Delivered Monthly: How to Start a Subscription Box Business

It’s no secret that having a product delivered to your doorstep offers a level of convenience that many consumers absolutely love. In fact, over 50% of shoppers prefer to make their purchases on the Internet as opposed to in-store. 

This behavior is one of the primary reasons why subscription box companies are able to perform so well.

If you’re looking to develop your own, there are some things you’ll need to keep in mind.

Not sure where to start? Don’t worry, we’ve got you covered.

Let’s take a look at everything you need to know about starting a subscription box business.

What Is Your Niche in Your Industry?

This is one of the hardest parts of creating this type of business. Fortunately, though, everything else will fall in line after you figure this out.

To start, you’ll need to break down your industry into subsegments and then decide where you fit in.

For example, let’s assume your company is going to operate within the fashion/beauty industry.

If you want to target women, what kind of women do you want to reach? Middle-aged women looking to take better care of their skin? Is it college-age girls who enjoy doing their own makeup?

Or, do you want to target men with skincare products like toners and moisturizers?

Once you figure out who you’re trying to reach, you can then decide what you’ll offer them.

This leaves us with the responsibility to…

Thoroughly Define Your Audience

If you’re going to target someone effectively, you need to get pretty specific. This means you’ll need to consider factors like:

  • Age
  • Ethnic background
  • Level of education
  • Occupation/income
  • Hobbies and interests

The more work you put into defining who your audience is, the more likely the product you offer will be relevant to them.

Later, when you start marketing and building a customer base, you can rework your audience parameters if needed to better zero-in on your ideal buyer.

Come up With The Perfect Price

There are a handful of costs you’re going to need to offset with the price of your subscription box. So, choosing an arbitrary number like $50 or $100 is never a good idea.

These include:

  • The cost of the products in your box
  • Shipping labels, tape, filler paper, etc.
  • The cost of the box itself
  • Shipping fees
  • Online transaction fees from your store
  • Marketing costs
  • Residual costs (web hosting, software leasing, etc.)

You’ll also have to learn about chargebacks and other shopping platform fees. You can find out more here.

As you can tell, these costs can quickly add up and will lead to you operating at a loss if your product isn’t priced at a high enough amount.

So, you’ll want to shoot for making a 40%-50% profit on your product in order to ensure that your company will be sustainable. Otherwise, you may find that you will profit during some months and lose money during others.

Start Marketing Early

It’s not advisable to create your business (store, product, etc.) and then start marketing

It can take a bit for your brand to gain traction with your audience, and you’ll be left with residual costs and inventory that’s collecting does until your business starts to take off.

Running a prelaunch for your business is a great way to gauge consumer interest in your product while simultaneously saving money. You should have a prototype box ready to showcase so that your customers can have a solid idea of what they’re getting.

This process generally lasts an average of 30 days and is centered around building hype around your brand. Common marketing methods entrepreneurs use during this phase include using social media and email to direct customers to a prelaunch signup page.

You should have a subscriber number in mind that you need to reach during the prelaunch phase. So, whether it’s 10 people or 100 before your product goes live, do your best to get as many signups as possible.

The good news is that since your business is subscription-based, you don’t have to worry too much about one-time purchases. If your product provides enough value, it’s unlikely your buyers will unsubscribe due to anything under your control.

Create Your Store

Once your prelaunch is over, it’s time to finally create your store.

While you can create your company’s site beforehand, it’s often best to wait until after you’ve discovered there are enough people who are interested in your product.

The bad news? Creating a website can be difficult for a tech newbie. If you decide to outsource, you’ll need to consider this cost in your budget, as well.

The good news, though, is that designing an online store is fairly straightforward. It also shouldn’t require many changes after your site goes live unless you want to add new products or services.

After your store is ready, it’s time to…

Fulfill Your Orders!

One of the biggest mistakes people make when running an online store is not prioritizing the shipping process. This only results in disappointed customers who may end up unsubscribing.

Even before you ship your first batch of orders, you should strive to ensure they get there at a reasonable time after purchase (and stick to whatever number you give). So, if you say that your customers will get their box on the 5th of every month, do everything you can to make this happen.

Developing a Subscription Box Business Can Seem Difficult

But it doesn’t have to be.

With the above information about creating a subscription box business in mind, you’ll be well on your way to getting things up and running as soon as possible.

From here, you can focus on optimizing your customer experience and cultivating your brand over time.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.