A subscription box business can be very profitable, just ask Hello Fresh. Hello Fresh is one of the most successful subscription businesses in the world and even though their recent profits didn’t hit the marks, there’s still a lot that can be learned.
Are you looking to start your own monthly subscription box service? If so, you’ve come to the right spot because few companies understand the subscription box industry like Thill does. This guide walks you through the step-by-step process of starting a subscription box business and getting it off the ground.
Starting your own subscription box business could be the big break you’ve been waiting for. Taking the time to do your research as you are now is going to be vital to your success. A lot of subscription box businesses struggle. While there’s a number of different reasons why, it’s commonplace.
Companies like Thill specialize in subscription box fulfillment services, so we’re very familiar with helping business owners grow their monthly subscription box business.
(1) What Subscription Box Concept Should You Choose?
There’s a number of different subscription box types you can choose from as you research for ideas and concepts to start.
- Art Subscription Box
- Book Subscription Box
- Cat Subscription Box
- Clothing Subscription Box
- Coffee Subscription Box
- Cooking Subscription Box
- Disney Subscription Box
- Dog Subscription Box
- Fitness Subscription Box
- Food Subscription Box
- Healthy Subscription Box
- Kids Subscription Box
- Makeup Subscription Box
- Skincare Subscription Box
- Snack Subscription Box
- Tea Subscription Box
- Vegan Subscription Box
As you can see, there’s no lack of inspiration and ideas for you to start your own monthly subscription box business.
The foundation of all great businesses is a great idea.
(2) Identifying Your Niche And Customer
There’s going to be a lot of give and take as you create your subscription box business. Things are going to change, but you need to be as detailed as possible. You need to identify your market, niche and competition.
This is the MOST important step because if you get this wrong, you can doom your business before you ever get started. Make sure you’re taking the time to really understand who your customers are on a deep level.
What Niche Will You Choose?
A niche refers to a specific segment of the market for your services and products. In your case, it’s going to be a subscription box business. Just like we gave you some ideas above, these concepts are niches. Think books, dogs, fitness, these are different niches you can choose for your subscription business.
Your box needs to be specific with a particular end customer in mind. This will also make it a lot easier to choose products you’ll be using in your boxes.
Who’s Your Customers?
Once you know the niche you’ll be focused on, you can begin identifying your perfect customers. There’s a lot to consider when identifying your customer.
- Are they male? Female? Both?
- How old are they?
- Where do they live?
- Where do they work?
- How much do they make?
- What’s their passion?
- What do they want?
Some companies would refer to this as building a customer avatar or a customer profile. It’s important you get this right because you want to always talk to your customer and keep them top of mind in every aspect of your new subscription box business.
Who’s Your Competition?
You also need to analyze your competition. A simple Google search can show you who your competitors are going to be. Once you’ve identified who they are, you can begin analyzing what products they’re using in their boxes, what messaging they’re using and many other factors.
(3) Pricing Your Subscription Box
Another big step before you launch your subscription box is determining your subscription box price. It’s so important, pricing is often a big mistake that subscription box owners make. The last thing you want to do is price your subscription box too low.
The general rule of thumb with subscription box pricing is to have at least a 40 percent profit margin.
There’s a lot of things that you have to account for with pricing.
- Product Cost – How much your items cost
- Box Cost – How much your box cost
- Packing Cost – How much it cost to pack your box (wrap, bubble)
- Shipping Cost – How much it cost to ship your boxes
- Fulfillment Cost – How much it cost to fulfill your boxes
- Marketing Cost – How much you pay on advertising
(4) Getting Feedback Will Always Be Important
What will your customers think about your monthly subscription box service? That’s one question you’re going to have the opportunity to answer. Communication with your customers is important.
You always want to make sure you give your subscribers the opportunities to voice ideas, concerns, problems and what they like. This data is priceless as it gives you the chance to consistently improve your monthly subscription boxes.
(5) Your Prototype Subscription Box
While most people think you need to have your subscription box finished before you start marketing it, that’s completely false. This is why having a prototype subscription box is a wise idea.
The whole purpose of using a prototype box is to introduce your subscribers to the type of products you’ll be giving your customers.
Choosing Your Products
With your prototype box, you want to make sure the products you’re included are accurate to what you’ll be sending out on a monthly basis.
Choosing Your Box
The box design of your subscription box is important. At this point, you may have your box design ready or perhaps you don’t. You hear about the unboxing experience a lot, that’s because it’s important to your customers. Choosing the right box design and size is important, you want to make sure you do it right.
Would you use a standard box? Likely not, at least we wouldn’t recommend it, we’d recommend using a custom box. With custom boxes, branding, design and size are the big 3 you need to focus on.
Choosing Packing Materials
Next, what packing materials will you be using in your subscription box? Crinkle paper is a popular favorite for subscription boxes. Even so, you may have a different idea. None the less, you’ll have to figure out what packing materials you’re going to use in your boxes.
(6) Pre-Launching Your Subscription Box
By this time, you’re now getting prepared to launch your new subscription box business.
Why a pre-launch? You want to engage interest in your new business. You want to start attracting subscribers and getting them on your email list. You want to test the waters, test engagement, test how well your concept is working.
Now, it’s time to start marketing your business before you officially launch.
(7) Pre-Launch Checklist
There’s a few key areas that need to be on your pre-launch checklist.
- Your Pre-Launch Period
- Setting Your Signup Goals
- Email Signups And Lead Generation
- Pre-Launch Offer And Landing Page
- Social Media
How Long Should Your Pre-Launch Be?
