How To Start a Subscription Box Business

Last modified on June 22nd, 2020

If you’re reading this page you should be considering starting a subscription box business (aka “subbox”).

Otherwise, you have an established business, but you’re looking to add the power of subscription payments to your business model. 

We’ve drafted this easy to follow guide which covers everything you need to know about launching (Part 1) and building (part 2) your subscription box business aka empire.

Are you a Reader or a Doer?

Talking and reading about starting your own business is different to doing. 

For all the ‘doers’ out there – rock on! You can start designing your very own subscription website for free right now using our drag and drop website builder. 

Upload a product, connect a payment system, and you’re away in minutes. 

Thousands of successful businesses have done just that. Watch how easy it is in the video below.

If you’re not ready to take the first step, keep reading below. 

About This Guide

1. This page is a shortened summary of the full eBook PDF version which includes extended, exclusive content. Download all 46 pages on ‘how to start a subscription box’ by scrolling to the bottom of this page and clicking the link.
2. Take notes, so grab a pen and paper.
3. Bookmark this page right now so you don’t lose it, you will need to refer back to it.
4. Follow us on twitter, so you can ask questions.

This is version 3 of this guide. There will be more to come, and I welcome your feedback, so don’t be shy to ask the team or I questions. – Note from Stefan, Founder of Subbly

Preface: How Big is the Subscription Market and Why is it Growing?

How big is the subscription market in 2020? 

Yes you make money from a subscription business model. People have been doing that since 2004.

The earliest subscription box we could find in our research appeared in 2004 and was called The Sampler. It was a simple collection of samples from indie craft producers, record labels and zines.

One of the most famous catalysts for the industry’s rise was Birchbox. They launched in 2010 and in less than a year, they had 45,000 members. Everyone was talking about subscription boxes from that point forward. 

Today, everyone is offering subscription services and boxes. Even Disney has jumped onto the bandwagon. In the four years between April 2014 and April 2018, the industry grew by 890%

Who are the biggest subscription box companies in 2020? 

Clutch surveyed 528 online shoppers to find out and these were the results

. 

What percentage of people buy subscription boxes in 2020?

Clutch’s 2019 survey found that more than half of online shoppers (54%) say they are a member of a subscription box service (n=285).

Another 2019 private study found 25% of all shoppers receive a subscription box regularly

McKinsey’s more comprehensive study found 15% of all products and services sold in the economy are subscription boxes.

Either way, the category is huge and growing. Subscription models have passed mainstream adoption and you’d be foolish to ignore their power to drive superior business results. 

Why is the Subscription Box Business Model Growing?

The business model is increasingly popular for a few reasons which are attractive to both the buyer and the seller. 

Customer Convenience & Recurrence

Leaving our living room to do anything unessential just seems really inconvenient these days. Netflix, Postmates, Amazon Prime, and more bring everything to you. Just click on it, and it’ll be there. And one brilliant person said: Well, why stop there? What if you only had to click once and you’d get what you want on a consistent basis? Yes, brilliant person, we hear you.

Subscription Businesses are Cash Rich

Customers get monthly treats, surprises and helpful items you always need, at the convenience and recurrence you always want.

But for the merchant, it’s even better. As a subscription box business owner, you’ll have the stability of recurring monthly revenue that gives you the capacity to grow over time and build brand loyalty (more on this later). Talk to any accountant and they love high ‘free cash flow’ figures. Subscription business models allows for 

Time to Get Started

We hope the information above has convinced you to start your own business and carve a slice out of this expanding market. 

If it hasn’t, chat with us or join our Facebook group to talk with a bunch of other people who will be able to answer your questions. 

Step 1: Conceptualising Your Subscription Box Business

What’s my passion?

If you want to create a subscription box business you first need an idea.

Find your passion

I can tell you from personal experience – that if you’re passionate about something, you’ll actually want to do it, and you’ll tend to do a much better job in the long-run. 

So the first thing you need to do is figure out what topic you really enjoy and how it may be possible to share that interest via a subscription box with the rest of the world.

Is someone else doing it already?

The most important aspect of this initial step is recognizing that there’s probably already a lot of others out there with the same passion. That’s ok. There’s ways around that which will cover later which will help reduce competitive forces.

Differentiate and be Distinctive

You can differentiate yourself by choosing how specific and creative you get within your niche. This will also help you understand your customer persona better which we discuss further in Chapter 2.

So let’s say you love fashion (like me). You’ll want to pick something that people want on a recurring basis that satisfies a particular need or desire and can give your customers a great experience when they receive their subscription box!

1 – Choosing your Niche

2- Decide your subscription model type 

Do you want a discovery model (think Birchbox) or do you want a convenience model (think Blue Apron)? Read more on subscription box models to understand this better.

