Starting a subscription box service can add a steady and reliable revenue stream for your existing business.
But, there's a lot more that goes into running a successful subscription box service than just throwing products in a box.
So, how exactly do you do it?
Let's start with the basics.
A subscription box is a type of product kitting where multiple products are shipped to customers on a recurring basis. There's a bit of variation allowed for different industries, but they mostly work in similar ways.
Here are the commonalities:
- Recurring deliveries. These boxes are usually shipped on a monthly basis. They're a great way to sell off products that otherwise could become dead stock. The main selling point of this model is 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 paired with recurring payments from your customers. This is the biggest reason companies expand into the subscription box market, as they can guarantee additional income each month and the value of each customer compounds over time.
- Themed boxes. These boxes are often built around an underlying theme that connects the products. This is a great way for businesses to help each other grow, since less well-known businesses can get their products exposed to a much larger audience with a multi-brand subscription box. It’s also a great way for a B2B business to expand into the direct to consumer market. For example, a wholesale coffee bean roaster can sell wholesale to coffee shops and small batches to consumers.
Are Subscription Boxes Still Popular?
Yes, in fact, subscription boxes are more popular than ever. In the past few years, the subscription box market reached new heights with 2021 projecting more than $15 billion in sales.
Another sign that this trend is not slowing down is that brands are now expanding their subscription box services internationally.
The best subscription box ideas all meet three criteria. First, there is a market for it in your product category. Second, customers have a need to acquire the products on a recurring basis. Third, the category isn't seasonal or based on a short-term sales proposition.
Now, read on to see our top subscription box categories that meet these criteria.
Food Subscription Box
The convenience of food-to-table delivery becomes more appealing to consumers every year. Food subscription boxes benefit from this cultural shift and can access a very large, existing market.
Luckily, BlueCart Subscriptions is designed to grow food sales for businesses of all types and sizes. It's an all-in-one food subscription platform. Whether you sell groceries, pantry items, non-perishables, or pre-cooked meals, we can help you increase your eCommerce sales.
Arts and Culture Subscription Box
Art, music, books, crafting supplies, and more are great choices for a subscription box. Essentially, these products serve to entertain or enlighten and there’s ample opportunity to carve out an untapped niche in this category. It also has a low bar for anyone starting an eCommerce business.
Pet Supply Subscription Box
Pet food and toys are products that customers must purchase on a regular basis. This makes them a perfect choice for companies that are looking to expand into subscription boxes. Whether you're looking to supplement sales in your pet food business or start a new venture, there's a very large market for this one.
Fashion and Beauty Subscription Box Ideas
Makeup, clothing, and accessories, are major players in the subscription box industry. They're uniquely situated to benefit from the boxes. Cross selling multiple product types and brands is also very common. Just stick with sample sizes to start with and you can keep costs low while growing recurring orders.
Health and Fitness Subscription Box
The health and fitness market has seen a major surge in the past decade. Now, with gyms closed and people working at home, the subscription box industry is getting in on the action. These boxes offer customers the chance to manage their fitness experience and goals from the comfort of their home.
What Is the Subscription Box Business Model?
The subscription box business model is built around recurring payments. However, there are a few ways that subscription businesses can increase the value of these payments and reach their goal profit margin.
- The freemium model. The freemium model allows customers limited access to the product for free. It is an effective B2B marketing and DTC marketing tool and it draws in more users than if there was only a paid version. It also highlights the product value without allowing total access. The main drawback is that many people will use the free version without ever converting to a subscription.
- Tiered pricing. The most common model for subscription boxes is a tiered pricing model. Multiple versions of each box are created with varying pricing levels. This lets a business target a wide range of demographics with different demands. It's also great for upselling customers to increase revenue with the higher margins on higher-end subscriptions.
- Adjustable rates. The final option for subscription pricing features variable rates. These rates may increase or decrease between payment periods based on subscriber growth, the general economy, or rising costs. Most businesses will have to adjust their pricing occasionally, but doing it too often or too drastically will decrease customer satisfaction and increase customer churn.
How Do Subscription Boxes Make Money?
Subscription boxes make money through recurring payments and one-time purchases. With recurring payments customers must pay a fee to participate in the model.
One-time purchase fees happen on top of the monthly fees. A good example of this is clothing subscription boxes. Customers pay a monthly fee for a box of curated clothing to be delivered. If they choose to keep any of the clothes, they then pay an additional fee to cover the cost of the clothes.
This is only possible if the subscription box is accompanied by a user-friendly and sales-optimized website.
Creating a subscription box website can seem overwhelming. Whether you’re just starting an eCommerce business or you’re looking to increase eCommerce sales, you need to take a step-by-step approach to ensure a successful launch.
Here are the steps you should take:
- Pick a niche. The very first thing you need to do is to determine what type of subscription boxes you’ll sell. Consider who your target customers are and how to convince them that your subscription box is better than others.
- Create content. Come up with a basic plan for the content and pages you want on your site. At minimum, you should have a main landing page, individual box pages, and possibly an FAQ or blog with more info.
- Choose a platform. You can choose to host your site with a headless eCommerce platform or start a store page on an eCommerce marketplace. Pick the platform that fits your unique business needs and capabilities. For food suppliers, BlueCart Subscriptions is a great choice. It was designed to grow food sales for businesses of all types and sizes.
