How to Start a Subscription Box Service (+ Most Popular)
The subscription box service business is booming! In 2011, industry sales were just under $60 million. Five years later, sales had increased to more than $2.5 billion! Today, there are approximately 7,000 subscription box services across the world, and 70% of them call the United States their home.
The industry has become such a phenomenon that global research firm Gartner predicts that by 2023, 75% of all companies that sell direct to consumers will offer some type of subscription-based service. So, how can you get in on the action? We’ll get there in a moment!
What Is a Subscription Box Service?
Subscription boxes are a recurring delivery of products to a business or a household. Sometimes referred to as “subcom” (as in subscription e-commerce), this marketing strategy has become a hit with consumers. Management consulting firm McKinsey & Company looked into the popularity of subscription box services and found that most generally fall into one of three categories:
- Curation (55%): The service sends collections of new items for customers to sample and use.
- Replenishment (32%): The service sends consistent replacements of the same types of products.
- Access (13%): The service allows members to access perks and discounts on items.
Today, more than half of online shoppers (54%) say they subscribe to a subscription box service because it offers either convenience or novel experiences.
Most Popular Subscription Box Services
Wondering which subscription box services are raking in the money? Currently, the five most popular subscription box service brands are as follows:
- Dollar Shave Club (29%), which delivers razor and other personal grooming products.
- Ipsy (21%), which delivers cosmetics, skincare items, perfumes, and more.
- Blue Apron (17%), which delivers ingredient-and-recipe meal kits.
- BarkBox (17%), which delivers dog food, treats, and toys.
- HelloFresh (16%), which like Blue Apron, delivers ingredient-and-recipe meal kits.
As you can see, these top “subcom” retailers are in the business of either replenishing existing products for consumers or offering personalized collections of new items on a regular basis.
How to Start Your Subscription Box Service
Most subscription box services either provide people with an item they need regularly, without the hassle of trekking to the store, such as the aforementioned Dollar Shave Club, or the contact lens service Hubble. Others allow people to try out different products regularly; for example, Bean Box will send coffee-lovers different blends to try out each month, while Stitch Fix will send guys new attire to wear and return, always keeping them looking their best!
Here are some things to keep in mind when developing your subscription box business plan.
1. Find Your Niche
Although the subscription box business is booming, it’s only going to work if you have something to sell that someone needs fulfilled regularly, or allows them to try out something new. Figure out what your specialty is and then determine if it would make sense to offer it as part of a subscription service.
2. Mind Your Competitors
There is a lot of competition out there when it comes to subscription box services, but that doesn’t mean you can’t take on other companies (two of the top subscription box services, Blue Apron and Hello Fresh, offer a similar product/service).
For every BarkBox there is a Chewy, and for every Dollar Shave Club, there is a Harry’s. However, if you’re able to dominate a category from the start by offering something truly unique, you’ll be way ahead of the game.
3. Know Your Customers
As with any product or service, you need to know who you’re marketing toward and understand why they’d want this product or service in the subscription model format.
Is your customer a wine aficionado who wants to try out different flavors without the commitment of a purchase? What would motivate someone to subscribe? How much is your target audience willing to spend on a monthly subscription? These are questions you need to be asking yourself.
4. Price Your Box
Subscription box services can live or die based on price. You need to price your box low enough to be competitive, but you need to price it high enough to turn a good profit! That’s not all. You’ll also want to consider the cost of the box itself, packing materials, inserts, postage and shipping, and transaction and platform fees.
5. Determine Fulfillment Methods
Now that you know what you want to send, and who you’re going to send it to, how do you get it to them? Making regular trips to the post office or other carrier won’t sustain your business for long, especially as you grow. A fulfillment center can store your product, and ship it out at regular intervals to your customers. By allowing the fulfillment center to handle this task, you’re able to spend more time on efforts that grow your business!
Subscription Box Service Fulfillment with The Fulfillment Lab
Have some winning subscription box ideas? Great! Subscription box services are here to stay. Simply put, people love them!
“I love getting packages in the mail,” says Ramona Sukhraj. “It doesn’t matter what season it is, a package makes any day feel like Christmas morning. Fighting through bubble wrap, taking inventory of the goods, maybe laying them out for an Instagram photo.”
If you’re considering starting up a subscription box service, or your current service is growing and you need a partner, consider The Fulfillment Lab. Our services help you deliver a better customer experience, generate more revenue, and reduce costs. The end result? Happier customers and more money to expand your growing subscription box service even faster!
Our cutting-edge, proprietary fulfillment software was designed to change the way fulfillment is handled and meet the needs of modern, growing subscription-based businesses just like yours. There’s simply nothing like our system and approach on the planet when it comes to drop shipping subscription boxes. Ready to experience it for yourself? Contact us to learn more!