3- Set your pricing strategy

You don’t need to settle on an exact amount now, because nearly everyone changes their prices throughout the company’s life cycle. However, you need to choose whether you want to go for the premium market or the every-day market.

Companies like Blue Apron and HelloFresh are passionate about making healthy cooking easier for those who are much too busy to go to the store, come up with recipes, and don’t have hours to cook. This is their original customer persona (What’s this? Keep reading…). But now they are getting more specific: by creating options for those with gluten sensitives and other special food requirements they have access to a new target customer persona.

Get started right now and trial Subbly for free or investigate all of the platform’s features here. Download an extended guide with exclusive content by clicking the PDF download link at the bottom of this page. Or, go to the homepage and talk with one of our team right now via live chat to ask the questions you need answers to

Step 2: Defining Your Customer Persona

Who’s my customer? Meet Jane and Bill.

So now you’ve got your subscription business idea. You’re excited and want to start selling, but who are you selling it to?

Creating customer personas will drive so many other decisions and keep you focused once you start a subscription box business. 

This step is critical to making sure you are advertising to the correct market and making sure there even is a market out there for what you’re hoping to sell! 

I can’t stress this enough. But this is probably the number 1 most important step. 

But how do you create personas?

You could use your own opinion, but you’re going to make so many assumptions, the result will be highly fictional at best. 

A better way is to survey a bunch of your potential customers. This will at least turn a blind guess into an educated one. 

You’ll want to understand your customer including their:

• Buying habits
• Interests
• Motivations for purchasing
• Median income
• Potentially sensitivities (what makes them totally want something versus what could repel them)

The answers to these questions will help you with deciding anything from prices to design. 

Use polls, surveys, or even just talk to family and friends to get an idea of what kind of customer would purchase your subscription box.

Continual Research is Key

This will be an ongoing process and you’ll constantly learn about your target consumer. But getting started early on will make a big difference. You want Jane and Bill to be itching to get a piece of your box 🙂

Get started right now and trial Subbly for free or investigate all of the platform’s features here. Download an extended guide with exclusive content by clicking the PDF download link at the bottom of this page. Or, go to the homepage and talk with one of our team right now via live chat to ask the questions you need answers to

Step 3: Developing Your Box & Offering

What’s in my box?

Now this is the fun part! Designing and creating your first box. This is the first thing your customers will see and from the moment it arrives at their front door the experience begins. Ultimately this is your “test” box so don’t be afraid to get a little crazy and make it exciting for your customer. Imagine yourself opening it… what would you want to see?

What are the different types of subscription boxes?

McKinsey found subscription boxes fall broadly into three categories:

• Curation (55%) – A service sends collections of new items for customers to sample and use.
• Replenishment (32%) – A service sends consistent replacements of the same types of products.
• Access (13%): A service allows members to access perks and discounts on items.

Things to consider:

• Pricing: Low enough to keep your customers but high enough to keep the doors open
• Number of items: How many items are you sending out? Will it change depending on the shipping frequency of the box?
• Type of products & their packaging considerations: Ice cream? You’ll need a specific type of insulation for that. Fragile jewelry? Hello packing bubbles.
• Size of the box: Weight and size play into shipping costs!*
• Design & aesthetic: It’s all about the visuals here.
• Engagement experience: Think about what your customer wants to feel when they open the box and what it will take to help them get there! We’ve got some suggestions for you.
• Written content & packing information: Personalized message? Details about the product? Figure out what you’d like to communicate with your customer and how it can enhance their experience.

Get started right now and trial Subbly for free or investigate all of the platform’s features here. Download an extended guide with exclusive content by clicking the PDF download link at the bottom of this page. Or, go to the homepage and talk with one of our team right now via live chat to ask the questions you need answers to

Step 4: Finding Suppliers, Sourcing Products & Building Relationships

Where do I get the products to put in my box?

There are plenty of places online that can not only give you ideas on products to put in your box, but also give you an easy place to buy them! Shopping spree anyone? As long as you don’t just buy everything in sight like I do, then you can find some awesome (theme fitting) items to make your box even better.

No Shortcuts

The real key here is to really just spend time doing this step, there’s no skipping this step and it’s probably the most important one. Alternatively you could try hiring a virtual assistant to help you with your outreach and product sourcing if you are tight on time. Right now if you’re not cash rich then you’re likely time rich so how you want to approach this is up to your circumstances.

Quality is Key

You want to make sure you pick high quality products that give value to the customer and make them want to come back for more. Don’t cut corners, the customer will know. So find suppliers who agree with your mentality. You can’t start a subscription box business without products to put in the boxes! So it’s time to get to work!

