There are many reasons to create a subscription box service: sharing a passion, building a business, or making a little extra money as a side hustle. But if you’re thinking of starting your own box service, you likely have questions about how to get started. We answer the top questions about creating a subscription-based service below.
What Type of Subscription Box Should I Sell?
Maybe you want to set up a subscription service, but you’re unsure what will gain a following or be profitable. In coming up with ideas for a subscription box business, zero in on a box service with the following characteristics:
1. Something You’re Excited About
Creating a subscription box isn’t for the faint of heart. It takes a lot of effort, and it likely will be a while before you turn a profit. Being passionate about your subscription box idea can help you get through the frustration and challenges of starting a new online business.
2. Something That Consumers Want
To be successful, you need to find your audience. While you may have a passion for seashells painted in glow-in-the-dark neon colors, there might not be enough subscribers — or colored shells — to make your effort worthwhile.
Keep in mind that box subscribers tend to be between 25 to 44 years old — and that 60% of people who get subscription boxes are female. However, men are more likely to have multiple boxes at a time.
So what do people in this age group want? It turns out they’re very into boxes for beauty, pet items, food kits, and lifestyle items. Craft kits for kids are also popular because many women and men in this age range are parents.
People also want a balance of choice and surprise. Some subscription services now allow customers to customize all or some of the items in their box. If you’re managing fulfillment on your own, this level of customization can be a logistical nightmare. Outsourcing pick-and-pack to a fulfillment company can make tailored shipments a viable option.
Top Subscription Box Ideas
- Food and meal-kits
- Makeup and skincare
- Shaving supplies
- Pet items
- Coffee of the month
- Book of the month
- Clothing and accessories
3. Something That Fills a Gap in the Market
It can be hard to gain a subscriber base if your box is too much like the current options. For example, there are plenty of successful beauty subscription boxes with loyal fans. While meal kits are one of the hottest categories, it’s difficult to make inroads into such a crowded category unless your offering is unique or has a much lower price.
Instead, think about what needs aren’t being met — or be on the lookout for opportunities stemming from new trends or global circumstances. In 2020, at the height of the pandemic, the most successful subscription box category was food and meal kits. While it wasn’t something anyone could have anticipated, that would have been a perfect time to launch a snack subscription box.
How Many Subscription Boxes are There?
It’s hard to track down the exact number. Some sources say about 3,000, while others say there are more like 7,000. The bottom line is that consumers have a lot of options — that’s why you need a unique idea, excellent execution and competitive pricing to be successful.
4. Something Sustainable
A typical subscription box includes 5-10 items. That’s easy, right? But consider that you need to have new things for the next month and the month after that. With some quick math, that’s 60-120 items each year. Will you be able to sustain the theme of your box?
If your idea is highly niche, it will be hard to keep it going over the long term. For example, if you create a “sands of the world” crate, you’ll eventually run out of sands — albeit it may take a while. In this case, a more significant issue may be sourcing. How in the world, pun intended, will you collect sufficient sand from Syria and Siberia?
When people sign up for a subscription box, they buy into the promise of a new mystery box each month. If the contents are too similar from box to box, people will get bored and discontinue their subscription.
So, as you’re zeroing on the type of box you think you want to create, spend some time writing out a list of things you can include. If you can’t get past 50, you might want to expand the scope of your box.
How to Price Your Subscription Box
So how much should you charge for your subscription box? There are a few things to consider:
What People Will Pay
Your box needs to be priced to sell if you want to succeed. The sweet spot for subscription boxes is typically between $20 to $40. But this can flex depending on your target market. If you’re focusing on high-end goods, you might be able to price your box at $100 or more.
The Cost of Competitive Boxes
Say you’re putting together an amazing makeup subscription box packed with high-end cosmetics and personal care products. You’re thinking of including products with an approximate retail value of $100 products and pricing it at $39.99. Seems like a steal, right? Sure, except most popular makeup subscription boxes sell for under $30 and often offer even more bang for the buck. So once you’re closing in on a concept, spend some time looking at similar services and what they’re charging.
Since your goal is to make money, it’s essential to have a clear picture of all your costs. Ideally, your profit margin should be somewhere between 40-60%. Here’s how you can expect to spend your money:
Items For Your Box
The items for your box should account for most of your expenses. Remember, you’ll want 5-10 goodies per box. There are many resources to buy wholesale products online. If you need a hand, Point B can help you source various wholesale items for your box — both from local makers and from abroad.
Don’t forget that you’ll need a way to present all the amazing goodies to your subscribers. In other words, you need to consider the cost of the outer packaging — whether that’s a padded pouch or a cardboard box. Plus, there’s also the expense of the packing materials that you might use inside the box, such as crinkle paper shreds or tissue paper sheets.
In the beginning, when you have few subscribers, it might be okay to start with an off-the-shelf box and apply labels with your branding. But as you gain more customers, creating a custom box can help build your brand and refine the customer experience.
Subscription boxes typically include a printed flyer or magazine that provides information about the box’s contents to build excitement and loyalty. So, what should you put on a subscription box insert? Effective flyers typically include retail prices, ideas for using the items, and testimonials or photos from happy subscribers. But think about what would interest your subscribers. For example, if your box is all about BMX biking, you might profile an epic rider or provide details on a stellar trail.
Keep in mind that the quality of your box inserts reinforces your customer’s perception of value. The good news is that digital printing allows you to print quality inserts at a reasonable cost.
