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Starting a Subscription Box Company: Actionable Steps

E-commerce 10 min read

The subscription box industry is worth around 15 billion dollars. And when you think about how exciting it can be to order and receive a box full of goodies, it’s not hard to see why millions of people have fallen in love with this unique model for selling products. 

That’s why companies in all industries have started taking notice of the subscription box mania and are looking for ways to add the service to their business. Others have launched entire companies with the idea of centring their entire service around subscription boxes that provide a unique experience to their audiences.

However, figuring out how to start a subscription box company isn’t as straightforward as putting together the box and adding it to your online store.

You need to think of it as a separate business model that follows its own rules, has a distinct audience, and requires proper planning to execute everything correctly.

To help you get started, let’s define what a subscription box is, look into why it makes sense to jump on this opportunity, and the essential steps to maximizing your chances of success.

Ready to get started? Then read on below.

What is a Subscription Box Company?

A subscription box service is a recurring delivery of physical products packaged to provide additional value to the buyers. A crucial aspect of a subscription box service is not the great value that they receive but also the unique experience of receiving curated product collections put together by people who know how to please their customers.

A large part of the appeal that subscription boxes offer comes from the ability to try out new products that people have not found or purchased otherwise. 

Instead of having to go through each product category and make decisions, buyers can choose a box and trust that the brand will provide a unique experience that includes new products, unusual choices, and a continued experience that will last as long as the subscriber pleases.

Initially, subscription boxes featured beauty products. But today, the industry encompasses almost any niche you could think of since most physical products can be adapted to the subscription box model with excellent results.

Why Should You Start a Subscription Box Company?

It’s clear why subscription boxes are so fun and exciting to consumers. By why should businesses bother with them? Why not just stick with traditional eCommerce sales that can offer better product-for-product profit margins? 

Well, there’s actually a ton of advantages to this business model, which makes the effort of figuring out how to start a subscription box company worth it in the vast majority of cases.

Let’s look at some of these benefits below.

Predictable Income

Fluctuations in sales are a natural part of running a business. Most companies experience both peaks and lows in terms of performance, and the smart ones are able to use demand forecasting to adjust accordingly and minimize the risks that come with it.

However, if you run a subscription box company, you can mostly eliminate this issue altogether.

Because of how a subscription model is set up, you can enjoy a steady stream of sales month after month, predicting your revenue for a longer time and enjoying the stability that few other types of businesses have.

Sure, some people will cancel their subscriptions, but you can compensate for that by bringing in new leads on a regular basis. And if you deliver a good service, there’s no reason why your best customers wouldn’t stay with you for many months or even years, allowing you to compile your income and ensure stable growth.

If you want to really minimize the risks of sales fluctuations, you could even set up an upfront payment system for your subscription boxes. Some companies are seeing great results with annual subscription box services paid in advance, which provide a lot of cash flow and enable them to use the profits for marketing and sales.

Easier Order Fulfilment

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Fulfilling orders quickly and effectively can be a hassle. Sure, there are software solutions that can make this easier, but you still need to deal with fluctuations in sales which can cause stock shortages and backups in your fulfillment chain.

All of this becomes a non-issue when dealing with subscriptions.

You still have new subscribers coming in that require you to make adjustments, but for the most part, you can prepare to ship monthly orders well in advance, stocking up on items accordingly and ensuring that you have the resources to ship each order on time.

And if you ship subscriptions on the same day each month, you can eliminate the unpredictable elements altogether, giving yourself plenty of time to prepare for new orders and providing the best possible experience to your customers. 

Increased Customer Lifetime Value

The subscription box business model also offers an excellent opportunity to increase your Customer Lifetime Value (CLV). A subscription box is a much bigger commitment than a regular purchase, which can be an impulse or one-off buy that won’t happen again.

People tend to get used to receiving their subscriptions each month, and they are also charged for them automatically. So unless a person is unhappy with your service, they will probably not go through the effort of manually canceling the subscription.

As long as you can deliver and meet customer expectations with each box, there’s no reason why they shouldn’t stay subscribed for many months or years. And if you get them to pay upfront for a more extended subscription, you have a minimum amount of time they will stay with you that you can be absolutely sure of.

New Audiences

Finally, if you figure out how to start a subscription box company, you can tap into a new audience in your niche that you might not have been able to attract otherwise.

Buying subscription boxes is increasingly popular, but it still attracts a certain type of person who likes to be surprised, wants to try out new things, and doesn’t mind committing to a brand for a longer time.

So, if you’re already operating in a niche, starting a subscription box service can be a great way to tap into a new segment of an audience who otherwise wouldn’t want to buy from you. And that’s an excellent way to grow your business and create additional income streams without having to put in a lot more effort. 

