How to start a subscription box business

The 2021 global pandemic revived subscription boxes. And their popularity doesn’t seem to be fading anytime soon. There’s a reason why subscription boxes are so popular among consumers.

Thanks to its convenience, personalization, and savings potential, the subscription box model is here to stay.

If you’re yet to embrace the powers of subscription boxes, we’re here to share the best practices behind selling them and how to start your own subscription box business.

Already offer subscription box services? Keep reading to learn how to grow and scale your subscription box business.

The power and popularity of the DTC subscription box model

Subscription boxes come in many shapes and sizes. From replenishment services to curated collections, subscription boxes typically contain multiple products. Customers will receive their subscription box on a regular basis — be it weekly, monthly, or another frequent schedule. 

Direct-to-consumer (DTC) brands that offer subscription boxes add a lucrative recurring revenue stream to their business. Repeat orders will routinely roll in as subscription box orders go out. Meanwhile, customers will benefit from predictable deliveries and may even 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.”

Essentially, subscription boxes act like mini-rewards by firing up our dopamine receptors (the reward center of our brains) and result in making us feel happier.

Research in the UK noticed the popularity of subscription boxes soared during the height of the 2020 pandemic and is set to grow to £1.8 billion ($2.16 billion) by 2025. 55% of shoppers said they signed up for a subscription box as a way to treat themselves — backing up Wolkin’s claim that we buy subscription boxes as a way to reward ourselves and evoke positive emotions.

In the US, the Washington Post found that some Americans were subscribed to as many as ten subscription services. The subscription economy in the US is expected to grow to an impressive $1.5 trillion by 2025.

As a DTC retailer, subscription boxes offer an opportunity to increase your bottom line while delivering positive experiences for your customers.

Subscription box business best practices

Subscription box business best practices

Understanding what it takes to deliver a showstopping subscription box will allow your brand to stand out against a sea of subscription competitors. Before you dive into adding subscription box services to your online store, brush up on some best practices.

Learning from some of the subscription box giants, we’ve pulled together our best practices for DTC retailers looking to start (or grow) their subscription box model.

Carefully choose your niche

Get specific about what you want to sell as part of your subscription service. Choosing a niche will allow you to enhance your bottom line by becoming the go-to merchant for that product type.

When choosing your niche, aim for an industry that is desirable without being overly competitive. Look for a gap in the market and aim to fill that gap with your subscription service. 

Dollar Shave Club is a DTC subscription brand who are reaping the rewards as a result of niching down. Dollar Shave Club could have easily curated a subscription box of skincare products but they took their model a step further by specifically niching down to razors.

They recognized a gap in the market and fulfilled that need with their subscription box. According to McKinsey, Dollar Shave Club is the most popular subscription box among men and the second most popular subscription service overall, just behind Amazon Subscribe & Save.

Take inspiration from Dollar Shave Club by seeking out a popular, yet underserved niche.

Presentation matters

People often buy subscription boxes as a gift for themselves or others. So, keep that gifting experience alive by investing in presentation.

By putting that extra effort into your subscription box presentation, you’ll curate an unboxing experience that will fill consumers with joy whenever they open it.

A carefully created unboxing experience can increase perceived value, generate brand loyalty and increase your chances of going viral. You only have to search “unboxing experience” on YouTube to know 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, the outer mailer packaging is branded. This creates brand visibility from the offset. This branding continues on the inside, oozing personality and creating a visually appealing backdrop to your 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 brand values.

Level up your presentation to create powerful unboxing experiences.

Choose a fulfillment partner

Don’t fall victim to fulfillment bottlenecks. Before you even launch your subscription service, consider how you plan to fulfill orders. 

Shipping subscription boxes require more legwork than selling standalone products. You need to curate boxes, add multiple products, remember additional details (such as information cards), and ship them out on time. You also need to account for new subscribers and any cancellations. Managing subscription box fulfillment can quickly get overwhelming.

Find an experienced subscription box fulfillment partner to help you smoothly ship subscription boxes. The organization is key here. Inform fulfillment partners in advance of upcoming subscription box contents and ensure they have all the inventory they need in good-time to prep orders.

Prioritize personalization

The pull of personalization is one of the main factors that encourage consumers to buy subscriptions. Subscription box customers also want to be delighted and surprised by their subscription.