Finding good suppliers will take effort and time but remember to:

• Try the products yourself
• Ask for a credit line – you want favourable payment terms to make sure you have healthy cash flow for the first couple of months
• Request extra samples if you do commit to a purchase
• Offer cross marketing opportunities as an incentive to get them in your box
• Save time by creating a templated process. Use a CRM to manage contacts and outreach and follow up. Template your emails.

Places to find products & suppliers

• Amazon – This one is sort of a DUH. Amazon has so many products that you’re bound to find something that fits your niche and can add value to your box! Check out the Amazon Bestsellers page to see what’s hot.
• Etsy – Love specially crafted items? This is the place to go! Etsy has individual vendors that sell unique products that range from babywear to interior design items. You can find some awesome products that will make that month’s box more special!
• Pinterest – This isn’t just a place for picture collages. Search your interest and check out all the places you can find it!
• And more, we’ve compiled a list of places to find suppliers and products to put in your subscription box.

Want a professional opinion? Check out TrendWatcher to see exactly what consumer trends are and what people are wanting!

Get started right now and trial Subbly for free or investigate all of the platform’s features here. Download an extended guide with exclusive content by clicking the PDF download link at the bottom of this page. Or, go to the homepage and talk with one of our team right now via live chat to ask the questions you need answers to

Step 5: Building Hype Around My Business – Pre-launch Strategy

How do I create excitement for my new subscription business?

You’ve got the main components of your idea down and now you want to start getting in front of your target customer persona(s) on the interwebs and validate your subscription box business model by getting some email signups or pre-subscribers! When something is talked about and creates hype, people want to be a part of it! This is the time to start creating an online presence for your subscription box business so once you launch, everyone will be itching to be a part of your community!

Please do not skip this step when you start a subscription box business.

There are two approaches to a pre-launch campaign, one typically coming after the other:

Email Signups & Pre-subscribers

Let me explain…

Email Signups

Someone interested in your business and gives you their email address. A signal of interest which can help validate your business concept. These people can be emailed when you go live.

Pre-subscribers

Someone who has serious buying intent and puts their card details in to actually subscribe when you launch. This is a very strong signal of validation for your business idea & model.

The first thing you’ll want to do, regardless of which way you decide to go is to get the word out there about your business and get people excited about your business.

Building Hype 101 & Validating Your Business by Collecting Emails

• Reach out to social media outlets (create your business Instagram (instagram.com), Facebook (facebook.com), and Twitter (twitter.com) and get active! Find people who may be interested in what you’re offering and talk to them about potentially collaborating or advertising your product to reach their own following (your target personas).
• Create a pre-launch page to briefly tell people about your subscription business and have them sign up as pre-subscribers (Subbly allows for you to get committed pre-subscribers which will be your first customers!).

Some great launch page sites are: LaunchRock, Instapage and Unbounce. These tools will allow you to collect email addresses of interested people so you can communicate with everyone once you launch! And since this is a one-page intro, it will give you time to create your full store and site.

Back to it…

• Announce your pre-launch and see if you can purchase some ads if your budget allows and if not, ask your friends to help by sharing your pre-launch page on their social media. You’ll be surprised at how many people you might be able to reach!

Straight to Pre-subscribers?

Alternatively you can skip the the Email signup stage and go straight for the kill and get Pre-subscribers. There are arguments for and against doing it this way, and if marketed correctly, you could do this and it would be very successful! FYI you can do this on Subbly.

Get started right now and trial Subbly for free or investigate all of the platform’s features here. Download an extended guide with exclusive content by clicking the PDF download link at the bottom of this page. Or, go to the homepage and talk with one of our team right now via live chat to ask the questions you need answers to

Step 6: Setting Up Your Website

Ok, now how do I get my business set up and online?

Please note if you’ve already got a business you might be set already, but if you’re still needing software that can handle subscriptions then read on.

Your idea is becoming a reality and if you’ve completed all the chapters and steps then you need to get your actual subscription enabled website ready for going live. You may already have decided to go with the pre-subscriber approach using a platform like Subbly that can handle this stage. If so, then you’re on your way.

If not, then let’s talk about ecommerce platforms and software to get you setup!

Considerations

This step is really critical. You need to consider multiple aspects when you decide on what platform or solution to go with to start your subscription box business. (Yes, more considerations… it ain’t easy getting a business going but I promise we are going to make it as painless as possible!). In fact this part is a paramount when you decide to start a subscription box.

You want to choose something that…

• …can scale with you,
• …is trustworthy and reliable,
• …has been tried and tested,
• …you like the feel of,
• …will be able to support you when you have a problem.
• And most importantly, something that your customers will like!

Sounds like the handbook to a successful relationship if you ask me… minus the customer part, that’s kind of weird.