Pre-launch duration can vary, there’s no exact specific amount of time a pre-launch has to be. With that being said, your pre-launch could be 7 days, 30 days or 60 days. We wouldn’t recommend going longer than 2 months because users can lose interest at that stage.
Setting Your Signup Goals
You’re going to need a goal to reach, it all depends on how many customers you want to launch your business with. The goal is up to you, 20 customers, 50 customers, 100 customers.
You need to start a Google Doc or Spreadsheet, track your numbers daily. It’s easy not to but that’s not going to help you. Make sure you’re tracking everything, track what you’re doing and the results. This will be an essential tool for you to grow your business moving forward.
You need to sign up for Google Analytics too, this will allow you to begin building data. There’s a wide range of important metrics you’ll be able to track using Analytics.
As you pre-launch your subscription box, getting names and emails is vital. We call these subscribers. Once you have subscribers signed up, you can pitch them on your subscription box. In order to get subscribers, you need an offer to sign up for. Make sure that offer is directly related to your subscription box.
We recommend using 20 percent as a benchmark for conversions. This means you need to signup at least 1 out of every 5 people that visit your offer. Out of everyone that signs up, you’ll hope to convert 10 percent of that list, meaning 1 out of every 10 people. As we pointed out earlier, track this daily. If you’re not hitting your conversion goals, make changes when appropriate.
In this scenario, if we get 100 people signed up to our list, we can expect to get 10 new customers.
If you’re under performing, start getting feedback from your customers and ask them how you can make your offer better. You may want to add something, take away something or add value to your subscription box.
What offer are you going to use to get people to signup to your email list? At this stage, your priority focus is building your email list for your launch, so getting names and emails to announce your official launch is going to be vital.
There’s a lot to consider at this point, such as your website, landing pages, email marketing software and others. If you’re not familiar with these, it can be a tough learning curve.
Not only do you have to worry about having a website your customers can order from, you also need an online presence via social media.
There’s no question that social media can be great for a brand new subscription box business.
(8) Pre-Launch Logistics
There’s a few more important things you need to consider during your pre-launch phase.
Product sourcing is going to be very important. While it may seem like a daunting task, it can actually be fun.
Your relationships with vendors will be vital to the success of your new subscription box business. Negotiating with your vendors on prices is an important part of your business. The best thing you can do is reach out to them now, begin building relationships now versus later.
(9) Shipping And Fulfillment
Planning your fulfillment process now versus later is going to get you properly prepared to grow your business. Here at Thill, order fulfillment and shipping is 2 things we know very well.
When you’re first getting started out, you’re likely going to do self-fulfillment. You’re going to be fulfilling your own orders. We recommend mapping out your fulfillment process and creating an assembly line for fulfillment. You want to make sure your packing materials, products, labels and everything in between is where it needs to be for fulfillment to be efficient.
It may not seem like a big deal now, but as you grow, this process becomes critical to great customer service.
With shipping, make sure you let your subscribers know about your shipping cycle. Studies have shown that this adds more value per subscriber. It’s a great move for merchants and subscription box subscribers.
(10) Building Your Website
One of your biggest challenges for starting a subscription box business or any business is having your website built. We touched on this earlier, but want to dive deep to some of the options you have.
One of the most popular platforms for subscription boxes is Shopify. With Shopify, you can easily create a website using one of the many Shopify themes available. If you have plans on outsourcing your fulfillment, Thill has a Shopify integration so you can see how all of your inventory is moving in real time.
Shopify is beginner friendly and one of the easiest ways to have a website built or build that website yourself.
Another popular ecommerce platform is WordPress, which uses WooCommerce. With WordPress, you’ll need to have more hands on experience but there’s a ton of great resources out there for building WordPress websites.
Another thing you want to do as you’re building your subscription box website is setting up your payment processing. There’s a number of different payment processing options you have to ensure you’re getting paid for your orders.
Don’t Be A Perfectionist
Sure, you want your business to look amazing, your box to look amazing and branding be on point from day one. However, don’t be a perfectionist.
No great company is great on day one. Great companies do “ONE” thing great, they adapt. They try something, get feedback and make it better. The most important thing is getting launched and started. You’ll have plenty of time after to keep making your business better.
(11) Time To Start Taking Orders
By now, it’s time to get to the business! It’s time to start taking your first orders.
Over your pre-launch period, you’ve been getting the word out, procuring products, working on your final box design and organizing inserts. Now, you want to start letting your subscribers know when the first shipping date will take place.
Remember what we said earlier, keep them updated on shipping cycles.
(12) Growing Your Subscriber Base
Finally, at this stage, it’s all about fueling the growth of your subscription box subscribers.
The good news, one of the quickest ways to grow your subscription box business is worth-of-mouth referrals. Your current customers can be your best route to fuel growth. Ensuring your customers have a great experience is a big key to subscriber growth.
There’s also some creative ways to grow your subscriber base.
- Have a free contest
- Start a referral program
- Start an affiliate program
There’s a ton of different ways to grow your subscriber list.
You can even try marketing strategies like influencer marketing, search engine optimization or PPC.
More than anything, give yourself the credit you deserve for getting your subscription box business launched!
Word of advice, enjoy the moment and don’t forget to take time for…. “you.”
(13) Building Your Community
Before we close this guide, there’s one more pillar I want to touch on again. “Community.”
The most successful subscription box businesses are those that build a community of loyal fans and followers. There’s a big lesson in that, “build a community.”
One of the greatest assets your business can have is a community you can tap into and have conversations with on a regular basis. Why is that important? Constant feedback of course. This feedback loop is vital and worth every penny. It allows you to get constant feedback on your