How To Start A Subscription Box Business

Who is your customer? This is a crucial first step when you decide you want to start a subscription box business. If you don’t know who you’re selling to, how will you know how to market, sell, and promote your product?

Have you heard of a customer profile or avatar? Imagine your perfect customer. Where do they live? How old are they? How much money do they make? Are they married? Do they have children? What problems do they face? How will your subscription box impact their lives?

There are hundreds of different questions you can ask yourself about your perfect customer. Every answer you come up with will result in a clearer picture of who exactly you are selling to. This will become your customer profile/avatar. You can have multiple profiles, name them, and even draw them! Some business owners like to keep these profiles on their desks next to their computers or in their workspaces so they are keeping their customers in mind while working.

Do your research to make sure your customer profile is backed by statistics from similar subscription box businesses. Think of this profile as a sort of micro-audience. Your demographic is your wider audience and can be determined in the process of this research.

Research what you want to put in your subscription box! If you already have an idea, go back to identify your customer. If you have a customer but no defined products, it’s time to start doing more research.

What sorts of products do well in already-existing subscription boxes? A great example of an out-of-the-box (no pun intended) idea is the Dollar Shave Club. Using razors, a simple self-care product most people use, provided an easy way to save money and a trip to the store each time they needed a replacement. They now offer face wash, shaving cream, and other self-care items expanding their market and potential customers beyond their original profile/avatar.

No matter what you want to include in your box, make sure there is something unique and interesting to potential customers. There are limitless exciting possibilities. It is a competitive market but there are always opportunities to reach customers in a specific industry.

What will your box provide to your customers? Convenience, discovery, whimsy, and/or a special interest? Some of our favorite existing subscription services provide boxes full of gourmet foods, arts and crafts projects, fitness and health products, hand-selected clothing and accessories, pet care and toys, and home goods like candles or art.

If a box idea eludes you, start keeping a notebook on you or begin a list on your phone of ideas you encounter throughout your day. What problems do your friends, family, and coworkers complain about? What could they use more of in their lives? You’ll find your idea in no time!

Finding suppliers to source your box is the next step. You have a lot of different options depending on what you choose to include in your box. You can choose to purchase your products directly from a wholesale company, pay full price from a smaller business, or do a combination of both. It’s in your best interest to initiate a long-term relationship with your supplier(s).

Networking with vendors, suppliers, and artists can help you expand your box offerings. If you plan to focus on unique, one-of-a-kind, or local items, it will be especially crucial for you to form those relationships. You can also consider reaching out to sellers on Etsy to source your products from, many creators would be happy to provide smaller versions of their products to include in a self-care box or full-size items at a wholesale price.

While reaching out should be your first step, make sure your website and/or social media have a place for potential vendors to contact you!

How can you figure out what to charge for your box? Sites like Cratejoy, Launch Your Box, and Subbly recommend no less than 40% of a profit margin, but your ultimate goal should be 50% – 70%.

There are several things you need to consider when you’re deciding what to charge for your box. Cost of goods (products in your box), cost of packaging, cost of any inserts you include in your box, sales tax, costs related to shipping, transaction fees, marketing costs, fulfillment costs (what does it cost in labor to fill your boxes?), and industry averages are all factors to keep in mind when determining the final price of your box.

Do research on prime impulse-buy prices, boxes that sell similar products to yours, and different kinds of payment plan options (monthly, discounted yearly memberships, different levels of boxes, etc.) and be prepared to adjust accordingly.

There are a lot of different options for you to fund your subscription box.

You will need to cover your start-up costs at the very least. Marketing, shipping, inventory, once you know what you’ll be putting in your boxes and how much it will cost to fill them, you can consider full funding options for your small business.

Some funding options you can consider include:

• Borrowing money with a startup loan.
• Use funds from advanced orders from subscribers.
• Utilize a business credit card.

You can also start small and limit the quantities you sell so you can cover your own costs when starting out. This reduces your financial risk, potential debt, and naturally creates a more urgent/exciting sale because of limited inventory.

Another option you can consider is crowdfunding your subscription box. Crowdfunding is a great strategy for unique, cause-related, and/or niche boxes.

Once you know your customer, products, suppliers, pricing, and how you’re going to fund your subscription box, it’s time to make a pre-launch plan.

A helpful first step would be creating a business plan. Business plans may seem daunting at first, but they are necessary for any business, no matter the size, and they can be as intricate or simple as you desire! Read our article on how to make your own one-page business plan.

Part of the pre-launch plan should include a timeline. This doesn’t have to be public (but can be if you’ve made a crowdfunding campaign or want to create excitement on your social media accounts) and can be as vague or specific as you’d like. Making a timeline will help you set realistic expectations for your small business and can also be used as an accountability tool. Sharing the timeline with someone in your support system can especially help with accountability.

The next step in your pre-launch plan will be determining how you will market your subscription box.

Like a business plan, a marketing plan is a must for any new business in the age of the internet. It also doesn’t have to be super complex and detailed; whatever works best for you will work best for your business. The subscription box business can be competitive, so being savvy and using all of the resources available to you is crucial for your success.

Social media marketing is one of the easiest (and cheapest!) ways to market your subscription box. You can use it to establish your brand and get potential customers excited about your launch!

We recommend doing the following:

• Start posting regularly, tag larger accounts, and network online.
• Test a paid/sponsored social ad and target your campaign to your box’s niche.
• Hold a giveaway to gain followers and create excitement.
• Take advantage of influencer marketing by sending a box to an established influencer for review and/or promotion.

Email marketing is great if you are already an established business adding a subscription service. There are many low-cost or free email services that allow you to create robust email lists.

If you are truly starting from scratch, you can reach out to another local business and pay a small fee for a shout-out or paid ad spot in their next email newsletter. Create an email form on your website to make it easy for people to subscribe to your email list.

An advantage of creating this kind of list is that you can easily gauge the interest in your subscription boxes without breaking the bank to create focus groups. You can also use this form to collect credit card numbers to reserve one of the limited number of boxes you plan on releasing for your first launch. This is another way to create excitement and a feeling of FOMO (fear of missing out) around your subscription box to increase your potential customers.