How to Start a Subscription Box Business

Subscriptions boxes are one of the best ways to shop, period. They offer consumers unique experiences curated around products, introduce new brands, and make checking the mail just plain fun.

On the business side, they offer a stable financial model rooted in recurring monthly revenue that can be built around almost every niche – from puzzlers to beauty to pets. If there’s an existing community around a product or category online, chances are you can build a subscription box around it.

So, how do you start a subscription box business?

Step 1: Start with a Great Idea

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The bottom line: The more niche the better

The start to any strong business is a good idea. And when it comes to subscription box businesses, what usually separates good ideas from great ones is specificity.

A niche is best understood as a small, specific market for products and services. An easy way to think about this in relation to a subscription business is to examine what would be inside your box. Think about the types of products your subscription would include – what makes these unique to others, and how do those traits define the values your box embodies?

Answering these questions is important because the more niche you are, the easier it is to curate and tailor products for a specific audience, enabling you to maximize retention and create a great customer experience. Marketing also becomes easier when you can zero in on a specific audience and know who you’re selling to.

Example: Starting a food-focused subscription box

Let’s assume you’ve chosen the general category of your subscription: food. Here’s one example of how digging deeper into your niche helps you understand what market you serve specifically:

Find your niche.

In the above example, you can imagine how the ideas, though related to the same root concept (food), are distinctly unique and would have specific sets of customers they would target. Try to build a similar breakdown for your idea.

Seller advice from Retro Pop Box: Marry personal interest with a gap in the market

We approached the idea for Retro Pop Box from two directions: a business opportunity and a personally fulfilling opportunity. We are big fans of nostalgia – we follow blogs, facebook pages, and Instagram accounts featuring [things] we used to have and do growing up.

When looking at subscription boxes, we did not find any that were answering the general nostalgia market. We felt that if we married our personal interest with a gap in the market, we could create a box whose theme is an entire decade versus a single aspect of a certain period, which would become a time capsule of one’s youth.

 

Step 2: Research your potential customer

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The bottom line: Who are they? What are their shopping habits?

Chances are, after working through step one, you’re starting to have a picture as to what type of person would purchase your box. This brings us to the next step: researching potential customers.

In this step, the goal is to paint a realistic assumption of your customer, namely through data, competitive analysis, and polling.

  • Try to find resources on the market analysis of your niche.
  • Look at the competitors in the niche you wish to serve. Who are their customers?
  • Poll friends and family, and consider using online services to host polls.

It’s also suggested that once you research your customer, you develop a specific customer profile. List out their buying habits, median income, interests, sensitivities, and motivations to purchase. Be as detailed as you can when it comes to fully defining your customer.

Step 3: Put together a Prototype box

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The bottom line: Is this something you’d want to receive on a recurring basis?

A prototype is simply the early model of your product. It’s the physical beta-test of your subscription box, and it’s in this step that you’ll start to lay the foundation for customer experience.

Prototyping involves a number of considerations for new subscription box business owners:

  • Size of the box: How big is it? (Psst. Think about shipping!)
  • Number of items: How many items will you put inside each month?
  • Safety of Products: Will you need packing material of some kind?
  • Written content/packing information: What self-printed material will you be including in the experience?
  • Design and Aesthetic: What type of presentation does your niche respond to?
  • Visceral Experience: How are you integrating an experience into your product?
  • Pricing: Make sure you can offer the box at a price customers can afford, but will also keep you in business.

Keep in mind that this is when you’re beginning your design process, and design is iterative. Revise, revisit, and reflect on the above considerations as much as needed.

Seller advice from Sunday Mood: Develop vendor relationships early on.

What helped me a lot was reaching out to vendors in the two months I was in my pre-launch phase. Almost all of them got back to me and we negotiated pricing. I definitely suggest starting to at least make a list of vendors you might be interested in carrying, and contacting them as early as possible- this will give you much less work to do on a monthly basis once you get the ball rolling, or box rolling for that matter.

Step 4: Begin the pre-launch phase

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The bottom line: Build buzz and collect emails

You know your idea, you know your customer, and you know your product: now it’s time to start marketing your subscription box.

Building an early buzz around your business is the easiest way to both validate your idea and attract early customers and brand evangelists. Best of all, this doesn’t have to be an expensive task. Launch your social media channels, begin interacting with users, and make sure your have a compelling destination to send your traffic, like a launch page.

Launch pages are just simple, single pages that request the visitor to enter their email to be notified about the upcoming launch, and there are a number of services you can choose from (Launchrock, Instapage, Unbounce, etc). You can incentivize users to give their email by offering a free box for one lucky winner. Once you’ve got your angle, remind presubscribers of the prize and encourage sharing through regular emails. This helps keep the leads “warm,” or interested in your product.