Whether you curate boxes based on customers’ answers to a quiz or you give them the freedom to choose their own products, consider personalizing the subscription box experience. Tailor subscription box contents to delight customers.

Stitchfix is one subscription service that knows the power of personalization. Stitchfix sends clothes straight to its customers’ doorstep with each item carefully hand-selected based on consumers’ size, style, and price range. 

Customers simply complete a style quiz, choose their frequency schedule, and they’ll receive personalized clothes as chosen by a personal stylist. Stitchfix shoppers can choose the items they want to receive from stylists’ recommendations or they can leave the choice down to the stylist.

Follow Stitchfix’s example by weaving personalization into your subscription box model.

How to start a subscription box business

Now we’re aware of the best practices underpinning successful subscription box models, let’s look at the steps you need to take to start a subscription box business.

Conduct market research

If you want your subscription box business to be a roaring success, you need to find a lucrative angle. Conducting market research will allow you to uncover consumer interests and identify gaps in the subscription box industry.

Get inside your target customer’s head to find out what they want from a subscription box. You can do this by speaking directly with customers, conducting market research surveys, or researching forums and competitor offerings.

Figure out what your customers want from a subscription box — is there a particular category or product type? How much are they willing to pay? How often do they want to receive the goods? Is it for themselves or someone else?

When conducting consumer research, remember there are typically three main reasons why people buy subscription boxes:

  • Replenishment – To save time and money by automatically replenishment repeat purchase items
  • Curation – To receive a curated selection of different items, designed to delight and surprise
  • Access – To gain access to exclusive opportunities, offers, and products with additional VIP perks

Analyzing the subscription box market will also allow you to identify which boxes perform exceptionally well, along with spotting any gaps that aren’t yet being fulfilled. 

Take meal subscription kits for example. This category of subscription boxes is really popular. From child-friendly meal kits to healthy recipes and prepped meals, there’s an abundance of choices for anyone looking for a meal subscription box. With so many companies already offering this service already, you may struggle to make your brand stand out if you don’t have a great unique selling proposition (USP).

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 are a general merchant selling a wide variety of stock or you’re a specialist retailer who has niched down to one specific category, analyzing your existing inventory offers great insight into what your customers already enjoy.

First, review your popular products to see what items your customers purchase most. Next, look at what products people frequently buy together. Then use these insights to build curated subscription boxes based on customer interests. You could offer replenishment subscription boxes or curated collections related to the most popular products.

Don’t forget to also look at the slow-moving stock. Building subscription boxes also offers an opportunity to clear old stock. While these items may not sell so well on their own, they could make great additions to subscription boxes when positioned next to star products and best sellers.

Know your numbers

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

When crunching numbers for your subscription box, remember to look at the costs of:

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

Consider every cost related to launching your subscription box and use those insights to work out your budget, price point, and potential returns.

Create a powerful unboxing experience

We’ve already discussed the power of presentation but we felt now would be a great time to reiterate the importance of creating an unboxing 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.

Review packaging suppliers and team up with someone who is 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.

Map out the customer journey

Knowing how your customers interact with your brand will make sure you cater to them through every step of the customer journey.

The customer journey is made up of multiple touchpoints. It’s likely your customers will experience several of these touchpoints before making a purchase decision so you need to make them count.

Some touchpoints you need to consider when mapping out the customer journey are:

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

Analyze each step of the customer journey and look at ways you can make customers feel appreciated and delighted. Focus on optimizing user experience at each stage to create an unforgettable experience for your subscribers.

Set up your tech

Offering subscription services often require more advanced tech capabilities than your standard eCommerce website.

Some eCommerce marketplaces and websites make it easy for retailers to offer subscription services. Shopify users can set up recurring payments so they can sell subscription products. Meanwhile, Amazon merchants can offer Subscribe & Save options for customers wanted repeat purchases of frequently-bought products.

Alternatively, you might want to set up a dedicated subscription platform. You can use a platform like Subbly to build an intuitive subscription website.

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

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

Nail picking, packing, and shipping

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

Ensuring subscription boxes go out in a timely fashion is an organizational masterpiece. 