Kitting and Fulfillment
In the beginning, you may be able to pack up all the boxes yourself, but as you grow, you might need extra hands and space to get your packages out to your thousands of subscribers. Using a kitting partner can help make sure you’re spending time growing your business and not packing boxes.
You’ll likely have fees for the payment processing. You may also have transaction fees, depending on how you choose to sell your subscription box.
Despite popular opinion, shipping is never actually free. Still, offering free shipping can be a great way to get people to sign up. Working with an offsite fulfillment warehouse can help ensure that you get the best postage rates — regardless of who’s paying for shipping.
You’ll have set-up costs to get the website up and running and the monthly fees for maintaining your domain or store.
Marketing and Promotion
While there are free ways to promote yourself online, most successful subscription boxes invest in promotional marketing.
How to Launch a Subscription Box
A subscription box is a business, and it’s usually one that you operate online. So, many of the steps for setting up an e-commerce business also apply to starting a box business, including incorporating your business, choosing a company name, setting up a website and marketing your business.
Prototype Your Subscription Box
You’ll need to create an example subscription box to spark interest and get people excited to sign up. The prototype doesn’t need to be a final version of what you’ll send out. However, it should represent the quality, type, and the number of items you plan to include in your box.
Since you’ll be using photos of the sample box in your marketing efforts, make it look snazzy. You can use free tools like Canva, DesignWizard, or Setka Editor to quickly create labels and inserts — even if you’re not a designer.
Create your Subscription Box Website
There are different ways to sell your subscription box — some of which require more tech know-how than others. If you’re unsure how to get started, the Point B technology team can help define what will best fit your needs and implement a solution. Here are the most popular options:
- Your own website – When using a personal website, you’ll typically have fewer expenses. The downside is that you’ll likely need to spend more on advertising to get people to your site. If you go this route, you’ll need to add a store and payment portal, ideally one set up for recurring billing. Many off-the-shelf website platforms have these capabilities built in or available as add-ons.
- A subscription box marketplace – When selling through a marketplace, you benefit from larger site traffic but will likely have higher costs. Perhaps the most popular subscription box platform is Cratejoy. You can sell on the marketplace or design and launch a branded website through Cratejoy.
- Your Shopify site – If you already have a Shopify site, adding your subscription box to your site can make a lot of sense. Wondering how to create a subscription box on Shopify? We can integrate the Shopify subscription API on your Shopify site.
- Through Amazon – Selling through Amazon gives you access to a massive audience, but seller’s fees can be hefty. To sell your box as an Amazon subscription box, you need a fully-assembled curated box and an active Professional Seller account on Amazon.com. Your box will need to be sold with free shipping, and you’ll need to ship directly to customers in all 50 states, Guam, and Puerto Rico.
If you want to build your box business, you’ll likely need to invest in Facebook advertising and AdWords. Creating a contest or a giveaway is another way to build buzz. Referrals can be an effective way to grow your business. So consider offering incentives to people who review or recommend your subscription box.
Deliver the Best Customer Experience
Customer retention can be a challenge. Up to 70% of subscription boxes are canceled during the first six months. But once people get past the half-year mark, they’re much more likely to hang on, even for multiple years. As a result, the average customer retention for subscription boxes is 12+ months.
The goal is to hook your subscribers early. A crucial part of building customer loyalty is delivering the absolute best customer experience. The box should be a joy to open, filled with surprises that delight. But there are times when people don’t want to be surprised. For example, if your customers contact you, they expect a prompt, friendly, and helpful response.
Customers also don’t want to be surprised when the box lands on their doorstep. While surprising, shipment tracking is a feature that boosts subscription box sales. Some web platforms have shipping tracking built in, but contact us if you need help adding it to your site.
How Much Does it Cost to Start a Subscription Box?
Do you know the old saying, “You’ve got to spend money to make money”? Well, it certainly holds true when starting a subscription box business. Your start-up costs will depend on the service you’re putting together, but spending $15,000 – $20,000 is typical.
Is a Subscription Box Business Worth It?
There’s undoubtedly a sizeable opportunity — the global subscription box market was $18.8 billion in 2020, and the market size continues to grow.
The bigger question is what that means to you and the box that you’re thinking of launching.
As mentioned earlier, most subscription boxes have a profit margin between 40-60%. But your earnings will depend on how many customers you have, the cost of goods and your pricing. Depending on the success of your box and how quickly you gain customers will impact how long it takes for you to turn a profit. The good news is that once you’re up and running, a subscription box can provide dependable income from month to month.
How to Start a Subscription Box Business with No Money
Let’s say you have a great idea but don’t have funds right now, don’t despair — there are options. For example:
- Presale campaign – With this approach, you use the money from preorders of the subscription service to get started and purchase box items. This approach can be risky. If you only get a few subscribers, you might not have enough money to pay for everything. Still, you’ll be on the hook to send your subscribers a fabulous box.
- Crowdfunding sites – Another option is to create a subscription box project on Kickstarter or IndieGoGo. These are great platforms to create awareness for your products while gaining funding.
- Small business grants – You may be eligible for a small business grant if you create a box for an underfunded community or a charitable or humanitarian cause. Small business grants are also available for people with specific backgrounds.
- Other loans – It can be difficult for new businesses to get a small business loan without existing revenue and credit history. So, a personal loan or a microloan might be better options.
Sign-up for Great Support
Starting a subscription box service takes a lot of work. Still, it’s much easier if you have a dedicated support team backing you. Point B is ready to be your partner for printing, kitting, sourcing and technology as your subscription box dream a reality.