For a full guide on nailing a great launch, check out our suggested Steps for a Powerful Prelaunch at SubscriptionSchool.

It’s suggested you build your launch list up about 6-8 times greater than the number of customers you plan to launch with. For example, if you want to kick off with 200 subscribers, you shouldn’t launch until you have 1200-1400 presubscribers. (Generally, these list convert around 10-20%, but this does vary.)

Seller advice from SoBakeable: It’s never too early to build buzz!

Before we officially launched, we created a landing page to collect email addresses and generate buzz about SoBakeable. This helped us to build our audience before we even had our product ready for sale.

It meant that as soon as we were ready to start selling, we already had people interested in what we were doing. Giving people the ability to opt in on our mailing list for updates and join the conversation on our social media pages was the very beginning of our relationship with them.

Step 5: Begin your presale campaign

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The bottom line: Collect your first paying subscribers

Once your launch list is ready to go, you can start pushing people to presubscribe. It’s in this step that your store becomes live and you begin accepting payments.

Begin by scheduling compelling emails that target your leads list (your presubscribers!). Because you’ve been updating them once or twice a week, they’re eager to sign up, and have likely been counting down the days till launch.

On social media, consider doing a countdown partnered with giveaways and prizes for sharing notices that your launch is coming. This can provide some last minute traction in advance of your launch date.

It’s important to keep one thing clear during this first step: the first ship date. If you’re not shipping until 45 days after you first bill customers, then make sure customers know it. This reduces confusion, lowers customer service requests, and helps keep expectation in line (better for customer experience!).

Step 6: Ship Your Boxes

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The bottom line: Use the revenue from presales to fund your business

Over the course of your presale period, you’ve also been procuring products, finalizing your box design, and organizing all your inserts. As the weeks come to a close, now’s the time to bring it all together. Because you’ve been collecting revenue from presubscribers, you also have the funding to purchase everything you need. Perhaps you’ve even set up an out-sourced fulfillment partner.

In this step, you should notify customers of the ship date, make sure tracking emails are ready, and try your hand at last minute promotions and sneak peeks to encourage more subscribers.

Advice from Retro Pop Box: Plan to scale!

The number one tip we have is to plan your fulfillment process and make sure that you have a smooth and orderly assembly process planned, staged, and ready.

When we first started out and had smaller numbers we could get away with boxes being staged here and there. But as we added more people to the fulfillment process, our inefficiencies became glaring.  We had to break down the process and build it back up, which is very hard to do when you have to gear up immediately after getting the previous month out the door.  Had we clearly defined the process from the start, we could have scaled it without any hiccups.

Step 7: Success

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The bottom line: Monthly recurring revenue means less worrying and more stability

Once your first boxes hit, take a moment to sit back and reflect on your accomplishment – you just shipped your first subscription box! Now’s a good time to analyze the operations for the first month and examine how your assumptions about niche, customer, and product experience have panned out.

Step 8: Grow Your Subscriber Base

Cratejoy dashboard with stats to help you track churn.
Cratejoy dashboard with stats to help you track churn.

The bottom line: Encourage word of mouth referrals and sharing

Going forward, the goal is to continue to scale your business. One of the most cost effective ways of doing this is through word of mouth referrals: customers referring other customers.

Numerous studies have shown that referred customers are often higher value and more likely to evangelize on behalf of your brand. Consider implementing a customer referral program, like the one provided by Cratejoy, that rewards customers based on the number of referrals they produce, ie. Every 3 referrals = 1 free box.

You can learn more in our guide on How to Get to 1,000 Subscribers from Subscription School.

Seller advice from SoBakeable: Focus on social sharing and establishing trust

Consistent interactions on all social media platforms have allowed us a greater level of exposure to reach and communicate with people that are interested in our baking box. It has also played a huge part in helping us stay connected with our subscribers.

We also send boxes out to subscription box reviewers and influencers which has really helped a lot in gaining and establishing trust with potential subscribers. We’re always thinking ahead and finding more ways to get our brand out there.

What’s Next?

Moving forward, there are tons of possibilities with your subscription box business. You can continue to work on gaining subscribers for your box, or you can diversify your offering, and launch new boxes or offer one-time products. For tips on all of this, be sure to visit Subscription School – home to dozens of guides, videos, and expert advice on building the best subscription box possible.

Cratejoy is an all in one subscription commerce platform that includes everything you need to start your own subscription commerce business online. Try it free for 14 days.

PS. Want a simple way to remember these 8 steps? Save this infographic!

How to Start a Subscription Box Business Infographic

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