But, what is a subscription box?
Keep reading to learn the ins and outs of subscription box services, the most popular types of subscription boxes, and some statistics on the growing industry.
What Is a Subscription Box?
A subscription box is a form of product kitting where multiple products are shipped to customers on a recurring basis. There's a lot of variation between different industries, but they work in similar ways.
Here are the commonalities:
- Recurring deliveries. These boxes are usually shipped on a monthly basis. They can expose customers to brands they haven't bought from before or let them try out new products from their favorite brands. They're also a great way to sell off products that are likely to become dead stock. The key to running a successful subscription box is that customers need to see cost savings. If the products in a box cost $100 MSRP, the subscription cost must be lower. This incentivizes customers to subscribe.
- Recurring payments. Recurring deliveries are only possible when paired with recurring payments. This is the biggest reason companies expand into the subscription box market, as they can guarantee additional income each month. The markup can also be very helpful depending on your industry, the products you’re selling, and any costs associated with custom subscription boxes.
- Themed boxes. These boxes are often built around an underlying theme that connects the products. They all may be sustainable goods, from local business, or some other connecting idea. This is a great way for businesses to help each other grow. It can even help a B2B business break into the direct to consumer market. For example, a coffee beans wholesale roaster can sell wholesale coffee to coffee shops and small batches to consumers. This lets them increase revenue and market share without taking on a lot of new work.
Types of Subscription Boxes
There are many types of subscription boxes in the subscription commerce market today, but a few have seen massive growth in recent years.
The top subscription box types are:
- Beauty subscription boxes. One of the biggest industries taking part in the subscription box model is the makeup industry. They can include products from a single brand or a range of brands. They offer great exposure for lesser-known brands and are a valuable DTC marketing tool.
- Food subscription boxes. Fresh meat, groceries, and snack boxes are a fast-growing sector of the subscription box industry. They're a great source of revenue for food suppliers and can help B2B suppliers enter the DTC food market. Luckily, BlueCart subscription management software was designed to grow food sales for businesses of all types and sizes.
- Shaving supply subscription boxes. Unsurprisingly, razors and grooming supplies what many people think of when it comes to subscription boxes. That's because they're some of the most successful. This is because people need to purchase the products multiple times a year anyway, so the box makes it easier. Even better for the suppliers, they can sell the products via dropshipping and never even have to pay for warehouse space.
- Pet subscription boxes. Another industry that relies on repeat purchases is the pet industry. Monthly shipments of pet food, medicine, and toys are common. Many large dog food brands are using subscription boxes to grow their sales. However, this industry needs to ensure they have good eCommerce packaging, since their orders are often much heavier than others.
- Coffee subscription boxes. Since coffee people are particular about what coffee they drink, and they generally drink every day, a coffee of the month club is highly valuable. If you're one of the best coffee roasters around, or are looking for a coffee marketing tool, learning how to start a subscription box for coffee is a great choice.
- Book of the month subscription boxes. The next evolution of book club, book of the month subscription boxes have been a staple of the industry for a while. They are highly curated boxes that have a big impact on book sales. For burgeoning authors or publishers, they can really help.
- Wine subscription boxes. Another major player in the subscription box market is monthly wine clubs. These clubs deliver an array of wine directly to customers' houses. This is a great way for vintners to sell off excess inventory and to introduce people to new wine variatals or a new wine list. If done well, your customers will have to invest in some new wine storage solutions. Wine subscription boxes also provide customers with food pairing advice. Whether you’re wondering what wine pairs with salmon or what is the best wine to pair with turkey, a monthly box can be a great source of knowledge.
- Clothing subscription boxes. Clothing boxes are a fast-growing segment of the industry and come in a few varieties. Some are personally curated for the customer, while others change themes each month. However, they all have the same subscription payment model in common. The customer pays a monthly fee for the box and then will pay for the clothes they choose to keep.