Possible Routes

There are 3 different main types of solutions:

1. An out-of-the-box subscription ecommerce platform
2. A custom developed solution
3. Combination of #1 and plugins or #2 and plugins
4. A marketplace solution

We’re going to make a big assumption right now… That you’re going to go with #1 (because we’re totally and utterly biased ?).

Features

Ok, so you need to consider the features for the software platform that you’re going to choose to start a subscription box business. What do you need and what are nice to haves?

Some features to consider:

• Automated re-billing
• Order management
• Shipping integrations and label generation
• Customer management
• Website builder & designer
• Marketing tools: refer-a-friend, coupon codes, etc.
• Content publishing abilities for things like blog posts and pages
• One time transactions as well as recurring charges
• Customer survey capabilities

There are many more… but those should get the cogs turning a bit for what is important to you and your business. Realistically you want something simple yet capable to help you start your subscription business efficiently!

Be wary of features you don’t need! They may seem appealing but could end up complicating your decision and making your business model more complex than necessary. No, thanks!

Pricing

When you’re weighing up features, you should also weigh up the costs. Those could include: monthly, transactional, setup or even hidden costs. Make sure to look into your recurring costs for running your business and what makes the most sense!

Customer Support

This one is super important. How responsive is the platform’s support? Is speed important to you, or quality of care? Or both?!

Customers need to know they are going to be looked after, no matter what. You don’t want to be left behind if the platform expands or shrinks or if they add features.

One thing that might be really advantageous and important to you is being able to get on the phone with someone. I’m proud to say that since Subbly launched 3 years ago, even to this day you can still schedule a call with our CEO. This might mean nothing to you, you might just care about email support. So whatever is important to you, just make sure you factor it in.

How Long To Implement?

This one might be important to you if you’re on a tight deadline. But how long does it take to set up and have a site ready to sell? An hour? A day? 1 week? When you start a subscription box business, you want to make sure you can remain LEAN (I highly recommend reading The LEAN Startup by Eric Ries). So make sure you can launch fast and scale fast to validate your business (more on this later).

Can They Scale With You?

Naturally you’re going to grow your business and you must consider if the platform or company you choose can scale with you.

If you have any questions about Subbly feel free to tweet us. GIFs are welcome 🙂

Get started right now and trial Subbly for free or investigate all of the platform’s features here. Download an extended guide with exclusive content by clicking the PDF download link at the bottom of this page. Or, go to the homepage and talk with one of our team right now via live chat to ask the questions you need answers to

Step 7: Launch your Subscription Business

Ahhh, I have my first orders in! Now what?

Okay breathe. Now jump up and down with excitement. You’re officially a subscription box business owner! … Ok now savour it for a minute, now back to work for the next mile stone. No rest for the wicked when you start a subscription box. 🙂

Side Note 1

If you haven’t already gotten emails or pre-subscribers from the time of your pre-launch you’ll need to apply some of “Building Hype 101” section and the two strategy suggestions to get your first customers! You will also likely need to utilise social media and dip into Chapter 6’s marketing strategies in order to get people to know about your business and sign up!

Side Note 2

The best way to go if you didn’t go with a pre-launch strategy? Social media! Tell everyone you know to post something about your new business and you’ll have people coming through your website in no time.

Your launch is a big part of how you’ll keep going with the business. Once you have your customers and your ship date all set, you’ll need to start getting fulfilment underway so people can start receiving their boxes!

Get going:  

1. Curate your box (see Chapter 3). Depending on when you’ve set your shipping date and what your products are (if they’re perishable* you’ll likely have to wait until an order is placed), this is something you may want to do before this point. Since you’ll have everything ready from your box, to packing materials and notes, you can easily put it all together!
2. Ship out your orders. The great thing about the subscription business model is that if you’ve gotten some pre-subs you’ll have cash flow coming in to begin shipping. So you’ll be able to use your pre-subscriber revenue to create your first boxes and get them shipped out! You’ll need this process hammered out or else you’ll get overwhelmed quickly each time you ship.
3. Alert your customers. Let your customers know the upcoming shipping date and make sure you’ve got your business automated! You can setup automated emails to consistently notify your customers. You don’t want upset customers who have no idea when their boxes are coming. Subbly can help you with this.

And that’s it…for now?

We’ve come to end of our guide on “how to start a subscription box business”. I am really glad you joined me, and I hope our journey and relationship doesn’t end here. Keep reading the second part of this guide which is all about how to grow a subscription box business.

If you’re serious about starting a subscription box, then I’m sure you have more questions, if so, then let’s talk. Feel free to tweet us.

If you have any questions or need any help starting your business, then please feel free to contact our friendly support team! We wish you the best of luck in starting your subscription box business.

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