The statistics around starting a coffee club subscription are remarkable. That’s because, right now, three important things are happening.
The first is that, now, two of the most important things to coffee consumers are taste and country of origin. Over the last 20 years, the coffee-drinking public’s attitude and expectation toward coffee has shifted dramatically. It’s no longer an unexciting commodity that people slug down in the morning out of habit. It’s an artisanal experience that can be appreciated on multiple levels.
The second is how regularly the U.S. consumes coffee. Americans drink about 400 million cups of coffee per day. There are, at present, 328 million people in the country. Anything consumed with that much frequency is begging to have its purchasing and acquisition automated.
And the third is the nature of buying stuff today. It’s all online. 80% of people in the U.S. made online purchases in the last month. If you’re not up and running with a reliable ecommerce solution, you’re behind the curve. But if you fully embrace ecommerce, you’re stepping up and delivering on customer expectations.
Starting a coffee bag subscription checks all these boxes. It provides coffee enthusiasts with a rotating variety of high-quality coffee. It does so regularly, and it does so with minimal effort online. It’s perfect for the 21st century American.
So here are the fundamentals of starting a coffee subscription business. We’re going to cover the basics, which apply to everyone, then we’ll get into some considerations for existing business types. First roasters and distributors, then retailers, and finally individuals.
Coffee Bag Subscription Basics
Virtually anyone can start a coffee subscription business, whether you’re a roaster or distributor, retailer, or individual entrepreneur. Existing coffee businesses have an advantage, of course, because of their existing infrastructure and operations. But we want to lay all the cards down on the table first. Here are the very basic considerations you have to make, regardless of your current business, to get a coffee bag subscription or monthly coffee subscription box up and running.
First, we’ll look at the structure of your coffee subscription. Then we’ll cover packaging and technological infrastructure. Everyone will need these, so it’s a good place to start.
Coffee Bag Subscription Structure
The way your monthly coffee subscription boxes are structured is the most important aspect of your coffee subscription program. Here are the important pieces.
Type of Coffee
The type of coffee subscriptions you offer presents different coffee philosophies to customers. Some of which will resonate with them. It’s where you offer your customers a chance to be a part of that philosophy and get excited about your products and company.
For example, you can offer a single-origin subscription. Every bag comes from a single growing region and emphasizes the community and geography behind the coffee. This speaks to coffee drinkers that value the terroir of growing regions and the human stories behind coffee.
You can also offer a coffee subscription for blends. Each blend will have a list of tasting notes and will be expertly constructed to strike just the right flavor profile. This excites those coffee drinkers who value the taste of coffee, first and foremost. Those who sip it and mull over the sensory experience like a sommelier over a glass of wine.
We use single-origin and taste as examples because, according to national coffee data, those are the two most important factors for today’s coffee drinkers. But types of coffee and subscription themes don’t stop there. Subscriptions can focus on roast level, beans from farming co-ops, local roasters, and more.
Coffee drinkers enjoy coffee for a multitude of reasons, and certain types of coffee will excite some drinkers and not others. Give yourself the best chance to succeed by strategically choosing the types of coffee your subscriptions are based on.
Ground or Whole Bean
Once you decide on the type(s) of coffee you’ll offer, next up is an easy one. Will you grind them, sell the beans whole, or both?
All coffee is roasted while the beans are whole. And roasters tend to ship out their beans to retailers and coffee shops whole. It best preserves the freshness of both the bean and the roast. Properly sealed, fresh whole bean roasts can last up to a month in the bag.
Ground coffee, on the other hand, is more convenient for the average coffee drinker who may not have a burr grinder on hand. But, properly sealed, ground coffee stays at optimal quality for only about 1–2 weeks.
Whole bean is better for the most enthusiastic coffee enthusiasts who grind their beans at home or if your shipping takes more than a few days. Ground is better if you’ve got an airtight, quick shipping solution. Or your customer base isn’t as worried about drinking coffee that’s not at 100%-freshness.
Offering the choice of both for each subscription type, though, is the ideal customer experience.
You’ll have to choose how often your shipments go out. Most subscription operations start with monthly coffee subscription plans. Then they fold in one-week or biweekly options as their business increases, their operations tighten up, and their shipping becomes more reliable.
One tip we heard that’s helpful for growing mail order coffee subscription businesses is to group renewals and shipments together for each frequency. If one person signs up on the 15th and another on the 20th, they’ll both get their coffee on the 1st of the next month. That simplifies things and helps you focus your energy on more growth-oriented businesses tasks.
