How to Start a Subscription Box - 7 Steps for Business Owners
If you’re thinking about starting a subscription box, congratulations! You’re looking at entering a booming industry that many customers view as one of the best ways to shop.
Often, once someone starts enjoying their purchase every month, they wonder how to start a subscription box for a niche they're interested in. While starting a subscription box might sound easy, it takes careful planning and an understanding of the eCommerce subscription platform.
What is a Subscription Box?
A subscription box is a monthly delivery of niche products. They’re used in subscription-based eCommerce, a market that’s worth around $10 billion.
Each subscription box company targets a niche market—from makeup to dog toys to fresh vegetables—and customers can often customize their plan. Buyers receive these personalized subscription boxes with an assortment of related products every month.
While buyers don’t select the exact products they receive, the mystery is part of the allure.
Types of Products in Subscription Boxes
Subscription boxes can target any niche you can think of. Some popular categories include:
Clothing and Fashion
Makeup and Beauty
Pet Toys and Food
Hiking and Camping
Snacks and Sweets
Fruits and Vegetables
Meats and Condiments
Books and Art
Beer and Wine
Games and Puzzles
Spiritual and Religious
Flowers and Herbs
Fitness and Health
Vitamins and Supplements
You get the idea, but we assure you, the list could go on.
How to Start a Subscription Box Company
Whether you own an established company that you want to expand, or you're launching your first company, starting a subscription box is relatively simple. It’s simple when compared to launching a new product or service, that is, but it isn’t a quick two-step process.
Subscription startups need planning and logistics, just like any other business. The good news is that, once you've established your subscription box business plan and started your website, the work begins to shrink. Until you’re fulfilling thousands of orders, but that’s hardly something to complain about.
The best thing about selling subscription boxes is that it all works from a virtual terminal, eliminating the initial need for a physical POS. This doesn’t mean that you don’t need invoice software or a reliable credit card processing solution, but it does reduce the upfront work required.
Here’s the abbreviated version of how to start a subscription box:
Come Up with a Subscription Box Idea
Create a Buyer Persona
Develop a Prototype Box
Price Your Subscription Box
Set Up Your Online Presence
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Step 1: Come Up with a Subscription Box Idea
Before you can start a subscription box, you'll need to come up with a brilliant idea. First, you need to identify your niche. Pick an area you're passionate about so you can think of creating a box you would like to receive.
Coming up with subscription box business ideas isn't difficult if you browse the competition. The trick is finding a market that isn't oversaturated.
Once you have a few ideas, look at products that would fit in the box and get creative. Think about branding, monthly themes, target audiences, and product availability. This process should help you eliminate all but your top one or two concepts.
Try to decide on an idea now or pick your top concept after completing steps two through five for each option.
Step 2: Research Competitors
The subscription box economy is highly competitive, but that doesn’t mean there isn’t room for incredible new offerings. You do need to check out your competitors, however. For this, you might want to check out Cratejoy, which serves as a marketplace for subscription boxes.
You’ll want to document facts about your competition. Note anything that stands out to you, but start with bare minimum questions like:
How does each competitor price their subscription boxes?
How many boxes are you competing with?
What comes in each competing box?
How can you make your box different and better than your competition?
Step 3: Create a Buyer Persona
This guide isn't just about how to start a subscription box; it's about starting a business. And with any customer-based business, you'll need to understand your potential customers.
While this sounds simple, building a detailed buyer persona is no small task. It's something that businesses of all sizes continually refine, and it can make or break your success. So, ask yourself, who is your ideal potential customer?
Buyer personas are fictionalized models representing your target customers. Be ready to get creative with this one. Give your buyer personas names, habits, personal backgrounds, motives, fears, and negative triggers. Go as deep as you can with this and make between three and six personas.
Pick a target age range, education level, relationship status, annual income, and career status.
For example, if you’re creating a box for young, eco-conscious hikers, you might have personas like those below:
Eric is a 30-year-old single male in Colorado who has a background in the army.
He likes to camp, hike, and exercise on his weekends, and he’s looking for a box that makes his hobbies more interesting.
Eric is well-read, supports green energy as a money-saver, and is well-traveled.
He hates cheap products, redundancy, and items of limited use.
He’s afraid of leading a boring life.
Ashley is a 27-year-old in Oregon who identifies as gender-neutral and holds a Master’s degree in Marketing.
They are married, like to hike on weekends, and travel once per year with a guided hiking tour in a new country.
