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How to Start a Subscription Box Business

The subscription box market is one of the fastest growing sectors in eCommerce. With an expected annual growth of 18.2% and an estimated market value of $71.77 billion by 2028, subscription boxes are more popular than ever. That fervor is well earned thanks to the model’s convenience, personalization options, and savings potential.

If you’ve yet to embrace this lucrative offering, we’re here to share the best practices for selling them and how to start your own subscription box business. Already offer this service? Keep reading to learn how to grow and scale it.

The power of the DTC subscription box model

Subscription boxes come in many shapes and sizes, from replenishments of consumable to curated collections, and contain multiple items. Customers receive their subscription box on a regular basis, be it weekly, monthly, or another cadence.

Direct-to-consumer (DTC) brands are well positioned to capitalize on this lucrative, recurring revenue stream: You enjoy repeat orders while customers benefit from predictable deliveries (and possibly have control over what they receive).

According to Jennifer R. Wolkin, PhD, an NYC-based clinical psychologist, subscription boxes can uplift our emotions:

“When we find something new in the box, the mesolimbic dopamine pathway, thought to play a primary role in our brain’s reward system, is likely stimulated to release dopamine. Dopamine is known as one of the reward and pleasure-inducing neurotransmitters.”

So, subscription boxes act as mini rewards by firing up our dopamine receptors, which makes us feel happier. While a higher percentage (46.5%) of consumers choose this offering due to practicality, 26% said they signed up for a subscription box as a way to treat themselves.

That’s reflected in American spending habits, with some shoppers having as many as ten subscription services. As a DTC retailer then, subscription boxes pose a rich opportunity to increase your bottom line while delivering positive experiences to your customers.

How to start a subscription box business’ best practices

Understanding what it takes to deliver a showstopping subscription box will allow your brand to stand out from the flood of competitors in the sector. Before you dive into adding subscription box services to your online store, arm yourself with some proven best practices on how to start a subscription box business.

Choose your niche carefully

Be specific about what you want to sell as part of your subscription service. Finding a niche will boost your bottom line by making you the go-to merchant for that unique offering. Aim for an industry that’s desirable but not overly competitive. Look for a gap in the market and see how you can fill that gap with a subscription service.

For a concrete example, Dollar Shave Club is a DTC subscription brand that enjoys great success as a result of narrowing their market segment. Specifically, they took their model a step further by niching down to razors. By filling that gap in their market, Dollar Shave Club has become the most popular subscription box among men and the second most popular service overall, just behind Amazon Subscribe & Save.

Take inspiration from Dollar Shave Club and seek out a popular, yet underserved niche.

Give attention to the presentation

People often buy subscription boxes as a gift for themselves or others. So, maximize that gifting experience by investing in your presentation. Putting in that extra effort produces a curated unboxing that builds consumer anticipation for each shipment and fills them with joy when they open it.

A well-crafted unboxing experience can also increase perceived value, generate brand loyalty, and boost your chances of going viral. Simply search “unboxing experience” on YouTube to see how much people love presentation.

As part of their Unboxing series, Lumi unboxed Empathy Wines, a DTC subscription wine service co-founded by entrepreneur Gary Vaynerchuk. Even the company’s outer mailer packaging is branded, which boosts visibility from the start. It continues inside, oozing personality and creating a visually appealing backdrop to the subscription products. Bonus gifts of collateral cards, stickers, and information cards about the farmers and brand pull the customer into the experience and enhance the company’s values.

Choose a fulfillment partner

Don’t fall victim to fulfillment bottlenecks. Before you even launch your subscription service, plan how you’ll fulfill orders. Knowing how to execute your vision is an essential first step in how to start a subscription box business.

Shipping subscription boxes requires more legwork than standalone products. You need to curate packages, add multiple items, remember additional details (such as information cards), and ship them out on time. You also need to account for new subscribers and cancellations.

Find an experienced subscription box fulfillment partner to help you ship subscription boxes smoothly and without feeling overwhelmed. Organization is key here. Inform your fulfillment partners in advance of upcoming subscription box contents and ensure they have all the inventory they need to prep orders.

Prioritize personalization

The pull of personalization is one of the main factors that encourage consumers to buy subscriptions; these customers want their recurring orders to delight and surprise them. Whether you curate boxes based on buyer answers to a quiz or give them the freedom to choose their included products, tailor your subscription box experience.

