Forecast to reach a value of £1 billion by 2022, the UK subscription box boom can't be ignored any longer! You may be an already established business or a newbie looking for ways to sell your products, either way, learning how to start a subscription box business is a great idea.
We bet you've heard of Gousto, Graze, or Birchbox - subscription commerce offers businesses in any niche a recurring financial model that can maintain monthly profits. They offer customers a unique opportunity to try specially selected products and gets them excited to receive a bundle of goodies in their letterbox!
Creating a subscription box model that suits you and your business takes a little planning. You'll need to source materials, plan shipping and research marketing among other things before you can sell your first box. It's important to prepare well in advance to ensure your subscription services run smoothly. So, let's not dilly dally, here are a few simple tips to learn how to start a subscription box service and begin increasing sales today.
Why do brands offer subscription box services?
First, let's quickly go over why brands love creating subscription boxes and why you should too. Do you have a Netflix or Spotify subscription? Chances are you have one or the other - these subscriptions are so popular because the user forgets they even pay for the service. Subscriptions often create a 'set it and forget it' model for customers, which increases monthly revenue for businesses!
Subscription boxes can:
- Establish recurring revenue
- Forecast demand to plan product supply
- Introduce customers to more products
- Offer customers an exciting deal
Subscription boxes are a great way for customers to try new products or have their favourite ones delivered regularly without the hassle of reordering. Creating bundles of products that save your customers time searching in the shops can solve problems for them and improve business for you.
That's why subscription boxes have become so popular! CrateJoy even created a marketplace solely for subscription services so customers can have the products they need, delivered directly.
So, if you're still with us and want to learn how to start a subscription box service, here are a few steps to follow…
Start with a product
Finding a niche to break into is an excellent idea when putting together a subscription service. An eCommerce niche is a product or service that fits a distinct segment of the market or targets a very particular problem, like a 100% sustainable make-up collection or curly-haired dog shampoo.
When choosing your niche make sure it is something you can source (and sell) enough consumable products to fit within this niche. If your niche is colour treated hair then you can supply shampoo, conditioner, hair masks, styling products, brushes etc. You will need to have a variety of products available to keep your customers interest.
Once you've got your niche down you can then research your:
- Competitors: What do they sell? How much do they charge? How can you differentiate your boxes?
- Customers: How old are they? Where do they shop? What's their income range? What social media do they use?
These two areas of research will allow you to flesh out your subscription service idea and roughly work out what your customers will be willing to pay for it. By figuring out these details you can also get a head start on your subscription box marketing and start pivoting your advertising accordingly!
Set your prices
Pricing your products appropriately is vital. You need to settle on a price that is competitive within your market but allows you to maintain a healthy profit.
When setting a price point consider your overall costs:
- Product costs (how much it takes to make/supply them)
- Packaging costs (box/mailer, tissue, bubble-wrap, stickers, inserts, etc)
- Postage costs (Interparcel can help you cut costs and access discounted shipping services)
- Transaction fees (eBay/Etsy selling fees or PayPal transaction fees)
- Any additional costs (marketing, eCommerce website subscription fees, any errors…)
Your prices can get you noticed so make sure to factor in your target demographic's price points when deciding. Have a peek at your competition for some help with this!
Create a prototype box
Put together an example of what a subscription box with you will look like. You may want this to be your only subscription box offering, or perhaps you'll build a 'choose your own products' type of subscription model. Either way, you'll need to create a sample box to take great quality pictures so your customers can see what they're getting!
Here are some areas to cover:
- Products: 5-7 items is usually recommended to give a good range
- Box: choose consistent packaging, PackHelp can help with branded boxes plus you'll get marks for a unique unboxing experience!
- Pictures: start taking good quality pictures of your products and packaging to share on social media (shown to improve revenue accordingly to consumer psychology)
Your subscription box service should feel like a little gift on your customer's doorstep every month, so making sure it looks the part is important! Create a unique packaging experience that adds to the luxury and 'treat like' feel to entice customers to keep subscribing.
Open an eCommerce store
Online shoppers are most likely your target customers for a subscription box. Many of the best subscription services started on eCommerce platforms as they can save you time and stress by helping you process orders quickly and easily.
We have found that the best eCommerce platforms around for your subscription box services are:
- Squarespace: with their Advanced plan users can set up recurring billing cycles, edit subscription products, and manage all customer payments with you in one, easy to use area.
- WooCommerce: with their Subscriptions Plugin sellers can fully customise their subscription plan(s), manage recurring payments, and even set up product-of-the-month boxes
- BigCommerce: with their convenient subscription component, users can manage subscribers, billing, and fulfillment, and even set up a finance model (buy now, pay later)
Organise a shipping solution
A major part of providing the best subscription service is ensuring you can deliver regularly and reliably. That's where we can help. Interparcel only partners with the globe's most recognised and trusted courier companies, so small businesses can offer a range of cost-effective parcel delivery options to their customers.
Our services integrate with all of the major eCommerce platforms and can ensure your subscription boxes reach your customers on time every month in perfect condition. Interparcel's Shipping Manager makes running a subscription service simple. Our users benefit from:
- Advanced shipping manager: collate orders from multiple eCommerce platforms into one place
- In-built address verification and correction, no more manual errors or unprofessional mistakes
- New branded tracking, create a seamless brand experience when customers track orders
- Despatch orders in a few clicks from the comfort of your home
- Cheap shipping - UK and International!
Integrating your eCommerce subscription box service with our Shipping Manager is free - all you need to do is create an account with us and connect to your store. By having a shipping service that your customers can trust you'll be able to improve customer loyalty and retention, ensuring they subscribe to your boxes for much longer!
Create a marketing strategy
As the subscription box market becomes increasingly saturated, staying competitive is key. Marketing your subscription boxes can create an exciting buzz around your products and prime customers to buy! Setting up an eCommerce marketing strategy can make your business stand out from your competitors and draw in new customers.
When marketing your new subscription box service, think about trying:
- Email marketing: send a newsletter about upcoming subscription bundles
- Social media marketing: post pictures/videos of boxes to entice
- Giveaway marketing: start a giveaway to boost awareness and get customers trying products
- Offer discounts: promote discounts for the first three months or 'first box for free' to convert customers
- Free gifts: offer a free gift to all new subscribers
- Referral discounts/gifts: offer something to customers who introduce their friends to your service
Once you get your first few orders safely sent out give yourself a pat on the back for all your hard work! Each month be sure to check-in and review your order fulfillment process, keep track of your supply chain and finances. Once you start to grow it's worth seeing if you can obtain bulk discounts for your products and packaging materials.
Check if customers are still interested in the products you include, to be sure you're providing the best subscription service. It's important to keep checking in with your customers to increase customer loyalty and keep those happy customers subscribed.
Keep it up and you'll have subscribers for life!