Subscription boxes are extremely popular in e-commerce. Every year there are more and more brands that choose this lucrative business model. So it’s not a stretch to say that right now is the perfect time to start your subscription box business.
What is a subscription box?
To put it simply, a subscription box is a recurring physical delivery of niche-oriented products packaged together. There are three main types of these boxes:
Delivery boxes in which you curate products for your customers based on their preferences
Customers order the same goods to save their time shopping
This kind of subscription offers VIP perks for subscribers
The main features of subscription boxes:
- It is a stable financial model with recurring revenue
- It usually contains at least one surprise item: this creates an additional benefit of always feeling like a present (even though customers pay for them)
- It saves money: it’s more profitable to order the items together than to order every item individually
- It reflects a brand’s identity: your design and marketing teams should work together and create an outstanding box design which leads to the very social-friendly “unboxing experience”
Launching a subscription box business
The process of starting your online business has many considerations, but it may not be as complicated as you think. Let’s look at some of the basic steps to finding a target demographic to cater your products to.
1. Choose your products and define your target audience
When starting out, your entire marketing strategy will be based on who you plan to sell to and what you’re selling.
Also, keep in mind that, for most types of products, there probably are already numerous ways to purchase the products that would be in your subscription box. So regardless of the niche you pick, you’ll have to come up with your unique selling proposition.
Maintain a critical eye on what your competitors in the space are doing. You may discover a couple of brilliant ideas to steal or, on the contrary, you’ll see mistakes you can learn from and avoid.
As you go through this process of defining your product and target audience, look for unique ways to target your niche and ways to combine products that can be specific to your brand. This can help differentiate you from competitors and give you a strategic advantage in the market.
Ok, you’ve picked the products you’re going to include in your subscription boxes. The next step is to consider how and when you will present them to your customers.
There are weekly, bi-weekly, or monthly subscription boxes. You will need to set an interval that makes the most sense for your products and should automate order processing once you’ve received payment for the subscription. Automation like this can easily be set up using rules in a platform like ShippingEasy.
Prepaid subscription boxes
Prepaid subscription boxes allow your customers to pay for several months in advance. Usually, this subscription type implies getting a discount as people pay ahead. This box type is also a good gift idea as it can be ordered ahead of time.
This subscription model lets your customers choose from a list of products in your inventory. Those products are what will arrive in a package together as part of their subscription. A subscription box of this type will require close inventory monitoring, as you have less control over what is going out each interval.
Next, you’ll need to decide on your pricing model. Whatever you pick, there are some basic points that you have to take into account, making sure to keep revenue in mind at all times.
- Products costs
- Shipping costs
- Fulfillment company service costs (if you use one)
- Payment processing and transaction fees
- Packing materials and box design
- Marketing costs
Choosing a payment processing company comes with many tough considerations. This is especially true if you plan to accept recurring payments, as that means keeping credit card data safe. Seek out solutions with a high reputation for security and make sure to do your research.
One of the reasons subscription boxes are so popular is that it’s typically cheaper to purchase individual items in a package rather than individually. To make that more financially feasible on your end, try to find the suppliers who’ll offer you wholesale prices in exchange for long-term contracts or marketing activities for their goods.
You need to choose the right shipping platform to process your subscription box orders. You’ll want to find something with a robust automation and rules engine, multichannel and multicarrier support, and the ability to batch process orders. All of these will help maintain the efficiency you’ll need to keep up as your business grows.
A shipping solution like ShippingEasy does all of the above and lets you manage your shipping, inventory, and customer marketing, all in one platform.
5. Unboxing experience
Packaging design can have an influence on customers’ purchase decisions. That’s why you have to think about the box’s appearance both outside and inside.
Creating a unique unboxing experience for your customers is a great way to encourage social sharing. It is also a great way to organically get in front of your potential customers.
In this same vein, you should consider the opportunities that exist in influencer marketing. When you find an influencer who captures the attention of an audience you want to reach, it builds brand equity for your business and can drastically increase sales. Just be sure before your partnership goes live that you are prepared for a possible influx of orders, depending on the reach of the influencer you’re working with. Make the right decision and you could see results like below.
A lot of subscription box companies know that user-generated content is a great source of new customers. When your product and packaging are visually appealing, it encourages social sharing and makes an influencer’s job easier. Then, you can reap the benefits.
The more attractive, funny, stylish, cute, or interesting your box is, the more people are likely to brag about what they’ve received. And it’s just what the doctor ordered.
Subscription boxes are booming, and if you’ve been trying to find the perfect time to start your business — this is it.
About the Author
Veronika is a Marketing Manager at X-Cart. The company provides X-Cart, an open-source eCommerce platform, along with the full range of services for online business. In her spare time, she enjoys hiking and reading.