There’s a spirited discussion in the coffee shipping world: 12-ounce bags or 16-ounce bags? Green coffee is sold on the open market by the pound or kilogram, so don’t 16-ounce bags make more sense? Not necessarily.
First, let’s think about ounces in terms of cups of coffee. There are roughly 41 cups of coffee in an 8-ounce bag, 62 in a 12-ounce bag, and 82 in a 16-ounce bag. Now think about your customer and the best-by date of what you’re sending them. Does it make sense to target casual coffee drinkers with 16-ounce bags of ground coffee? Probably not. On the flip side, if your typical customer is drinking five or more cups of coffee per day and grinds at home, a 16-ounce bag of whole beans may be just what they’re after.
Another aspect to consider is price point. The price of a pound of quality coffee can be shocking. The modern price of coffee fluctuates around $1 to $1.20 per pound. Fair Trade coffees must be purchased at a minimum of $1.40 per pound, and organic Fair Trade at a minimum of $1.90 per pound.
Many of the best coffee roasters go way above and beyond those minimums in an effort to support growing communities—sometimes dropping as much as $6 per pound. Now consider that there’s an 18% shrinkage during roasting. That means it takes $1.22 of green coffee beans to get $1 of roasted coffee.
Coupled with establishing and maintaining a supply chain, the overhead of roasting in general, marketing, and shipping costs, prices can get pretty high pretty quick. For most coffee drinkers, there isn’t a huge difference between a 12-ounce and a 16-ounce bag. And a 12-ounce bag eases the sticker shock a bit.
Packaging gets our vote as the second most important aspect of your coffee subscription plan, behind the types of coffee you offer. Your coffee subscription packaging is the most impactful touchpoint your customer will have with your business. It has the ability to delight them, but you’ve gotta choose the right boxes, measurements, design, and printing methods. Let’s look into each.
Make It Unboxing-Worthy
Think for a moment about the phenomenon of unboxing videos. If you’re not familiar, someone opens up a box in front of a camera while narrating their actions and sharing information about the product about to be unveiled. It’s an entire industry on YouTube that leverages the excitement of opening gifts and the uniqueness of the product being unboxed. 90,000 people type “unboxing” into the YouTube search bar every month. It’s a thing.
But aiming for your coffee subscription box ends up in viral unboxing videos, while not unrealistic, isn’t the point. Unboxing videos prove that packages have a built-in ability to surprise and delight adult customers.
This Is Your Box
There are many like it, but this one is yours. Here are four quick rules to make a cost-effective shipping box.
- Box types: We suggest mailer boxes. They’re sturdy, rigid, and the go-to box type for almost all ecommerce mail order subscription shipments.
- Measurements: You need to strike a balance between fit and shipping cost. The best way to go about it is to use Packlane’s shipping box calculator.
- Design: Use your established brand colors and logo and keep in mind that mostly dark colors on a shipping box will make it feel stately and serious, while lighter colors provide a simpler, more playful look. It may not make a lot of sense to strike a playful tone if your subscription theme is social responsibility and the fight against poverty.
- Printing: Look into flexographic printing, which uses an automated printing plate stamp and is usually the most high-quality and cost-effective for orders of 1,000 boxes or more.
The clarity and ease-of-use of both your customer-facing and business-to-business tech assets are paramount. One of the reasons subscription-based businesses are proliferating is that the barrier to entry isn’t that high. The first is a crisp, clear, and easy-to-follow user flow for the coffee subscription part of your website. The second is a reliable ecommerce platform. Those are pretty much the two moving parts from a technological standpoint.
If you’re a supplier or a retailer, you already have a website. What you don’t have is a series of steps that introduce customers to your subscription service and get them to sign up. Taken together, those steps are called the user flow. Let’s do a quick case study of what makes a great user flow from a coffee subscription program that’s already knocking it out of the park, Blue Bottle Coffee.
Step 1: Clear, Product-Focused Landing Page
Blue Bottle Coffee’s landing page does a great job in multiple ways. First, it’s product-focused. There is nothing left to the imagination. There’s the bag of coffee, right there. That’s what you’ll get.
It also presents the user with a totally uncluttered, clean layout. The bright, neutral colors and minimalist design give a sense of breathing room, of non-commitment. Yet it still compels visitors with clear copy that concisely explains why the product is great.
Lastly, it provides obvious buttons to click on for next steps. And once you inevitably decide to sign-up (because who wouldn’t want to do business with such an elegant company?), you’ll have to make some choices. And they make it easy.