Stitch Fix is a subscription fashion service that understands well the power of personalization. They send clothes straight to customers’ doorsteps, with each item carefully hand-selected based on subscribers’ size, style, and price range. Customers simply complete a style quiz, choose their frequency schedule, and then receive clothes from an assigned personal stylist. Stitchfix shoppers can choose the items they want to receive from the given recommendations, or they can leave the choice up to the stylist.

How to start a subscription box business

Having covered the best practices that support a successful model, let’s look at the steps you need to take to start a subscription box business.

Conduct market research

How to start a subscription box business that’s a smashing success?  You need to find a lucrative angle. Conduct market research to uncover consumer interests and identify gaps in the industry. This will also reveal which offerings perform exceptionally well.

You can learn what your target segment wants from a recurring subscription by speaking directly with customers, launching surveys, and looking at forums and competitor offerings.

  • Is there a particular category or product type they seek?
  • How much are they willing to pay?
  • How often do they want to receive the goods?
  • Is it for themselves or someone else?

Typically, there are three main reasons why people buy subscription boxes:

  1. Replenishment:
    Save time and money by automatic replenishment of repeat purchase items
  2. Curation:
    Receive a tailored selection of different items designed to delight and surprise
  3. Access:
    Enjoy exclusive opportunities, offers, and products with additional VIP perks

Take meal subscription kits for instance: This category of subscription box is incredibly popular. From child-friendly meal kits to healthy recipes and prepared meals, there’s an abundance of choices for anyone looking for an easy meal prep option.

Since so many companies already offer this service though, you may struggle to make your brand stand out if you don’t have a great unique selling proposition (USP). That is essential in how to start a subscription box business that succeeds.

Identify opportunities in existing inventory

As well as scouring the subscription box market for ideas, you can also look for opportunities within your existing inventory. If you already sell products, you should have a good idea of your consumer’s main interests. Whether you’re a general merchant who offers a wide variety of stock or a specialist retailer who’s niched down to a specific category, analyzing your existing catalog reveals valuable insight into what your customers already enjoy.

First, review your most popular items to see what your customers purchase most. Next, look at what products people frequently buy together. Then, use that information to build curated subscription boxes based on buyer interests. You can offer replenishment subscription boxes or curated collections related to your bestsellers.

Look at the slow-moving items as well, as subscription boxes also pose an opportunity to clear old stock. Products that may not sell well on their own could make great additions to recurring bundles when positioned next to star products and bestsellers.

Source high-quality products

A box subscription is a long-term commitment — your subscribers expect worthwhile products in each delivery. Items of consistently high quality will not only satisfy them but also foster loyalty and encourage word-of-mouth marketing.

Look into various sourcing methods like wholesale purchasing, brand partnerships, or even manufacturing yourself. Each has its benefits, but your choice should align with your brand image and the needs of your audience.

MyFBAPrep’s warehouses, for instance, are strategically positioned near major ports to offer an efficient sourcing process. That proximity allows quicker transit times, reducing the distance and time between your products and customers.

Run your numbers

You should have a good grasp of your inventory, fulfillment, marketing and sales costs if you already sell products online. Knowing your expenses will allow you to dig deep into the financial viability of your subscription box idea.

When crunching the numbers for this offering, remember to look at the costs of:

  • Box presentation
  • Mailer packaging and any packing materials
  • Shipping
  • Picking and packing
  • Printed materials
  • Products to be included in the box
  • Marketing

Consider every expense related to launching your subscription box to work out your budget, price point, and potential returns.

Pricing extends beyond covering costs; it has to be worthwhile to your customers while maintaining a healthy profit margin. The price should reflect the perceived value of the box to ensure customers feel they’re getting their money’s worth. Look at how much your competition charges and what they offer at comparable price points to inform your final cost.

Craft a unique selling proposition

The competitive subscription box market requires a unique selling proposition (USP) to stand out. It’s your chance to tell customers why they should choose you over competitors. Your USP could be an impressive product selection, commitment to sustainability, charitable contributions, or an exceptional unboxing experience.

