subscription box

What It Takes to Start a Subscription Box Company

Latest posts by Phil Bagdasarian (see all)

Subscription boxes are experiencing tremendous growth and popularity, and are also becoming increasingly competitive. According to a Forbes article, in April 2017, subscription company websites had about 37 million visitors. With approximately 5.7 million subscription box shoppers and over 2,000 subscription box service providers, the market is gearing up with new providers of all types and sizes.

But not everyone succeeds in this marketplace. There are some key considerations and important factors to consider when starting a venture in this particular market.

Do your research

It’s imperative to do your homework prior to launching a new subscription box business. Choose your business model wisely. Typically, there are two popular types of subscription boxes: convenience boxes and discovery boxes. There are also a wide variety of product segments to choose from, such as beauty and fashion, health and wellness, pet products, lifestyle products and many more. The list is endless.

Once you have narrowed down the type of products you would like to sell, you’ll need to conduct research to pinpoint which market segments are popular and who your potential customers are. It’s also crucial to gather product-related information such as competitive pricing details, service structure and overall product quality. Identifying an undervalued niche will allow you to bring something new to the market.



Convenience boxes

Convenience boxes offer the same product with each delivery, but may sometimes vary in style, color and design. The goal is to deliver convenience to clients by providing them with essentials on a regular basis.

Discovery boxes

Discovery boxes allow customers to try new products. These often hold an element of surprise as clients will never be sure of what they will find in their box.

More research

Product suppliers

Once you’ve chosen the types of products you will include in your monthly subscription box and have determined your target price points and market segments, you need to think about acquiring the right suppliers and providing product fulfillment: the who, what, where and how.

There are plenty of suppliers that cater to the needs of various types of subscription box companies. Simple Google searches will supply you with a variety of suppliers, such as Etsy or eBay. Crowdfunding sites such as Kickstarter and Indiegogo are also filled with unique product prototypes. If you have a discovery box business model, you may be able to secure suppliers who will furnish you samples at no cost in the hope that consumers will fall in love with the samples and purchase a full-size product from them directly in the future. This will help keep costs down.

Setting up shop

A functional e-commerce website is required to set up shop and sell your subscription boxes. A dependable e-commerce platform that supports subscription payment options, including a shopping cart, billing management system and payment gateway is a crucial aspect of running a successful online enterprise.

Solid research is key so that wise choices can be made and future system revisions can be avoided at a later date. Fortunately, there are now a myriad of solid options to choose from including all-in-one management platforms such as Subbly, Magento and Cratejoy.

Packaging and presentation

The box that delivers your products is crucial for several reasons. As costs are a real concern, it’s important to find a supplier that is affordable and has reasonable minimum order options. Reducing the weight of packaging boxes will also save money on shipping costs.

Presentation in subscription box service is critical to building your brand and making the unboxing experience a memorable one for your customers.

A survey conducted by Dotcom Distributing showed that 52 percent of customers who receive an interesting and pleasant package are more likely to make a repeat purchase.

Think of your box and packaging as your storefront. This is the customer’s first look at what you have to offer. There are plenty of inexpensive touches available such as colorful fillers and interesting box shapes and designs. Adding a special offer or a small bonus surprise will be sure to delight and keep your customers coming back for more.

Be sure to take part in the design process to ensure your box design is reflective of your brand.


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Shipping

When starting out and orders are minimal, you may want to consider shipping the products yourself. Assembling and shipping boxes from home will greatly reduce costs. But once your business grows, a fulfillment company may be a good option to consider, as this will allow you to concentrate on other aspects of growing your business. Research various reliable companies and get multiple quotes before you choose one.

Business and financial plan

Even if you plan to start small, it is important to create a business and financial plan. This will help you create a roadmap for success. Set your sales goals by identifying expenses and performing a break-even analysis. Determining your short and long-term financial and operational goals will help ensure your startup’s success.

Marketing and advertising 

Getting the word out about your subscription box service is the key to success. In today’s digital age, there are a variety of affordable strategies at your fingertips. Some options include guest blogging for publications that appeal to your target audience, creating newsletters to announce the latest offerings to your subscribers and positioning your website prominently in search engines through Search Engine Optimization strategies. Using paid advertising such as Google Adwords and Facebook, and spreading the word through social media via your company’s Facebook page and influencer marketing are also extremely effective tactics.

Conclusion

Connecting with customers is one of the keys to obtaining success as a subscription box company. Providing value, quality and fulfilling market needs will make you stand out among others. If you make the unwrapping of a package an overall gratifying experience, you will secure a loyal following that will be sure to spread the word and help grow your business.



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