How to Start a Subscription Box Business

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Subscription boxes have become a necessity in growing your business in today’s world. Customers appreciate the convenience and reliability of a subscription box whether it be monthly or every few weeks. Subscription boxes not only draw in customers but also provide many advantages for your business growth as well. Here are some things to consider when launching a successful subscription box.

Selecting a Niche

Although this may seem like a simple step, selecting a niche market may be more difficult than you think. Loose ideas need to become concrete in order for your subscription box to stand out in a marketplace. Your niche needs to be focused on a specific demographic in order for it to be the most advantageous for your company. Niche marketing is advantageous because it requires less reviewing data to understand and keep up with their needs. Due to the fact you are focused on a specific customer with a specific need, you only need to cater to that area.

Once you have selected a niche, the next step is determining what subscription business model you want to use for that niche market. The three main types of subscription business models are curation, replenishment, and access. In the case of a subscription box, a curation business model with being the most beneficial for your business.

Curation subscription business models provide customers with subscription boxes that are personalized to them. This means either sending the same products automatically every month or sending samples and new products every month to give customers the opportunity to try new products. These two types of subscription commerce are a reference to convenience commerce and discovery commerce. Both of these subscription types are most commonly used to sell food, apparel, and beauty products.

A benefit of subscription box business models is they are highly profitable. Some customers keep up with subscription boxes for convincing while others look forward to a monthly surprise of new products to try. These factors keep customers drawn to the idea of receiving a consistent subscription box. This model can scale quickly, generating high profits for your business.

Sourcing products

It is essential to select high-quality products for your niche that will contribute to your business’s success. Before you start putting together a subscription box, it is important to consider your purchasing models behind the subscription box. These two models are sourcing free products or sourcing products you pay for.

Sourcing free products

• Improves margins for subscription boxes
• Can impact product offering
  • Free product sourcing works best will trial size or sample size products
• Can potentially force your cost down due to the quality or quality of sample products included.
• Requires the vendor to eat the cost of ingredients and or packaging

Sourcing products you pay for

• Potential higher price for customers.
• Lower margins for your business
• Faster and easier negotiations with vendors.
• Works with any size products.

Once you have decided which model works best for your subscription box, you can start figuring out where you would like to get your products from. Here are some options for sourcing products:

Local Stores

Stores around your area are a great place to start when looking for specific products for inside your subscription box. Looking in specific stores that attract your target demographic can help you conceptualize what exact products you want inside your box. Even if you don’t buy these products directly from local stores, it is a great place to start to look for inspiration. In the case your local store produces its own products, you may be able to work with them and add specialty items to your subscription boxes.

Etsy

Etsy has a variety of goods that is bound to fall into some category of your niche. Etsy’s website is very accessible and allows for specific searches to fulfill the needs of your niche. You are able to specify products as well as where they are located if you were trying to keep your subscription boxes local. Local business would help save on overall shipping costs.

Global Markets

Global marketplaces can be very beneficial when you are ordering in bulk for your subscription boxes. These markets are more so helpful for indistinguishable products rather than branded. This still is essential for a successful subscription box because the packaging is just as important as the product.

Finding Customers

In modern times one of the most effective ways to sell your subscription box is through promotion on social media. This can be through your own companies profiles, brand deals with influencers, or even encouraging customers to share your subscription box through a hashtag. Social media can be great for spreading your name and reaching customers globally.

Giveaways and discount deals can also be beneficial when starting a subscription box. Having giveaway contests where someone can follow your social media profiles for a chance to win one of the boxes will not only create more interest in your company but will also promote it. Offering discounts for customers who sign up for a continuous subscription box can also be advantageous for selling more boxes.

Fulfilling Orders

Understanding the supply chain is the key to profitable subscription boxes. You first need to make sure your boxes and packaging are reasonable so you are still making a profit when you account for shipping costs. Since most items in a subscription box will be purchased in bulk, you will hopefully save some money purchasing that product in bulk, giving you an even greater profit margin.

Working with a trustworthy fulfillment company is also necessary for a profitable subscription box. As your product and packaging will most likely arrive at the fulfillment center separately, it is their job to pack and send those orders out the way you intended to. Fulfillment centers would also be able to prepare these boxes ahead of time through a process called kitting, which would help the subscription boxes be sent out more effectively. Fulfillment centers are very reliable, cost-effective partners that will contribute to the efficiency of your business.

To launch a profitable subscription box it is essential to conceptualize a solid plan. Limiting your box to a specific niche and a targeted market is important for long-term growth. Once you find products that work for your box, social media is an excellent way to promote and spread your business globally.

Sources

Lang, By: Vanessa Rodriguez. “How To Start Subscription Box in 10 Actionable Steps.” Uhuru Network, 27 July 2017

“What Is Subscription Commerce? 7 Things You Need To Know.” Subbly Blog, 1 Aug. 2019

Guest Post: Chris Motasky’s background combines 20+ years of success in logistics and supply chain management. He’s managed client services, IT and 3rd party system integration within fast-paced logistics and fulfillment operations. Throughout his career, he’s overseen system integration for global clients across a diversity of industries spanning small online businesses to industry giants. He collaborates with clients on systems integration throughout multiple platforms using APIs.

The post How to Start a Subscription Box Business appeared first on The Founding Moms.