Ashley is involved with activism, would like to be more outdoorsy, is relatively fit, and likes companies who support the planet.
They dislike excess packaging and refuse to shop at Amazon.
They’re afraid of not being relevant and of wasting what’s left of their twenties.
Tanya is a 20-year-old female in Wisconsin who just got into hiking and is still deciding on a degree.
She’s new to being outdoorsy, but she consumes a lot of media about nature, and she wants a box that helps her gear up for her new active lifestyle.
She likes green products but mostly focuses on having unique items that look good in her Instagram account.
Tanya doesn’t like ordering products that are cheap or ugly.
She’s afraid of being left out of outdoorsy experiences.
Believe it or not, these personas could be much more detailed. The idea is to create a real person with likes, dislikes, qualities, and flaws—people who are often interested in your niche.
No idea where to start? Head to Instagram and check out accounts who post with hashtags related to your niche.
Step 4: Develop a Prototype Box
Developing your prototype box helps you choose partner companies or suppliers and select specific products.
You will use your prototype box in images for your website, social media, and landing page.
Start by selecting products that represent what you want to include in your box. They don't need to be precisely what you'll use, but you should not misrepresent your offerings.
If you're going to include options for different numbers of products and levels of subscription, you should prototype a box for each offering.
Next, select your box. You'll want to pick boxes with the right size, color, and quality. The box your customers receive is often the most significant part of the user experience, and therefore very important for your customer satisfaction. Think about customer values as well as looks—for example, is your box recyclable?
Once you've picked a box, select your packaging materials. Again, think about customer values as well as looks.
Now, you're ready to start taking photos of your sample products in your prototype box with your packaging materials.
Step 5: Price Your Subscription Box
Before you can open your shop, accept credit card payments, and start bringing in money, you'll need a reasonable price. Pricing your subscription box incorrectly can be your companies downfall before you even begin.
Aim for at least a 40% profit margin to make sure your company is sustainable. Before you figure out your profit margin, you’ll need to consider:
Packaging Material Cost
Shipping and Postage Material Cost
Transaction and eCommerce Fees
Monthly Software Fees
In step one, we mentioned deciding on your final idea before progressing past this point. If you haven't decided on your concept yet, now is the time. With your pricing, prototype, buyer persona, and competitor research in front of you, it's time to pick your first subscription box theme.
Don't worry if you have to cut an idea you like. It'll still be waiting for you after you’ve learned your way around how to create a subscription box the first time.
Step 6: Set Up Your Online Presence
The majority of subscription box marketing is completed online. You need a social media presence and an effective advertising plan, as this will make or break your success.
If your Instagram, Facebook, and other social media accounts aren’t already active, it’s time to start building a following. Interact with your audience and market yourself to your target audience. You want to generate hype and get people excited about your box, so you have people to sell to!
You might want to outsource your marketing if you're not versed in selling products or services.
We recommend that you work with influencers to get publicity for your box. You’ll send them the first official boxes you put together for free in exchange for a review and, ideally, a video of their unboxing experience.
Now is also the time to design and schedule your marketing campaigns, build your subscription box website, decide whether to sign up with a subscription box platform and set up payment processing.
Step 7: Start Selling!
Once you're established online, it's time to start selling. That's right. You're ready to take orders and ship your boxes! Your first shipment date should be clear, so your customers know exactly when they'll be receiving their orders.
This step is when you're bringing everything together. It’s time to make sure your first impressions are great ones.
As you continue to sell, ask yourself questions like:
Are my buyer personas still accurate or did a different market pick up my boxes?
Which marketing channels are working best for me?
How can I improve my fulfillment process?
What feedback am I receiving from my subscribers? And have I asked for feedback?
How can I improve customer satisfaction?
Should I consider a referral program?
Questions like these will help you increase your subscriber base and improve your new company. You have several possibilities for where to go from here!
Many of these steps will take time and dedication. If you follow your plan, though, you'll have your subscription box selling before you know it. It's all about finding a niche market and offering personalized subscription boxes that interest your audience.
Assuming you’ve made a plan for these seven steps, you’re ready to start setting up your business on all fronts! You’ll want to choose a reliable small business checking account, brush up on your customer service etiquette, make an inventory management plan, and make sure you understand credit card fees.
When you’re ready to get a physical card reader and take your business to the next level, SumUp is here for you. We offer transparent low pricing on all transactions, easy setup, and processing for all major credit cards. You’ll also receive excellent customer care and convenient tracking for all sales.
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