Here are a few potential areas to focus on while crafting your USP:

  • Unique product selection:
    The products inside your box form the core of your offering. A unique product selection could look like offering items not readily available elsewhere or those that cater to a particular niche. You might curate artisanal products from around the world, or perhaps your box contains unique book covers designed to trend on #booktok. Whatever you choose, your product selection should resonate with your target audience and their interests.
  • Commitment to sustainability:
    As consumers become increasingly eco-conscious, a commitment to sustainability can be a powerful USP. This can involve using recyclable or compostable packaging, sourcing products from companies with sustainable practices, or offsetting your carbon emissions. Not only does this attract eco-minded subscribers, but it also positions your brand as socially responsible.
  • Charitable contributions:
    Tying your subscription box to a good cause can be a strong enticement for shoppers. Send a portion of your profits to a charity that aligns with your brand’s values or the interests of your target audience.

For example, partnering with an organization that promotes literacy would be a great fit if you sell children’s books. This adds a feel-good factor to your subscription box and leaves a positive impact.

Create a powerful unboxing experience

Having discussed the power of presentation, we felt it wise to reiterate the importance of a memorable unboxing experience.

This is the first physical interaction consumers have with your brand, so you need to seize the opportunity to wow them, build excitement, and create an emotional connection. A beautifully designed, well-packaged box can elevate the perceived value of your subscription and make customers feel they’re getting a luxury experience.

Think about what your customers will see when their subscription box lands on their doorstep. Consider how you can create moments of delight through packaging choices, design, print materials, and the small, unexpected details throughout. This could take the form of personalized notes, attractive packaging, or unexpected freebies.

But it’s not just about what’s inside the box; how it reaches your customers is equally important. With customers increasingly looking for environmentally friendly options, it’s also essential to balance aesthetic appeal and sustainability. As such, eco-friendly packaging can significantly enhance your brand image. Consider using recyclable or compostable materials, minimizing waste, or incorporating a sustainability message into your box design.

Your internal product arrangement can enrich the unboxing experience as well. Review packaging suppliers and team up with someone who’s able to bring your unboxing visions to life. You may be able to work with existing suppliers, or you might want to expand your network by working with new packaging providers.

The goal is to create a memorable experience that makes your subscribers look forward to each delivery, and MyFBAPrep’s meticulous packing guidelines could be the asset you need. Meanwhile, our professional kitting and bundling services can boost the appeal of your USP. Whether you already have a standard packing method or need to develop one, we’ll present your items in a consistent and appealing manner.

Map the customer journey

Knowing how your buyers interact with your brand will ensure you cater to them at every stage of the customer journey. That journey contains multiple touch points, and it’s likely your customers will experience several of these before making a purchase decision, so you need to make them count.

Some touch points you need to consider when mapping your customer journey are:

  • The first interaction someone has with your brand
  • Product pages
  • The buying experience
  • Social media content
  • Online reviews
  • Post-purchase communications
  • Delivery experience
  • Follow-up communications
  • Ongoing interactions

Analyze each step and look for ways you can make customers feel appreciated and delighted throughout their subscriber experience.

Set up your tech

Subscription services often require more advanced tech than a standard eCommerce website. Some online marketplaces and sites make it easy for retailers to offer subscriptions. For instance, Shopify users can set up recurring payments to sell subscription products. Meanwhile, Amazon merchants can offer Subscribe & Save options for customers who make repeat purchases. Alternatively, you could set up a dedicated subscription platform using a platform like Subbly.

Other tech considerations to think about when launching a subscription product are an onboarding quiz, email campaigns, and an app. While none of these are necessary to launch your subscription box business, they could help you stand out from the crowd.

Birchbox, a beauty subscription, lets customers build a tailored box based on their answers to a beauty quiz. This feature is a great way to add personalization to the subscription experience.

Nail your picking, packing, and shipping

Shipping subscription boxes requires more attention to detail than standard customer orders, especially if you deliver internationally. So, nailing your fulfillment strategy for picking, packing, and shipping is a crucial step when launching this service.

Once your box is curated and packed to perfection, it must reach your customers swiftly and in pristine condition. To achieve that end, you need to:

  • Choose a reliable shipping carrier:
    Your customers expect their boxes to arrive on time and undamaged, and the right carrier can help you meet that expectation.
  • Track packages and manage shipping costs:
    Keeping expenses in check is essential, as they can significantly impact your bottom line, so you need to set up a robust management system.
  • Develop an international strategy:
    Global shipping presents additional challenges, from understanding international shipping rates to navigating customs regulations. Plan ahead to save you time and potential headaches.