- Establish pricing. Think about the best way to maximize your profit margin while serving as many customers as possible. This may be through tiered pricing, single cost sales, or allowing one-time purchases. It will be important when you start setting up the backend of your site.
- Design pags. Website design is a major factor in converting new customers. You need to provide a smooth user experience and establish your unique brand identity. Make sure to include on page SEO for eCommerce in your templates so you can drive traffic from day one.
- Launch and market. Once your site is built, you can go to market with it. Do thorough quality checks and make sure everything is functioning correctly. Then get to making sales. This will let you focus on other important aspects of the business like finding the right subscription box suppliers and investing in eCommerce fulfillment.
Remember, launching your new subscription box website is only phase one. You’ll need to continue to monitor eCommerce analytics performance and tweak plans until you’re hitting your eCommerce KPIs.
You'll also need to be able to get paid by your customers.
The subscription payment model lets businesses and customers automate their transactions and establish a recurring billing and payment plan. This payment method comes with a lot of upside for both the business and its customers.
Customer Benefits of the Subscription Payment Model
Customers see many benefits from the subscription payment model. Their happiness with the model is the driving factor behind its increased growth and adoption by businesses.
Here are the top three customer benefits of the subscription payment model:
Customer Cost Savings
This happens in two ways: First, the customer saves directly from purchasing the subscription box as they are priced lower than the individual prices of the products they contain. Second, customers can usually pay a lump sum for multiple months at a time at a lower rate than the monthly rate.
The subscription payment model is very convenient for customers because they don't have to remember to place an order before they run out. For example, if you know your family consumes one bag of coffee per week, you can have a weekly coffee bean subscription automatically delivered to your home on a set day of the week.
Low Barrier to Entry
Subscription payments are lower than ordering products individually, so customers are more likely to be willing to try new products. They can order test new products in smaller quantities and hop around options to find the one that fits best with their lifestyle and that they can afford.
Business Benefits of the Subscription Payment Model
More than $15 billion were made in the subscription box industry last year. This burgeoning model is attractive to businesses of all sizes.
Here are the top three benefits for businesses:
Increased Customer Lifetime Value
Subscription payments greatly increase overall customer lifetime value since it compounds each subscription cycle. Unlike the traditional model where a large portion of customers are one-time buyers, subscription buyers are intentionally repeat customers.
Valuable Customer Relationships
With the subscription model, businesses and customers are in contact far more often than in others. Businesses can get feedback regularly and make small adjustments to ensure customer satisfaction and use these tweaks for marketing efforts.
Subscription businesses don't have to work as hard or spend as much to acquire customers and traditional businesses. This means less volatility in ROI and higher revenue overall.
Now that you understand subscription box ideas, website, and payments, the only thing left is getting products and supplies.
How to Find Subscription Box Suppliers
Sourcing, or procurement, is the key to establishing a lasting and successful subscription box business. You need to find quality products for a price you can afford.
You can procure your products in two ways: for free or by buying them upfront.
Free Product Sourcing
When sourcing free products, you put no money into acquiring the products that you'll be selling. The suppliers cover all costs, while you focus on aggregating the products and fulfill orders. You don’t have to buy or store products, so your startup capital can be much lower.
However, you have to be able to convince vendors that the marketing benefits of the arrangement outweigh costs. You likely will also only get short-term partnerships, as few companies want to continually give away products.
Paid Product Sourcing
With paid product sourcing, you sign a contract with a vendor who will sell you products at a given price. This price is usually well below MSRP, but you’ll have to order a minimum amount.
Luckily, acquiring products this way is much quicker, since it’s a simple business transaction. You are also in control of the size and quality of the products you purchase, so you don’t have to worry about only having sample sizes in your box. The best part of purchasing the products is that you have total control over your inventory levels and can calculate optimal reorder points.
Unfortunately, you do need a large amount of capital upfront to buy enough products for a subscription box. 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 shipping packages for shipping.
Designing Custom Subscription Boxes
Subscription box design entails all aspects of how your packaging looks. It includes graphics, branding, and even the weight and feel of the package.
Design plays a major role in establishing your brand and helping your subscription box attract new customers. It can also help with customer satisfaction and customer retention, since you can convey value savings just from your packaging.
The best way to get the most out of your packaging is with custom subscription box designs.
Custom Subscription Box Design
Custom subscription boxes are most commonly designed using digital printing. These designs can be as colorful and complex as you like as long as you're willing to pay for the effort involved in printing.
It is a low-cost form of marketing and people who see your sustainable eCommerce packaging in the mail may become interested in buying your subscription box. Costs are also low since many digital printers allow for smaller minimum order quantities (MOQ). Still, you'll have to pay a printer to do the work, and likely also have to pay a graphic designer as well.
Custom Shipping Packages: Boxes For Subscription Boxes
Custom shipping packaging entails any packaging materials that deviate from the norm. They may be odd-shaped boxes or custom packaging to ensure product safety. Look for a shipping box supplier who can accommodate your unique requests at the scale you need. You don't want to buy your supplies from a business with limited product runs or can't offer volume discounts.
Add Value, Add Subscribers
Starting a subscription box requires forethought and understanding of your target customers's desires. Follow the steps above to ensure you start off on the best foot and you'll be in a great position for sustainable growth from day one.