Step 2: Subscription Type Front-and-Center
Once you click “sign up” you’re immediately presented with their subscription types. As we mentioned earlier, your subscription types are the single most important part of your coffee subscription business. Blue Bottle gets that and acts on it. It should always be the first decision your potential customer makes.
Step 3: Size Options Explained
The next step is choosing the bag size. They have two sizes: 6-ounce and 12-ounce. But most importantly, they explain the sizes. They tell you roughly how long each bag will last for a certain amount of coffee drinkers. It’s probably the most helpful information on the entire website, and it’s only about 40 or 50 words. That’s a huge win in terms of the customer experience.
There’s not a lot of options, and that’s good. We’re not building a custom character in a video game, we’re trying to get some good coffee. And they likely opt for the smaller 12-ounce bag for many of the reasons we touched on in the previous section. Also notice the running summary of the order on the right side of the screen that makes it easy to see exactly what’s happening.
Step 4: Frequency Made Easy
Lastly, they ask for you to choose your frequency. One week, two weeks, three weeks, or four. No analysis paralysis here. The options presented are few and easy to grasp. Then it’s off to checkout. Again, notice the running summary and how it’s not only detailing your choices, but giving you a little more information about each one.
And that’s it. Any time during the process of rolling out your monthly coffee box subscription program you feel like it’s complicated or overwhelming, here’s a trick: look back at these four images of Blue Bottle’s website.
If you can get a user to tell you three things, three measly things, they’ll become your customer. In just a few images, they’re able to communicate that a coffee subscription business isn’t rocket science and signing up for one is easy—dare we say, even pleasant.
The final piece of the tech puzzle is implementing a coffee ecommerce platform to streamline and simplify transacting. That means transactions both from a customer purchasing from you and you purchasing from, if you’re an individual or retailer, a supplier. That means you need a platform that can handle both business-to-consumer (B2C) and business-to-business (B2B) tasks. BlueCart is one such ecommerce platform.
Here are the three main things to look for in an ecommerce platform, specifically regarding a monthly coffee subscription service:
- Digital catalog management. An ecommerce solution should offer a digital e-catalog that consists of every product you sell. It should be searchable, update in real time based on what arrives and what sells out, and contain everything a buyer needs to know. That means country of origin, tasting notes for blends, caffeine levels, price, and any other relevant information.
- Order processing and payments. This is the heart and soul of an ecommerce platform and the reason they’re so epically valuable. The platform should offer both online and mobile ordering and integrate with your existing payment gateway. You should confirm that your current payment processing is either supported in the core platform or available as an add-on or extension.
- Invoicing. The platform should have a customizable invoice template so you can place comments or create partial order invoices.
- Returns. The right ecommerce system will quickly correct errors, process returns, and issue refunds or credits.
- Route management. If your ecommerce platform doubles as your connection to your supply chain, that’s a huge operational win. It should optimize delivery routes, management fleets, and provide real-time updates.
- Customer relationship management. A big part of beginning to transact with customers is helping them troubleshoot issues. If the ecommerce platform has built-in customer support functionality, you’ll be thankful.
- Analytics and reporting. All of this shipping and transacting leaves loads of data behind. Collecting and visualizing that data is key to fainting actionable insights, minimizing risk, maintaining margins, and growing your business.
Everything listed above is, in general, what an organization needs in place to start a coffee of the month program. But depending on your business’s place in the supply chain, strategy, and current operational makeup, you’ll have unique strengths and weaknesses for rolling out monthly coffee subscription boxes.
Let’s look at some of the built-in benefits to existing coffee-related businesses and what their biggest area of opportunities are.
Roasters, Distributors, and Suppliers
A roaster, distributor, or supplier has the lowest barrier-to-entry for the coffee subscription business. Here’s a few reasons why and some things to keep in mind.
- Coffee acquisition. By being earlier in the supply chain, distributors and suppliers, whether they’re roasting or not, have a distinct advantage. They’re able to provide a larger selection of coffees because of their direct relationships with growers and co-ops. If a customer isn’t aware of this, they should be made aware subtly in copy on your website. It’s a good selling point.
- Pricing. Another benefit of being higher in the supply chain is that stuff’s just cheaper. Less people need to make a profit before it gets to the customer. As a distributor, this is a huge strength. Make it clear to customers on the subscription landing page or in some marketing materials that the savings are being passed along to the customer; they’re getting a sweet deal transacting with you. Casper, the mattress business, does just that to great effect.
- Shipping. Distributors and suppliers already have all the delivery infrastructure in place, because that’s their current business model. All the fleets, routes, and operational checks are ready to go.
