Subscription boxes are gaining rapid popularity.
There’s a good reason behind that. They are super convenient: instead of placing orders over and over again, customers can subscribe to products based on their needs and get those delivered in a monthly box (or some other set interval). Moreover, customers get a more personalized experience, whether through the contents, messaging, or packaging, which they won’t if they buy the items separately.
But a lot goes on the other end to make this convenience possible for customers. The nature of the operations puts such businesses in the eCommerce domain. And incidentally, that brings in a lot of deliberation into things such as the contents, suppliers, shippers, and orders.
The good news is, if you’re planning to get into the subscription eCommerce business, you don’t have to scramble trying to gather insights from several sources. We’ve done the heavy lifting and here’s the one guide that tells you how to set up a successful subscription box business.
Subscription box is a recurring eCommerce business model where customers subscribe to a set of items and receive those products periodically. These boxes typically comprise items that customers need to purchase frequently, for instance, beauty products, groceries, and stationery.
The subscription box business model helps build a loyal customer base while reducing the customer attrition rate.
Subscription eCommerce involves a higher cost of packaging and delivery and more complexities than the traditional eCommerce business model. Since you’ll need to provide customers with a unique experience to encourage repeat purchases, you’ll need to spend significant resources on designing the packaging for your box. You’ll also need to procure contents from different suppliers, which will further complicate your business processes.
So, here’s the bottom line: whether you’re a new or experienced player in the eCommerce space, setting a subscription box business isn’t going to be easy. Building a subscription box business from scratch is quite different from building a typical eCommerce business and several unique challenges.
Worried about how to set up your subscription box business? We’ve got you covered.
Here are the seven steps to keep in mind.
For items as common as clothes, there are many subscriptions a customer can choose from. In a market this saturated, you need to differentiate your products from competitors’. And defining a niche to operate in is a powerful way to differentiate your brand.
By selecting a niche, you’ll be able to pinpoint your target market effectively. At the same time, you’ll be able to craft a personalized experience for your target market. For example, instead of offering generic boxes of kid toys, offering boxes of educational toys, gaming toys, or group activity toys will help you create a stronger experience for your customers.
After you’ve finalized a niche, the next step is to understand the needs of your target market. This can be done in the following ways:
Surveys: Surveys can help you identify the preferences of your target audience, including pricing expectations, contents of the box, and frequency of orders before you launch your subscription box.
Interviews with target customers: Another powerful method is to identify specific individuals from the target audience and conduct in-depth interviews with them. By initiating conversations with members from your target audience, you’ll understand the psychological needs of your audience, which will help you uniquely design your subscription box offering.
The next step is to analyze the offerings from your competitors. This will give you an idea about the similar subscription box offerings out there and provide you with insights into the pricing ranges of your competitors.
Having analyzed results from the survey and performed competitor research, you should be able to identify the right components for your subscription box. However, don’t fall into the trap of replicating the contents that your competitors are already offering. The goal should be to create a unique offering that not only provides customers with a personalized experience but also sets your brand apart from the competition.
Once you’ve locked the components of your box, you’ll have a clear idea of setting up the initial subscription box. Follow these steps:
Identify the suppliers: Select the right suppliers to procure the box items. Keep in mind the pricing and reliability of these suppliers, as you’ll be banking on them to fulfill your subscription box orders.
Have a unique box design: Determine the specifications of the box and design a box cover that is appealing to your target audience. You can procure these boxes from a supplier or manufacture them yourself but that will require some extra costs on getting the required machinery.
Finalize the pricing of your box: Adding the cost of the components and packaging will give you the cost of the subscription box. After this, the market price of the box can be calculated using the following formula:
Minimum box price = 1.4 X Total cost of the box
*Based on CrateJoy’s recommended 40% profit margin
Try that your box isn’t too expensive. If your offer price turns out higher than your competitors’, you can try modifying suppliers, box items, and packaging providers.
Shippers are a key ingredient of your subscription box business. If you choose a shipper that fails to deliver customer orders on time, you risk a poor customer experience. And if you choose a shipper that charges a lot, the increased delivery costs can discourage your customers.
Offering free shipping can reduce your customer abandonment rate and provide you with an edge over your competitors. Check out this blog to identify the right free shipping model for your business.
Once you’ve finalized the components, packaging, pricing, and shipping services for your box, you have all the necessary ingredients for designing your website. The website design is very important because the website will be the face of your brand and if it doesn’t resonate with the target audience, customers will stay away from your brand.
To design a website, you can use one of the following three options:
Website builder software: These tools offer a WYSIWYG editor that lets you design websites using pre-built templates. You simply need to select the right layout and customize elements based on your subscription box needs. You can choose any website builder tool out there, as long as it offers eCommerce management functionality.
eCommerce software: An eCommerce tool with integrated website building functionality will also help you design your subscription box website. Such a solution has dual advantages: You’ll be able to create a website as well as manage product listings and orders from within the tool interface.
Website builder services: If you’re more flexible with your budget and have specific ideas for your website that can’t be implemented using website builder tools, you can hire the services of an organization specializing in building websites. These services design your website based on specific design preferences, thus allowing you to offer a more personalized experience to your customers.
Brand messaging is all about appealing your audience. Once you’ve followed all the preceding steps carefully, you’ll have plenty of information to create a strong brand messaging. You’ll have insights into your target audience from survey analysis, a list of customer expectations from customer interviews, and an understanding of the branding methods of your competitors.
Craft a creative brand motto or slogan that resonates with your target audience, design a logo that appeals to them, and create brand content for your audience. With this, kickstart marketing campaigns for your subscription box using the following approach:
Set up social media accounts on prominent social media channels, including Facebook, Instagram, and Twitter. Also, create a blog section on your website.
Set up a team of content creators, copywriters, and editors to create content for social media posts and blog content. Ensure regularity in blogs and social media content.
Create paid marketing campaigns to promote your website and social media channels. You can use ad services from all these channels to target potential customers.
Besides campaigns and marketing efforts, you can also offer introductory or limited-period discounts to attract new customers. In all the marketing efforts, however, keep in mind the return-on-investment on your marketing activities.
If you want to ensure the success of your subscription eCommerce business, you need to have the right tools for the job. Software solutions not only help you reduce manual efforts, but also provide you with actionable reports that can help you make informed business decisions.
We recommend investing in the following software solutions for your business:
Inventory management software: Tracks the stock levels and movement of your inventory. Also, informs about real-time stock levels, which helps you avoid overbooking or stock outages.
Payment processing software: Lets you receive payments for online orders using different payment methods such as credit cards, debit cards, and online banking.
Accounting software: Updates the accounts payables and receivables for your accounting records. Some solutions also integrate with your inventory management and eCommerce systems, thus auto-updating your records whenever a product is sold.
Social media management software: Allows you to manage all the social media accounts for your subscription box business. Also lets you track the engagement rate of each post and the ROI of your social media campaigns.
The applications selected in this article are examples to show a feature in context and are not intended as endorsements or recommendations. They have been obtained from sources believed to be reliable at the time of publication.