Introduction on how to start a subscription box business
A subscription box is a recurring delivery of products, packaged together, and sent right to your customer’s doorstep. Instead of a one-time purchase, customers agree to automated online payments for the duration of their subscription.
From a consumer perspective, subscription boxes are an efficient way to receive a recurring, delightful surprise. Everything from groceries, take-out food, and everyday products can now be delivered right to one’s door. The massive success of these ventures shows how valuable these services are in a busy world where time does equal money.
A guide on how to start a subscription box business
Starting a profitable subscription box business sounds a lot harder than it is. It also doesn’t necessarily require you to raise any external funding. Let’s break down the steps you can follow to start your very own in no time. In this article, we’ll show you how to start a subscription box business and the pros and cons of a subscription box business. Let’s get started!
How to start a subscription box business
You can learn how to start a subscription box business with these simple steps and you can find other useful information about starting a subscription box business too!
Step 1: Start this business with a great subscription box idea
Your idea is what attracts your customers. When coming up with your subscription box business idea, look to your passions and interests to gather inspiration. Make sure to distinguish yourself. What makes you different from everyone else?
It is important to research your ideal market and customer persona when beginning a subscription box service. Identifying your ideal customer is one of the major steps in building a successful subscription box business. Your subscription box is not going to appeal to the masses, but it’s going to be an interest from a particular group of people who can relate to your idea.
Step 2: Identifying your target audience
If you have competitors, this might mean that your target customers are their current customers who aren’t 100% satisfied with their service. To identify your target audience, you should be able to define a target demographic for your ideal audience, whether that’s based on age, geography, income, interests, or choice of the social platform.
A niche relates to specific products, services, and interests. Different niches could include beauty, clothing, hygiene, fitness, technology, food, etc. It’s important to define your market as clearly as possible. Break down your niche into more specific categories such as natural skincare, socks, men’s razors, yoga, cell-phone accessories, and international snacks. The more specialized you are, the more efficient you will be at tailoring your subscription box to your unique audience.
Take a look at competitors within your niche and make a note of the price, packaging, and the products they are including within their box. To create demand for your subscription box, you must differentiate yourself from the competition.
Research and gather as much information as possible to create buyer personas. They help you determine where and when to market to these customers, what products to include in their subscription box, what upsell offers are most tempting, and so on.
Subscription boxes offer a great opportunity for branding. There is a lot that you can do to grow and establish your brand’s presence during the shipping process. A popular name is only part of effective branding and thinks of a logo as a business name that spells out your box name.
Step 3: Price your box
Next up, it’s time to decide the pricing of a subscription box. There are two components of budgeting that you’ll want to pay particular attention to. Your cost of goods sold and customer acquisition cost will both factor into the final price you’ll need to set to make a profit off of your box. Consider the average cost of your products, packing materials, and shipping fees to get a good look at what the box will cost to create and ship out. Considering you need additional revenue to survive, add a margin to this amount to ensure you are generating profit.
Other things to consider when pricing your box:
- Product cost: the items in your box
- Box cost: your box and box accessories such as stickers or stamps
- Packing materials cost: bubble wrap, filler paper, or inserts
- Postage/shipping costs: mailing labels, packing tape, etc.
- Fulfillment costs: physically packing your box
- Transaction and platform fees: charges from your payment processor and eCommerce platform per order
- Fixed monthly costs: Gmail fees, accounting software fees, etc.
- Acquisition costs: advertising & marketing to acquire new customers
Step 4: Creating a prototype box
At this stage, your goal should be to create the most accurate representation of your vision with the budget and resources you have available. A prototype is essentially a marketing tool for your potential customers to get an idea of the kinds of products your boxes will contain.
When creating your prototype box you’ll need to do is:
- Decide on the products you’ll include
- Create a branded and customized box
- Take photos of your box
Putting together a prototype box will create marketable material, giving prospective customers a good look into what to expect from your business.
Once you’ve put together your prototype box, it’s time to snap a picture to share your hard work. If you’re brand new to subscription boxes, this will be the prospective client’s first impression of your business. Use your prototype box to begin marketing your subscription business and products on your website and social platforms.
Here are some places you can find products for your prototype:
- Local stores
- Etsy (especially good for unique handicrafts, accessories, and jewelry)
- com (for beauty products)
- Yummy Snack Co (for snacks and confectionery)
- ThinkGeek (for memorabilia and franchise-related merchandise)
- eBay (for anything and everything)
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Step 5: Begin your pre-launch
A prelaunch is the process of marketing your subscription box before you launch to measure the interest, collect email signups, and build buzz around your upcoming launch. The main goal of your pre-launch campaign is to build an audience for your subscription business.