Areas of Opportunity
- Packaging. If your usual customers are retailers and coffee shops, your boxes aren’t designed for the front lines: the individual consumer. Discerning and susceptible to surprisingly high levels of surprise and delight, today’s consumer demands the creation of memories. Make your packages delightful, memorable, and a true representation of your business values.
- Customer support. Your business has customer relationship management, but it’s at the business level, not the individual level. Your ecommerce platform can provide a level of customer support for your B2C endeavors, or you can transition some of your existing account managers to customer support responsibilities. It’s worth noting that BlueCart comes with built-in messaging features that put customers directly in touch with dedicated support reps.
Retailers and Coffee Shops
Retailers and coffee shops have the benefit of being old pros when it comes to serving the public. That translates to quick wins with package design and customer support. On the opportunity end, making sure the supply chain is tight is the lowest-hanging fruit.
- Brand awareness. As a business at the front lines of customer interaction, you’ve spent a ton of time and effort building visibility and loyalty, along with the attendant social media following, email lists, etc. You’ll be able to turn on your marketing spigot at the drop of a hat and rustle up a lot of sales for your new subscription program easily.
- Packaging. Your coffee retail shop or cafe probably doesn’t have mailer boxes designed and printed. But you’ve got more B2C visual assets ready to go than a business on the supply side. You’ll also be paying proportionately less for shipping, as shipping as a percentage of your cost of goods sold will decrease the higher up the purchasing funnel you go and the price increases.
- Customer support. Again, while there may be no established customer support operation, these businesses have the benefit of sustained exposure to customers. Pivoting to some customer support functionality won’t be as difficult. But, again, an ecommerce platform should be able to help.
Areas of Opportunity
- Supply chain. Sitting at the end of the supply chain means depending on a lot of other people. Running out of a coffee as a retailer is as easy as not offering it anymore. But running out of coffee after someone’s ordered it online as part of a monthly coffee subscription box is another story. That’s why shops and retailers need to put a lot of effort into tightening up their supply chain. Appoint a single leader with the responsibility for end-to-end supply chain performance, set performance goals, and keep a watchful eye.
- Pricing. As a function of where a retailer sits in the supply chain, the sale price will be higher.
- Coffee acquisition. Not having direct relationships with growers will impact your ability to source new and interesting coffees.
- Delivery infrastructure. Most brick-and-mortar businesses don’t have much experience with quickly packing, shipping, and tracking packages. Having no need for their own routes or fleets largely insulates them from this, so it will likely be the most substantial change.
Individuals are the most unique case here, because they’ll likely be acquiring coffee remotely and using a drop-shipper.
- Low overhead. Starting a coffee subscription business as an individual is pretty much as easy as starting a website.
- Agile. As a team of one, you’ll be able to pivot to new and compelling strategies as you discover them. Like, for example, if you want to switch dropshippers and change your subscription type from single-origin to only espresso beans.
- No need to get bogged down in shipping. You’ll be using private label dropshippers which take care of supplying you your beans and shipping your orders. Not too shabby.
Areas of Opportunity
- Brand awareness. You’re starting this from scratch. You’ll need to put a lot more effort into general marketing than many existing businesses.
- Low sales and revenue. At least at the beginning. You’ll be starting small, and expectations about sales and profit should be adjusted accordingly.
- Customer support. An individual is most likely to lean on the customer support of an ecommerce platform. Nevertheless customer support is always a challenge with an operation of one.
- Coffee acquisition. By using private label dropshippers, individuals avail themselves of a lot of benefits. One important thing they don’t get, though, is the variety of an operation that sources their own coffees. They’re tethered to their dropshipper and the choices that the dropshipper makes regarding sourcing.
Monthly Coffee Subscription Boxes: No Better Time Than Now
Learning how to start a coffee subscription business isn’t hard. Especially if you’re in the coffee industry already. And the benefits of starting a coffee bean subscription are huge. If you’re a coffee roaster, supplier, or distributor there’s no reason not to roll out coffee subscription boxes.
The demand is huge, the revenue is recurring, and you’re 85% of the way there. The same sentiment goes for coffee retailers and shops, though we’d place them about 70% of the way there. And individuals, well, if they’re reading this that means they’re doing some research. So they’re about 10% of the way there.
One thing that will get you even closer is landing on the right ecommerce platform. Book a demo with BlueCart to see the ecommerce solution that roasters, suppliers, retailers, shops, and restaurants depend on for seamless ordering, payments, and reporting. Many of whom are operating successful monthly coffee subscription boxes right now.