HelloFresh offers a prime example of well-oiled processes: Recipes are shipped on a weekly basis, but not all subscribers receive the same products, nor do they all receive their boxes on the same date. Recipients can choose what recipes they want (or select a random choice curated by HelloFresh) as well as which day of the week they want their box to arrive. HelloFresh subscribers can also opt to skip boxes or add extra recipes.

With so many variables, a lot of thought and preparation go into making sure each HelloFresh box is accurate and ships on time. Similarly, you need to have the resources and systems in place to pick, pack and ship subscription boxes seamlessly.

Want to hone your shipping process? Check out MyFBAPrep’s guide to shipping optimization.

Market your subscription box

Like your other offerings, you need to advertise your subscription box business. Your marketing strategy should consist of pre-launch, launch, and post-launch activities:

  • Before launching, ramp up demand with sneak peeks and teasers. Create a waiting list so interested customers can be first to hear when the subscription box drops.
  • When you’re ready to release your subscription box, invest in launch campaigns across social media, email marketing, and paid marketing channels. Outline PR opportunities and out-of-home advertising too. Working with content creators and influencers is a great way to increase visibility and demand for your subscription box, so pull together a roster of suitable influencers.
  • Promotion doesn’t stop after the launch period ends. Ongoing marketing activity is key to ensure your subscription box grows. Insert subscription-specific content into your ongoing marketing activity and consider creating campaigns centered around your box service.

Other promotional activities could include designing a customized quiz, offering exclusive gifts and discounts, introducing a loyalty scheme, incorporating reviews and social proof into your advertisements, or collaborating with other brands and creators on exclusive boxes.

Marketing is the engine that powers your subscription box business. With a thoroughly planned and well-executed strategy, you can attract and retain subscribers and even turn them into brand advocates. Consider investing in channels such as:

  • Social media marketing:
    Social media has become an asset for reaching potential buyers. Platforms like Instagram, Facebook, X, and Pinterest can effectively showcase your subscription box, connect with your audience, and build a loyal following. Share high-quality images and videos of your box, curate user-generated content (UGC), and engage with your followers to build a sense of community.
  • Email marketing:
    Email marketing is a tried-and-true method for reaching potential subscribers. You can send emails to share updates, special promotions, sneak peeks into upcoming boxes, or useful content related to your niche. Craft personalized communications to make subscribers feel special and appreciated and boost customer loyalty.
  • Influencer collaborations:
    Working with influencers in your niche can expose your subscription box to a larger audience. Find well-known personalities who align with your brand values and have a following that matches your target audience. They can unbox your product on their channels to provide their followers with an authentic view of the experience your subscription box offers.
  • Referral programs:
    A referral program can transform existing customers into brand advocates. Offer them incentives like a discount on their next box for every new subscriber they refer. This motivates them to spread the word about your business and brings in new customers who already have a positive impression of your brand.
  • SEO and content marketing:
    Optimize your website for search engines to make it easier for potential customers to find you. Regularly publish valuable content related to your niche, such as blog posts, tutorials, or buyer’s guides. This improves your SEO and positions your brand as an authority in your sector.
  • Positive reviews and word-of-mouth marketing:
    Happy customers are your best advocates. You can cultivate positive reviews and word-of-mouth marketing by providing a seamless buyer experience, starting from the initial visit to your website through to order fulfillment. Also, encourage them to share their unboxing experiences on social media and review your subscription box online.

UGC and positive reviews can significantly enhance your brand’s credibility and reach.

Get creative with your marketing to produce showstopping content that attracts, nurtures, and converts your target audience.

Managing returns and exchanges

Returns and exchanges are inherent in eCommerce and are an essential part of the how to start a subscription box business equation. While they might seem like setbacks, handling them efficiently and professionally can actually boost customer satisfaction and loyalty; the more pleasant the experience, the more likely people are to make repeat purchases and sing your praises to others. To transform these losses into lucrative gains, you need to:

  • Craft a clear return policy:
    Foundational to effective management of returns and exchanges is a transparent and fair policy. Your policy should outline the conditions under which returns or exchanges are allowed, the time frame for acceptance, who covers reverse shipping costs, and how refunds are issued.

A thorough return policy sets clear expectations for your customers and guides your team in handling these situations smoothly.

