6 Things Every Company Should Know Before Starting a Subscription Box Service

There has been a recent surge in the popularity of subscription boxes. Customers enjoy receiving a box of products every month, whether it’s ingredients for meals, beauty products, alcohol, coffee or even specialty products such as Japanese snack foods.

There seems to be no shortage of new ideas for niche products in the subscription box market, and there is a vast range of helpful ‘getting started guides’ available online. It can also be relatively easy to get started in the subscription box market.

Subscription boxes can be a great way of promoting your business and products, while also introducing your products to new customers. But there are a few pitfalls to avoid and common mistakes when setting up a new subscription box service. Let’s look at some of the things to consider before starting a subscription service yourself.

1. What is going to be in your subscription box?

There are two important things to consider when thinking about what to put in your subscription box: the current market competition and your passion for the product.

Of course, when starting any new business, it is important to know the market. Is someone else already providing a subscription service for your product? If so, how many other people are doing the same thing? With subscription boxes becoming very popular in recent years, it is key that you assess your chance for succeeding in a specific category of the industry.

For example, the makeup subscription box market is pretty saturated with the likes of the original beauty box, Birchbox, and the UK’s Glossybox dominating the market. There isn’t much room for new subscription boxes in the beauty department unless you are doing something vastly different. So you need to make sure your subscription box stands out.

You also need to be passionate about the products in your subscription box. Not only will this be easier for you to write about and promote a product you’re excited about, but you’ll also be able to relate to your customers more easily. When looking for a subscription service, people are often looking for something that makes their life easier, so they’ll gravitate toward products that fit into their lifestyle. You need to be able to speak to these people and attract them to your subscription box by passionately promoting the products you offer.

2. Who is your target market?

Defining your ideal customer might sound strange, but it’s almost as important as choosing the correct product. Don’t try and cater to everyone — that’s impossible!

Instead, choose your ideal customer and focus on specifics related to their lifestyle. For example, many meal preparation subscription boxes cater to busy people who want to cook with fresh produce, and a key part of their customer base are families. These subscription services will offer a child-friendly meal option to cater to these customers.

You need to focus on the market where you can attract the most customers. Then you need to think about how you can reach them. Without customers, you don’t have a business, so try to pinpoint your prospective target customers as early as possible.

3. How can you monetize your idea?

This might sound obvious, but as with any business venture, the goal is to make money and overcome the challenges that exist when starting a business.

First and foremost, name your price. Choosing the right price isn’t quite as easy as it sounds. In fact, it could make or break your subscription box business. Too low a price and potential customers will think your box is cheap and the products in it are of low quality. Charge too much, and people might not be able to afford your subscription box.

It’s worth doing some research before you decide on a price for your subscription box. It may also be a good idea to check out the competition’s prices. Many companies say they regret not charging more for their subscription box service, so how do you come up with the right price?

You can use a budgeting tool to work out how much your subscription box costs you to produce. This will largely depend on how you source the products you put in your subscription box: Do you pay for the products or not?

It might surprise you to learn that many large companies don’t pay for the products in their boxes. Partnerships mean companies give you free products to include in your subscription box. While partnerships allow you to start making money straight away, you’ll have less freedom in deciding what goes into the box.

To have full control over the products in your box, paid products is the way to go. However, you’ll have smaller profit margins on your subscription boxes, and end up depending on “pre-paid” plans to make money.

4. Should you offer different levels of membership?

If you pay for your products, pre-paid subscription services are the way to make the most money. Offering your customers three months or six months of service at a reduced rate will ensure you keep those customers longer and also have the money upfront to reinvest in your company.

Just be wary of constricting customers to long contracts. This is a practice that has largely gone out of fashion, with mobile phone carriers even offering rolling monthly contracts now. Customers don’t want to lock in to long-term contracts anymore, and they want an easy way out of the service. You can balance these two potentially conflicting ideas by making your website easy to navigate and offering shorter-term subscriptions such as monthly or quarterly contracts.

5. What’s the best way to prepare and ship your boxes?

How will you put your subscription boxes together? Will you compile all the items together in one place such as your garage or budget storage space and box the products yourself? Or will your partner or another third party do this for you?

There are a number of logistics companies whose sole purpose is to fulfill orders by packing, handling and shipping the desired items to your customers. Obviously, this will cost more than packing the boxes yourself and takes away a lot of the control you have over how the boxes are packed and presented. But once your business grows, packing boxes in your garage might not be very practical.

There is no right or wrong way to do this. You have to decide which option suits you and your business best. Research your options and find out how they fit in with your business model; for example, if a third party is providing free products, they may also take the responsibility and cost of packaging, handling and shipping off your hands.

6. How do you selecting the right packaging?

The packaging you use for your subscription box can affect the shipping costs and overall costs of your subscription service. The packaging will also have an impact on your customers.

Your subscription boxes need to look appealing when they arrive, be easy to deliver, open easily and — most importantly — protect the contents. Corrugated cardboard boxes are resilient and will retain their shape well, even under the stressors of most postal systems.

If you want your customers to notice your subscription boxes, why not customize your corrugated box with your company logo? A unique-looking package goes a long way in encouraging customers to keep subscribing to your service and spread brand awareness for your product.

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