It’s no secret that shoppers love subscription boxes. With the success of companies like Stitch Fix, Ipsy, Dollar Shave Club, and Birchbox, it’s easy to see the interest generated by curated boxes in specific niche industries. If you are interested in starting your own subscription box service, consider the following tips to get you started.
Understand the Popularity of Subscription Services
According to McKinsey and Company, subscription services have grown by more than 100-percent since 2013. Approximately 15-percent of all shoppers have signed up for at least one subscription service during that time. These types of services are most popular among individuals ages 25 to 44 with incomes from $50,000 to $100,000. Based on these stats, individuals in this age group prefer shopping online to save time and for convenience.
Pick a Concept
If you’ve been considering starting a subscription business, at this point you probably already have a good idea of what you want to concentrate on. Keep in mind, the more niche your idea is, the more successful it will be. For example, if you want to do a makeup box, focus on a specific group of people. For example, consider offering products to those with sensitive skin. Start with a large idea and break it down as small as possible. By doing so, you attract those with specific hobbies and interests to help maximize retention.
Know Your Competitors
A simple Google search can turn up some of the most popular subscription boxes in your niche. If you can’t find anything based on your idea, search online at the Cratejoy marketplace for keywords related to your service. Consider how your product is different from others and ask yourself why someone would choose your box over the competition. The answer might be larger products, cheaper prices, or a greater variety of products offered.
Once you’ve narrowed down your services and you know how many companies you will be up against, it’s time to choose the products for your box. Start by knowing who your customers are. If you are offering makeup for sensitive skin, find out what the most popular products are on the market. Understand what the customer wants and needs from their purchases.
Research these brands and search on YouTube for positive unboxing experiences that are related. Find out what people like. Make a list of these brands and look for businesses that offer low price guarantees. It also helps to get in contact with distributors to ask for bulk pricing.
Finally, put together a prototype of items you would like to receive if you’re signed up. Ask yourself if this is something you would want to receive on a recurring basis. While this doesn’t have to be the exact box you offer, it can be a sample to potential customers of what type of box they would receive each month. Be sure to take photographs of the box for later.
Choose Custom Packaging
Part of the whole experience of receiving a subscription box is the packaging. Many individuals and influencers share “unboxing” videos with family, friends, and subscribers, so it’s important to make your package as attractive as possible. Consider custom print boxes, matching tissue paper and colorful washi tape. Just try to keep in mind that the more packing materials you include, the more expensive the package will be to ship.
Price the Box
Pricing the box can be tricky. Price your product too high and you risk turning off customers. Price it too low and you might miss out on profits. Figure out how much you can offer the box while still maintaining a profit. A good general rule of thumb is to price the package within a 40-percent profit margin. Make a list of expenses. Be sure to implement an inventory management system with a “first in, first out” strategy. Things to consider when pricing include:
- Cost of goods
- Postage or shipping costs
- Cost of packing the box
- Transaction fees from credit card companies
- Costs of advertising to gain new customers
Be sure to set up a way to bill customers. Some of the top services include PayPal, Flagship, PaymentCloud, and iPayment.
Leverage Social Media for a Successful Launch
To be successful with your subscription service, you must get the word out about your product. Set up pages across all social media platforms. Reach out to groups within your niche. One of the best ways to create a buzz on social media is to engage with influencers. Locate top bloggers with a large following and get them to talk about your upcoming product. Do this by offering a free box in exchange for their honest review.
Take approximately 15 to 60 days to gather emails. Create a website and drive individuals to your page. Include an option to sign up for notifications on when your product will ship.
Once you have enough individuals interested, set a goal to obtain a specific number of subscribers. Expect between 10 to 20-percent of those you reach to subscribe to the service. If you’ve reached 200 interested individuals, expect around 20 subscribers. Set a goal and keep working and creating a buzz until you reach it. Personalizing all of your communication at each step of the customer journey is an important way to build the relationship.
Take Orders and Ship Your Boxes
Finally, set a date for recurring shipments and billing and start taking orders. Have individuals pre-pay for their first box to fund your endeavor. Grow your business through word of mouth. Ask satisfied customers to spread the word and offer a bonus to them. For example, for every three referrals who purchase a box, the individual gets a free box.
Subscription boxes are an excellent business to start for entrepreneurs. As long as you have an excellent idea and the drive to make it work, it’s possible to start making money quickly.
Laura Gayle is a full-time blogger who has ghostwritten more than 350 articles for major software companies, tech startups, and online retailers. Founder of Business Woman Guide, she created her site to be a trusted resource for women trying to start or grow businesses on their own terms. She has written about everything from crowdfunding and inventory management to product launches, cybersecurity trends, web analytics, and innovations in digital marketing.