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Subscription Box Business Starter Guide

 Subscription Box Business Starter Guide

 

Many people dream of being entrepreneurs, and are turning to subscription box businesses. With a subscription box company, you choose what kinds of products to offer and bundle them together into one package. Customers sign up to receive the products on a regular basis, usually monthly. For example, if you sell a subscription box containing beauty products, during summer months you could include sunscreen and lip balm. Subscription boxes, although a relatively new concept, are a great way to build your own business.  

 

 

 

Getting Started

The first thing on your to-do list should be deciding what kind of products you want to sell. What are you passionate about? It can be anything from healthy snacks to baby products. Once you have a niche in mind, follow these steps:

 

  • Create a Business Plan – This article is only a basic guide. Every business requires research on business models, industry specifics and marketing. Planning ahead is vital in the subscription box world. Start with a rough draft of which products to include each month, and then do some research to determine what’s feasible for your box based on price, availability, and logistics.

  • Develop a Customer Base – One of the benefits of having a business based on subscriptions is that you can sell the products before you actually have them if you plan accordingly. Simply give yourself a large enough grace period to get your product together before the shipping date. For example, any subscribers you get by the end of this month will get their boxes at the end of next month. With the right third party logistics company (3PL) and assembly services on your side, this should be plenty of time to pull together one round of subscription boxes.

  • Find product partners – Now that you have a concrete plan and paying customers, it’s time to approach some businesses and secure product partners. The goal with this is to be able to purchase the products you need at wholesale (or less, if possible). This is the reason it’s important to have a few paying customers before pitching your idea to businesses. The more subscriptions you have, the more buying power and leverage you have to increase your profit margins.

 

Determining Costs

Depending on the type of product you choose, starting a subscription box business can either be affordable or expensive. The price will also vary based on what your product partners are willing to do. While some may offer their products to you at a deeply discounted rate in order to gain exposure, larger companies who don’t need as much exposure may not. Aside from products, there are other costs to consider when starting your business.

 

  • Shipping - This is an obvious expense. Before orders are placed, you have to take into consideration the cost of shipping your customers’ boxes.

  • Warehousing -  When you start, a spare room or garage may be sufficient. However, when your business sees the type of success you are probably hoping for, your personal space may end up being over run. You may end up searching for a larger space near you but another option to consider is warehousing that is outsourced along with a few of the other services we will mention here. Fulfillment is a service that combines warehousing and shipping seamlessly.

  • Kitting - Right now, it may seem like no big deal to assemble and pack your boxes all on your own but, in the future, you’ll either need to hire help or outsource this process altogether. Each has it’s own benefits and obstacles but, generally speaking, outsourcing provides higher quality and accountability at a lower cost. If you end up using a fulfillment service, see if they offer kitting as well. The less you have to move boxes around, the more you can focus on running your business.

  • Credit card fees - Although seemingly not a significant cost, these fees can add up. A reasonable amount is 2.9% plus $0.30 per transaction. If you can find something even less expensive, more power to you!

 

Marketing the Business

Just like the business plan, every business will be different and will require more detail than we will be providing here. However, we can give you a few thoughts and resources to get the gears moving. Think about who your customers will be and where they may be. For example, if you’re selling a beauty supply box, you may want to use social media channels that have a larger female demographic like Pinterest. If you’re selling to business owners, you may want to focus on LinkedIn.

 

It’s common in this industry for people to create reviews of your box. Many of these reviews are in video format. Search “unboxing” on Youtube or almost anywhere and you will get an idea of what your product may be subject to. These unboxing reviews may work as a good marketing tactic for you. Taking a look at competitor reviews may also reveal insights into what your customers may be expecting from these products. Find out where the competition is lacking and use that information as marketing leverage.

 

There are also a few subscription box websites that may help to sell your product. Try mysubscriptionaddiction.com and subscriptionboxes.com to familiarize yourself with selling in this arena. Does your product fit in any of the existing categories? Do you see any direct competition? How do the prices compare? How well are similar boxes selling?

 

Growth and Change

This article isn’t meant to be an exhaustive resource but simply a guide with a few thoughts to get you started. Shockingly, there seems to be a lack of quality resources on this topic but don’t panic, we want to help. We will be diving deep into the subscription box business world over the next few months.

 

Subscribe to the TVI HQ newsletter so you don’t miss the articles as they are published every week. Whether you are looking to start or grow your subscription box company, you have finally found the right resource.

 

Do you have anything to add to this topic?

Please start a conversation on Twitter @TVIinfo. We are looking for case studies and interviews if you are in the subscription box industry! Don’t miss the chance to feature your business and contribute to the community.

 

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