One of the biggest questions we hear from people wanting to know how to start a subscription box is, "Where do I find products to include?"
That's a very good question!
No matter what types of subscription boxes you want to sell, they'll never work if you don't have products in them. But, finding the right products for your subscription box can take a lot of work.
Keep reading to learn how to begin product sourcing for subscription boxes and the places you can look for new products and suppliers.
How to Find Products For Subscription Boxes
The subscription box business model is built around the idea of selling bundles of products, also known as product kitting. Sourcing, or procuring, the right products at the right price is key to establishing a lasting and successful business.
There are two main ways you can source products for subscription boxes: for free or by buying them. Both come with their own pros and cons, so let's break them down.
Free Product Sourcing
Free product sourcing is exactly what it sounds like. You put no money into acquiring the products that you'll be selling. Your suppliers cover the cost of the products and any custom subscription box packaging needed, while you aggregate the products and fulfill orders.
The primary benefit of this model is that it can save you a lot in terms of up front investment. You don’t have to buy or store products, so your startup capital can be much lower. It also allows you to run a much smaller, more streamlined organization.
There are a few drawbacks to this model, however. First, you'll have to be able to sell vendors on the value offered by the model outside of money. Mainly, that it has value as a good DTC marketing tool since it exposes new customers to their product through samples. These customers will return later to buy full-sized products from the company. Second, you'll likely only get limited runs of products, since few companies want to continually give away products. This means you have to continually find new vendors. Finally, you'll still have to create and operate a subscription website that looks good enough to entice vendors.
Paid Product Sourcing
The most likely scenario for your business is that you'll have to purchase the products that you include in your box. You’ll sign a contract with a vendor who will sell you products at a given price. Hopefully, well below MSRP since you’ll have to cover all costs related to packing and shipping the products.
This model requires you to purchase the products you’ll be selling, but offers many benefits in return. First, negotiations and delivery of products happen much more quickly. A B2B business would likely have few qualms selling products for you to resell in a subscription box. Second, you don't have to worry about only having small sample-sized products. It's your money buying the products, so you get to be picky. Finally, you'll have clear insight into your inventory levels and reorder points. You won't have to worry about not having enough product on hand to fulfill orders and will know if and when you need to pre order products.
The main drawback is that you need a large amount of capital upfront to ensure you have products. You also have to invest in a warehouse and staff to support a larger logistics operation. This may not be feasible if you're just starting an eCommerce business. You'll also have to price your boxes higher since you have to cover these costs. This can be further increased if you need to use custom subscription boxes for shipping.
Where to Find Products For Subscription Boxes
In addition to choosing between the free and paid sourcing models, you'll have to figure out where to source these products from. You need to find businesses that offer quality products, are willing to work with you, and sell products that your target market would want to buy. They’ll also need to be able to do all this while fitting your budget, otherwise you’ll eat into your profit margins quickly.
Here are the three best places to look:
Local Product Sourcing
One of the best places to start looking for products and inspiration for new subscription box ideas is by visiting local stores and producers. These can be large chains or small mom-and-pop shops. The key is to find businesses that match the demographic and offerings of your business.
For example, if you're looking to start a food (fruit, vegetable, meat, etc.) or a snack subscription box, you could visit a chain like Wholefoods or a local grocery store. They may be doing something you hadn't thought of or be willing to let you offer some of their products.
There are a few advantages of using locally sourced products. First, local businesses that work together are more likely to build long-term relationships. You don't have to invest as much energy into supplier relationship management. Second, it's a great sales tool as the desire to support small businesses has never been higher. In fact, according to ComScore, 93% of shoppers prefer to buy small and local.
There are also two downsides to this model. First, it can be harder to grow your business as these vendors may not be able to scale with your growth. If they can’t provide enough product for increasing demand, that can hurt your bottom line. Second, you’ll have to put in a lot of labor to find and deal with new vendors. They likely aren’t set up for wholesale deals.
BlueCart Subscriptions was designed to grow food sales for businesses of all types and sizes. So, you can take these new ideas and turn them into revenue easily. It's also a great way for food wholesalers to get into the DTC food market.
Online Niche Product Sourcing
Small businesses, crafters, and designers who already sell products online are a great choice for subscription box suppliers. These are people who already serve the demographic you're targeting, so your customers would likely enjoy their products.
One major pro to this model is that you can find these vendors in many places. They may operate their own website or be on an online marketplace like Etsy. You can order their products yourself to test, then reach out directly to see if they'd be willing to work together. These businesses are also usually small to medium-sized, so they’re more likely to be willing to discuss arrangements that can benefit both businesses. These could include forming a partnership, offering bulk discounts, or doing a trial run of the products.
The drawbacks of niche product sourcing mainly revolve around costs. Many of these businesses work at a smaller scale and shipping costs can be expensive. You’ll also want to limit any non-product costs. Your best bet is to work outside the constraints of any platform they already use, or you may be paying a fee to a third party for each transaction.
Wholesale Product Sourcing
The third option for product sourcing is to go straight to a producer or wholesaler. This is much easier than it may seem because many large direct to consumer companies also have a wholesale operation set up. This is because it's a great supplementary source of income for them with little effort involved. Many of these suppliers also participate in dropshipping, so you may be able to expand into that market as well.
One big benefit from this model is that these businesses have a lot of name recognition already. This means you can ride their coattails and increase your own company's visibility. It also gives your brand a perception of quality and success. This means people are more likely to trust your offerings and you can increase your prices and profit margin.
Another benefit of this model is that you can save some money by ordering larger quantities. These businesses are far less likely to run into issues with backordered items and you can also benefit from getting deliveries via bulk shipping.
The main downside of wholesale product sourcing is that the upfront costs are higher. These companies are less likely to make any concessions on price or minimum order quantity (MOQ), since your business is smaller than theirs. Try to find a balance between the name recognition of the company and the value they’ll bring your subscription box. You'll also want to make sure your suppliers have a valid wholesale dealer license so you don't get burned.
Use the Source, Luke
Sourcing quality products at a reasonable cost is the key to growing your subscription box business. You can choose to pursue free or paid product sourcing, but choose whatever works best for you. Look for businesses that fit your niche well and that you'd like to have a long-term relationship with.
Once you get your products, remember to invest in subscription billing so you can make money from your new venture.