There are several things you’ll need to tackle during your pre-launch.
- Decide the length of your prelaunch
- Set an email signup goal
- Create a prelaunch page and connect your email tool
- Start marketing your page after setting up social media accounts
Other logistics to work out while pre-launching:
Once your marketing efforts are automated and underway, it’s time to get back to some of the foundational business decisions you need to make to launch. Product sourcing, ordering boxes, and choosing your shipping schedule are all great tasks to tackle during your prelaunch.
Step 6: Set up your website, or Marketplace listing
Create a user-friendly website with engaging copy and content about your company. Be sure to include a link where customers can sign up for email newsletters too. Online marketplaces, such as Cratejoy and Etsy, are the fastest ways to start selling online. Cratejoy was designed specifically for subscription box owners.
You want to choose something that…
- can scale with you
- is trustworthy and reliable
- has been tried and tested
- you like the feel of
- will be able to support you when you have a problem
- And most importantly, something that your customers will like!
Once you’ve made your platform choice, it’s time to start working on your storefront or Marketplace listing.
Step 7: Market your subscription box business
Start marketing your subscription box business with blogging, social media marketing, SEO, and paid advertising campaigns while also collecting emails and promoting your company on relevant forums and online communities.
Here are a few ways you can get the word out about your service:
- Social media platforms
- Leverage box bloggers
- Share it with your family and friends
- Free promotions or contests
- Use community forums
Step 8: Start taking and fulfilling orders
Be sure to test your website extensively to ensure it can handle orders without any technical errors. If fulfilling the order yourself, be sure to do so efficiently and in an organized manner. If you’re outsourcing the fulfillment process, find a partner that’s affordable, cost-effective, and has a reputation for reliability. Easyship can help with the fulfillment process for your subscription box business too!
Using the insights you’ve received during the pre-launch phase, craft your first box based on your current list of interested subscribers and their feedback. Online wholesale suppliers such as Alibaba, eBay, or SaleHoo are a great place to start, depending on the nature of your subscription company.
Step 9: Ship the ordered boxes to customers
Shipping subscription boxes take some preparation. Sure, they’ll usually all weigh roughly the same, and packing items is a consistent, similar process. Getting your boxes out the door doesn’t have to be a time-consuming ordeal. Finding the best shipping software for your business will help cut down on manual labor and can expedite the fulfillment process.
Once you have a box and a customer base, you’ll need to think about the logistics of shipping. You can either ship your products from home, or you can outsource to a third party.
Shipping from home
We recommend at least starting with this model, since it will cut down on costs considerably, and you’ll likely have a very manageable amount of shipping to do during the first few months. Here’s what to consider when shipping from home:
- Are your boxes sealed and protected?
- Are you equipped to print shipping labels from home?
- Are you ready to communicate with customers about their orders?
Shipping through a third party
When your subscription box company starts to grow, you can send your boxes to a third-party logistics company that’s equipped to handle inventory on a large scale. At this point, you’ll have enough customers to be able to accommodate third party shipping in your budget. Some of the things that a third party logistics company will handle for you are:
- Holding your inventory
- Safely packaging your boxes and sending them out
- Keeping track of what’s been sent and delivered
- Keeping you updated on what’s been sent and delivered
Step 10: Growing your subscription box services
As a business model, subscription-based services are more reliant on customer retention than most eCommerce vendors. Success means having a sizeable number of returning customers each month, allowing you to cut high-value deals with suppliers. To achieve this, you need to foster brand loyalty. This means cultivating a brand image and experience with your subscription box that’s inviting.
How much does it cost to make a subscription box?
There is no fixed price to spend on making subscription boxes.
Being that each box typically goes for 500 rs to 3000 rs per month, however, you can build your budget around these prices as a general rule of thumb. Depending on your target audience and products being offered, you can offer your boxes to be low-priced or high-priced, as long as you’re able to make some profit without reducing the value of the subscription box.
Pros and cons of a subscription box business
Here is the list of pros and cons of a subscription box business:
Pros of a subscription box business
- More consistent feedback from users
- Higher likelihood to refer to others
- Lower retention, less need for lead gen
- Predictability of subscription boxes
- Increased customer lifetime value
- Establish a brand identity
Cons of a subscription box business
- High levels of competition across all niches
- Struggling to maintain excitement and novelty
- Stagnation when not tailored to customer needs
- Uncertainty of income (people can cancel!)
The bottom line on how to start a subscription box business
The subscription box market is booming and there are plenty of opportunities for new sellers to get on board. Launching a subscription box requires careful thought and planning but can be extremely profitable once you have the right details in place. And, it’s one of the few e-commerce product-based business models that you can start with less cash upfront.
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