Essential Steps for Starting a Subscription Box Company

At this point, the reasons why a subscription box company makes sense are probably clear. So now, let’s look at the steps you’ll need to take on your path to discovering how to start a subscription box company in your niche. 

Identify Your Target Audience

As mentioned before, the audiences that typically buy subscription boxes don’t always overlap with the typical buyers in that niche. So whether you’re starting a subscription box business from scratch or adding this type of service to your offerings, you will need to conduct thorough audience research and figure out exactly who you need to target.

The best approach to learning more about your ideal customers is talking to them. Sure, this sounds simple enough, but you’d be shocked to know how many aspiring entrepreneurs skip this step and end up basing their entire business on assumptions.

If you want to gain the best possible insights, schedule some interviews with people who you think are your ideal customers or who have bought from you already. Ask them why they like to buy subscription boxes, how they choose which to buy, and what’s important in their decision-making process.

When you want to reach a broader audience, you can also run surveys or on-site polls to get specific answers to questions and be more confident about your choices.

Figure Out What Others Are Doing

Unless you operate in a very obscure niche, chances are that there are already at least a few subscription box services that you will have to compete with. 

Because of that, you will need to perform thorough research to ensure that you actually bring something new to the table and meet an audience need that isn’t being catered to by others.

That’s where competition research comes into play.

Start by performing some simple Google research to find who’s doing subscriptions in your field. Then, analyze how they operate, what their messaging is like, how they price the subscriptions, and what types of products they offer.

Find Your USP

Once you know what your competition is doing, it’s time to start developing your own USP, which will be the distinguishing feature that allows you to enter the market and appeal to buyers.

The great thing about subscription boxes is that the only limiting factor to what you can include is your imagination and creativity. 

It’s also easy to blend niches and enhance the subscription boxes with products you know your target audience would love. So, as long as you are willing to get creative, you should have no problem finding a unique angle that will make for an appealing offer.

Look for Suppliers

For your subscription box business to work, you will need products. And not just any products, but a continually-renewed selection of products you can use to curate unique and exciting boxes your customers will enjoy. 

In fact, if you want to excel with this business model, you will probably need to make it a habit to continually look for interesting suppliers, building long-term relationships that help you get better deals, exclusive products, and access to insights about what might be the next big thing in your niche. 

When looking for products, you’ll also need to test everything yourself and ensure that the quality remains up-to-par with what your customers are used to.

As your business grows, the opportunity to work with you will become more lucrative, allowing you to get more favourable deals and even getting suppliers to actively seek out partnerships with you.

Set Up Your Online Brand

Selling subscription boxes isn’t just about the products. Since it’s a curated experience that requires your buyers to trust your judgment, you will need a strong brand personality that attracts people and encourages them to choose to buy from you. 

And at the center of your branding will be your website. That’s where your buyers will find you, learn more about what your brand is about, and discover the subscription boxes that get them excited.

If you did your homework and figured out who you’re targeting, a lot of your branding will revolve around matching the expectations of your audience and aligning with the values they represent. 

Put Together a Marketing Strategy

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A subscription box service requires a consistent stream of new leads. If you don’t use multiple sales channels, your business revenue will start dropping as people cancel subscriptions, which will make it harder to sustain it for longer.

Luckily, since it’s an exciting service, there are plenty of opportunities for promoting it online. 

One of the best approaches you could use is partnering up with influencers who specialize in subscription boxes. This way, you might tap into audiences that love the subscription box model and might not even be in your niche otherwise.

You should also build a strong following on social media, leveraging user-generated content to showcase the value that comes with ordering from you.

Ensure Top-Quality Support

The final piece of the puzzle when building a subscription box company is offering exceptional customer service and keeping your customers happy. Even a few negative experiences can quickly cause irreversible damage to your brand, so you should have processes in place that allow you to solve problems before they can escalate.

And unfortunately, building and maintaining an in-house support team isn’t always feasible, at least if you want to remain flexible and invest your resources into growth.

Luckily, you can take advantage of customer service outsourcing services specialized for eCommerce brands such as subscription box stores. These types of professionals can provide 24/7 support for you, ensuring that your customers are happy and freeing up your time for focusing on improving your business.

Bottom Line

A subscription box company is one of the most exciting eCommerce trends of recent years. But even though the opportunities are there, you need to follow sound business practices if you want to find your audience and grow a loyal list of subscribers.

Using the strategies listed above, you should have a solid action plan for going from the very beginning to the day you start making sales, targeting the right audience, and ensuring that if they need help, you will have a support system that will solve any issues they might have.

Need a dedicated customer experience team ready to support your brand?

Book a consultation with us and we’ll get you set up.

Digital Marketing Manager @LTVplus Actively participating in the digital marketing world for more than 5 years. Currently making sure that our website content is up-to-date and our blog is filled with actionable tips and advice for online retail businesses. Very passionate about dogs, topics on spirituality and Unicorns.

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