Take HelloFresh for example. Recipes will be shipped to subscribers on a weekly basis. Yet, not all subscribers receive the same products, nor do they all receive their subscription on the same date. Subscribers get to choose what recipes they want (or receive a random choice curated by HelloFresh) and they get to choose which day of the week they want their box to arrive. HelloFresh subscribers can also opt to skip boxes or add on additional recipes. 

As you can imagine, a lot of thought and preparation goes into making sure each HelloFresh subscribers box goes out accurately and timely.

Make sure you have the resources and systems in place to seamlessly pick, pack and ship subscription boxes.

Market your subscription box

Finally, you can’t start a subscription box business without marketing. If you want to make sales, you need to invest in your marketing strategy.

Your subscription box marketing strategy should consist of pre-launch, launch, and post-launch marketing activity.

Before launching your subscription box, 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 launching your subscription box, invest in launch campaigns across social media, email marketing, and paid marketing channels.  Map out 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 well-aligned influencers.

Marketing your subscription box doesn’t stop after the launch period is over. Ongoing marketing activity is key for ensuring your subscription box continues to grow month on month. Plan subscription box content into your ongoing marketing activity and consider creating subscription box-centered campaigns.

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

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

How to grow and scale your subscription box business

How to grow and scale your subscription box business

Launching a subscription box business is just one part of the puzzle. Once you’ve launched, you then need to hone in on strategies for growing and scaling your subscription box business.

New challenges will arise as your subscription box business grows. Learning how to maintain momentum is one of these challenges. Hitting a plateau is normal when launching a subscription business. But, with the right strategies in place, you can soar past the plateau and secure healthy subscription rates.

Grow and scale your subscription box business by investing in these activities.

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 where your customers’ needs, interests, and challenges lie. Speaking with your subscribers is the best way to find out how you can deliver even more value with your subscription box.

Ask for feedback

Feedback is valuable so be sure to ask subscribers for their thoughts and opinions.

Make it easy for customers to leave feedback in post-purchase surveys or product reviews. 

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

Optimize your inventory

Opportunities are all around you —- especially in your warehouse. Grow your subscription box business by optimizing your existing inventory.

Improve inventory turnover rates by finding ways to turn your inventory into subscription box opportunities. You could create mystery boxes containing surplus stock or create exclusive seconds boxes where customers can get products with minor defects at a discounted rate. 

Optimizing your inventory doesn’t mean clearing old stock. You can also strategically order new stock from suppliers to gain preferential rates. Order high-volume stock for items you plan to include in subscription boxes, saving money and ensuring you have enough items to fulfill subscription box orders.

Outsource fulfillment to an experienced partner

As your subscription box business grows, staying on top of orders can be hard work.

Working with a subscription box fulfillment partner may be just what you need to optimize subscription box fulfillment.

At MyFBAPrep, we can manage the prep and fulfillment of your subscription box orders, ensuring everything goes out as expected and building customer trust. Meanwhile, you can focus on other areas of your business such as planning the next subscription box contents to wow your subscribers.

Create an engaged community of subscribers

Your subscribers fuel the success of your subscription box business. Without those subscribers, your business model wouldn’t exist. So, how can you create an engaged community of subscribers?

Engage with them!

Show your subscribers you genuinely appreciate them by engaging with them consistently. Create an exclusive group for subscribers and release content that is 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 long-standing customer lifetime value (LTV).

Develop a referral program

Reward subscribers for their loyalty by developing a referral program. A well-designed referral program incentivizes existing subscribers for spreading the word about your subscription box.

If you want to acquire new subscribers and grow your subscriber rate, create a referral program. By doing this, your subscribers will inadvertently become your marketing team. They will spread the good word about your subscription box in hopes of receiving something in return. You can offer subscribers rewards such as money off their next box, exclusive discounts, or free gifts whenever they refer a friend who also signs up.

Referral programs can lead to rapid subscriber growth so this is one strategy you don’t want to overlook when scaling your subscription box business.

Wrapping up — start your subscription box business today

Subscription boxes are a lucrative opportunity for online retailers looking to increase their bottom line and generate high levels of customer satisfaction.

Build a subscription box business today if you want to deliver outstanding experiences for loyal subscribers. Before starting your subscription box business, take time to look at market opportunities so you can craft a powerful solution for your target audience. And don’t forget about that all-important unboxing experience.

Need a subscription box 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.