  • Process returns and exchanges efficiently:
    When a buyer initiates a return, handle it promptly and professionally, ensuring the returned items are appropriately logged, inspected, and restocked or discarded, as necessary.

In the case of exchanges, ship the replacement items quickly and accurately. The goal is to limit the time customers have to wait for their issues to be resolved, as a shorter time can significantly enhance their satisfaction and loyalty.

  • Leverage returns for continuous improvement:
    Every return or exchange yields valuable feedback that can help you improve your subscription box, so track the reasons for these occurrences and look for patterns. If a particular item is frequently returned, reconsider its inclusion in your box. Or, if customers often complain about the box’s condition upon arrival, it may be time to review your packaging or shipping practices.

Managing returns and exchanges effectively can transform them from potential setbacks into opportunities for improvement and increased customer satisfaction.

How to grow and scale your subscription box business

Launching a subscription box business is only one part of the puzzle. Once it’s released, you’ll then need to implement strategies for growing and scaling your subscription box business. Hitting a plateau is normal when launching a subscription business. With the right strategies in place though, you can continue to push that initial momentum and secure healthy subscription rates.

Tap into customer needs and interests with surveys

Want to know what subscribers love about your subscription box? Ask them! The same goes for understanding what grinds their gears. Use customer interviews and surveys to find out what your customers’ needs, interests, and challenges are. Speaking with them directly is the best way to find out how you can deliver even more value through your subscription box.

Ask for feedback

Feedback is invaluable, so be sure to ask subscribers for their thoughts and opinions. Make it easy for them to leave their opinions in post-purchase surveys or product reviews.

Other shoppers can also use that social proof to make informed decisions about signing up for a subscription box. Your marketing team could also use feedback as part of their marketing strategy to demonstrate consumer satisfaction. Meanwhile, product development teams can leverage it to optimize and improve future subscription boxes.

Optimize your inventory

Opportunities are all around you to grow your subscription box business, especially in your warehouse. Notably, you can improve inventory turnover rates by capitalizing on your stock. You could, for instance, create mystery boxes containing surplus inventory or assemble exclusive “seconds” boxes where customers receive products with minor defects at a discounted rate.

The goal of optimizing your inventory isn’t only to clear old stock; you can strategically place new orders from suppliers to gain preferential rates. Order high-volume stock for items you plan to include in boxes to save money and ensure you have enough goods to fulfill recurring subscriptions.

Outsource fulfillment to an experienced partner

As your subscription box business grows, staying on top of orders can be difficult. Working with a fulfillment partner who has experience in this niche may be just what you need to build well-honed subscription box logistics.

At MyFBAPrep, we can manage the prep and fulfillment of your subscription box orders to ensure everything goes out as expected and thus build customer trust. That enables you to focus on other areas of your business, such as planning your next box offering to wow your subscribers.

Create an engaged community of subscribers

Your subscribers fuel the success of your subscription box business, so it’s important to foster an active community of subscribers: Show you genuinely appreciate them by engaging with them consistently; create an exclusive group for subscribers and release content that’s for their eyes only; interact with their posts on social media and forums, reshare content they post about your brand, and send them frequent emails.

Building a genuine connection with your subscribers is a surefire way to maintain a robust customer lifetime value (CLV) for the long term.

Develop a referral program

Reward subscribers for their loyalty by developing a referral program. A well-designed program incentivizes existing subscribers to spread the word about your subscription box, in turn contributing to a higher subscription rate.

A referral program essentially transforms your subscribers into a pseudo-marketing team: They rave about your subscription box in the hopes of receiving something in return. You can offer rewards such as money off their next box, exclusive discounts, or free gifts whenever they refer a friend who also signs up.

Wrapping up — How to tart a subscription box business that thrives

Subscription boxes are a lucrative opportunity for online retailers looking to increase their bottom line and generate high customer satisfaction. Running a successful subscription box business requires regular reviews and adjustments based on consumer feedback and market trends. By staying flexible and adaptable, your business will continue to meet subscriber expectations.

MyFBAPrep’s suite of services can quickly adjust to changes, whether it’s a tweak in packaging or a complete overhaul of the box contents. We’re here to ensure your subscription box business remains a top pick for consumers. Need a fulfillment partner to support the growth of your business? Get in touch to see how we can help you take your subscription box model to the next level.

Published: August 30, 2022
Updated: June 17, 2024