- Toy subscription boxes. Another industry that's built for subscription boxes is the toy industry. There are always more children being born, so toys are always needed. These boxes are often themed by age and offer developmental or educational toys on a monthly basis. It's a good place to start if you have a lot of subscription box ideas. Make sure to purchase the products from reputable subscription box suppliers, or your venture may be short-lived as the bar for these boxes is high.
- Hand-made goods subscription boxes. Though much more niche than many others on the list, boxes featuring hand-made products are growing in popularity. They are great tools for small businesses to gain exposure within their niche market to their lovingly crafted goods. If you're a creator or artist with some good eCommerce business ideas, you can make good money here.
Different Subscription Boxes
The boxes listed above are all popular and profitable, but what if you want to invest in a more unique subscription box? If you do your research and find a market of substantial size, you can create a subscription box for nearly any type of product. The most important thing is to thoroughly vet whatever ideas you have by looking at the existing market, the margins involved, and if there are already suppliers operating in the niche. If all of these answers are satisfactory, you’ve found a great place to start a new subscription box. If not, it’s probably time to move on to a new idea.
Subscription Box Industry Statistics
Subscription boxes are offered by some of the fastest growing and successful businesses in the world. But, you don’t have to take our word for it, here are a few pertinent subscription box industry statistics:
- More than 20% of all subscription box sales are in niche markets.
- In 2020, more than 2/3rds of US consumers subscribed to one or more subscription boxes.
- Nearly a quarter of consumers chose a subscription box based on recommendations.
- More than 60% of subscription box sales come from the beauty and food niches.
- Streaming services are helping subscription boxes grow. Nearly half of those that subscribe to streaming services are likely to enjoy the subscription box model.
Once you’ve settled on your subscription box products, you should also think about the type of subscription programs you’ll offer. That is, how you handle billing and shipping. There are three main types of subscription: Auto-shipments, Curated Shipments, and Access subscriptions. Here’s how they each work.
Auto-shipments work just as you’d expect them to. The customer signs up for your subscription box and is automatically charged on a per-determined schedule. As long as their account is in good standing, orders are automatically sent on the same schedule. This is the most common subscription type and most subscription box businesses use it.
Curated shipments are a little different as the products in each subscription box are curated to some degree. The customer may be offered a theme for the box or are allowed to pick and choose what products they receive. This model is used by high-end subscription box services and are often called “clubs” by the businesses that run them.
The access subscription model is less common than the other two, but is used most often by tech companies. This model is built around the idea that the customer pays a fee just to gain access to your product offerings. Essentially, the subscription fee is like paying a cover-charge just to get into a party. This model isn’t used by many subscription box services, but is very popular with streaming services.
Are Subscription Boxes Still Popular?
Yes, subscription boxes are more popular than ever! In 2020, the subscription box market reached new heights with more than $15 billion in sales. They're a major factor in eCommerce growth.
Even better, many brands are now expanding their subscription box services internationally. That means there's even more opportunity for you to begin bulk shipping your products overseas. However, there is more competition in the space each year. This means that you need to know your brand inside out and market your strengths.
Please Like and Subscribe
Subscription boxes offer a unique opportunity for small and medium-sized businesses to expand their reach and increase their profit margin. It's a fast-growing industry that is showing no signs of slowing down.
For food suppliers, BlueCart Subscriptions is the best way to start a new subscription box. It's an all-in-one food subscription platform and online marketplace. Whether you sell groceries, pantry items, non-perishables, or pre-cooked meals, we can help you increase eCommerce sales.
Frequently Asked Questions About Subscription Boxes
Subscription boxes are a great way to earn extra income on the side. Explore the following commonly asked questions to learn more about subscription boxes:
What Products Can I Sell in Subscription Boxes?
You can make a subscription box for the following products:
- Skincare items
What Age Group Buys the Most Subscription Boxes?
About 31% of millennials sign up for subscription boxes. Most subscription box customers are between the age of 25 and 44.
How Much Does It Cost To Make a Subscription Box?
The average cost to start a subscription box business is about $17,000. This accounts for the cost of the physical products, starting costs, manufacturing, and shipping.