earlier in this article, the subscription box service industry is booming which means you need to focus your efforts on staying competitive.

There’s a lot to understand and get right when it comes to selling products on subscription but with the right product, and tools it’s not difficult and in fact the automation factor of selling on subscription can make this type of service much easier to manage and more profitable in the long run.  

We’re passionate about helping businesses succeed with Subscription services so please contact us if you have questions or need help launching.

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Katie

Author Katie

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