How to Start a Subscription Box Business: The Best Guide for Stable Income

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How to Start a Subscription Box Business: The Best Guide for Stable Income

With reoccurring revenue running a successful subscription box company can be more secure than your 9-5 job. When done right, subscription boxes provide predictable and stable income. So if you want to learn how it’s done right, just keep up on reading.

In today’s article, I’m going to teach you how you can take your idea of starting a subscription box and turning it into a real business. I want you to get started on your business right away, so we’re going to cover the essential details, like what items you should include and how you can get started with a small budget.


Article Contents


Subscription Model

First things first, let’s talk about how the subscription model works. Customers will receive packages from you on a recurring basis. And this could be monthly, every few months, or annually. For you as a business owner, this recurring revenue model will lead to higher overall revenues. Look at this chart here.

Subscription Model Recurring Revenue

The initial outlay gets paid off over time, and then it grows exponentially. So you can see how this can be pretty lucrative.


Subscription Box Ideas

The first step in starting a successful subscription box is choosing a niche or a theme for your box. Here are some common niches to give you some ideas.

  • Fitness subscription box
  • Food subscription box
  • Beauty subscription box

For example, you can include hot sauces for spice lovers, paints for artists, or even gear for rock climbers. Let me know what your niche is in the comment section below, and I’ll give you an estimate of how competitive that niche is.

It pays to offer consumables that need to be replaced regularly, like groceries, home maintenance goods, and even books. So clothing is not considered a consumable, but styles come and go so quickly that this niche works as well.

In addition to consumables, mix in items that can be reused. That way, every time a consumer uses your item, they remember you as the brand that added value to their life. I recommend that you choose a niche that’s of genuine interest to you. Your goal is to solve a consumer problem with your subscription box.

If you’re essentially marketing to yourself, you’ll have the advantage of understanding the consumer, and if you speak your target audience’s language and know what they like and they don’t like, you’ll have a better chance at being successful.


What to Put in a Subscription Box

Here’s what to put in your subscription box. Start with three to five items that are small enough to fit in your box and light enough so that you save on shipping costs, make sure that each item falls under the niche of your subscription box as well. And you want to make sure that your products are satisfying an actual need. Otherwise, they’re just going to end up in a pile in someone’s closet, and then they’ll eventually cancel.

Capitalize on trending products by looking at publications and Google trends so that you can ride a wave before it hits. You must absolutely make sure to include a card in there as well with product information.

Communicate why each product is special, telling a story, makes the experience more enjoyable, and it makes the customer look forward to their next box.

It also helps to list what each product retails so that the consumer feels like they’re getting an excellent bang for their buck.


How to Source Products for Your Subscription Box

How to Source Products for Your Subscription Box

To source products for your subscription box, start reaching out to companies via emails, Instagram DMs, and even LinkedIn. You’re going to want to introduce yourself, let them know about your business, and explain why it would be beneficial for their product to be in your box. Tell them how many of the products you are looking for to work out a deal for a bulk order.

Here’s what an intro email could look like.

Hi, my name is Michelle.

I’m the operations manager at beard oil box. We’re a monthly subscription box that offers sample-sized beard oils with scents curated for each subscriber. I’m reaching out to see if you’d be interested in being featured in our September box. I would be looking for an order of fifty to a hundred units, and I’m interested to know what kind of pricing you could offer.

Looking forward to hearing from you.

Be prepared to knock on a lot of doors. Sometimes you’re not going to be able to agree on a budget, or the company might just not be interested, but don’t get discouraged. Just keep reaching out until you’re able to get enough products to fill your box, make sure that you’re registering your business, and make sure that you have insurance because vendors are going to ask you for this before they start to work with you.

Other ways to get products for wholesale prices are on Alibaba. You can try Faire and also local stores, and Etsy. Alibaba is going to have some hit or miss products when it comes to quality, so just be aware of that. But I particularly like Faire because their vendors are vetted, and they also have some free returns.


Shopify is offering a free 14-day trial. All you have to do is click the link to take action so that you can level up your e-commerce business.


How to Get Free Products to Include in Your Subscription Box

Now, maybe you want brands to give you their products for free. This is actually possible. Brands are actually willing to eat the cost of their product, only if your subscribers are an audience they want to get in front of. They would consider this to be a marketing cost. But to get a free product, that means you must already have an audience.

It’s a bit of a process, but to get subscribers before launching crowdfund with Kickstarter or Indiegogo, otherwise you can just adopt this business model once your company is more established.

Free product sourcing of course means higher profit margins, but be aware that you’ll have to invest time into pitching brands on why they need to invest being included in your box.


How to Design a Subscription Box

There are tons of businesses out there that will customize your boxes for you. You can check out ARKA, for example, but you’re going to want to start lean at the early stages. So fancy, customized boxes are an unnecessary expense.

Customized boxes can cost you anywhere from 2-5 dollars per box. So you’re going to want to find workarounds, get a custom stamp made with your logo, and use it on blank boxes over and over again. You can also brand your boxes with stickers or customized tape. You can include a college crinkle shred that matches your brand colors. I know your line sells 10 pounds for 47 Canadian dollars.


Cost to Start a Subscription Box

Cost to Start a Subscription Box

So how much does it cost to start a subscription box? Your expenses will include your products, your website, your shipping, and your marketing. Your Shopify Store starts at $30 a month, plus the cost of any apps.

So you’re going to want to check out Bold Subscription. This is the number one subscription box on the Shopify store, and that’s going to cost you around $50 a month. You can sell any product and make it reoccurring, and that’s going to give your customers the flexibility to update their plan as they like.

To cut on shipping costs, make sure your box is as small and as light as possible. What type of shipping service you go with is also going to affect your profit margins. Air shipping with tracking will be more expensive than just saying ground shipping without tracking, but customers expect little to no shipping charges for subscription boxes. So instead of paying full price, it might actually be worth it to get started with a shipping brokerage, like eShipper. eShipper is a free tool that will give you shipping rates at a discount.

When it comes to marketing, you can use free tactics like SEO, Pinterest marketing, and starting your own YouTube channel. In comparison to paid marketing, free tactics take time before you can start seeing results. But if you’re looking to use paid marketing, you can run social media ads. You would have to consider the cost of paying someone to set up your ads, as well as the ad spend, which is what you would pay Instagram, Facebook, or Google to show your ads.

Expect to spend anywhere from $2,000 to $5,000 a month on this. You can pay influencers or publications to speak about your subscription box as well. This figure also will vary, but you can spend anywhere from $500 to $2,000 on PR.


What to Charge for a Subscription Box

Once you have an idea of what your marketing budget is, the cost of shipping, as well as the products themselves, then you’re going to want to figure out what you’ll charge.

If you position yourself as a value box, you can charge anywhere from $1 to $15. A mid-tier box is going to cost $16 to $30, high-end boxes will be $31 to $50, and luxury boxes will cost $50 or more.

So think about a profit margin that you would be happy with. And that’s going to answer the question as to where you should be positioning yourself.


Handling Fulfillment

Handling Fulfillment

If you start with, say, 20 customers, and you have 5 items per box, that’s still 100 items that you have to store somewhere, and that you have to oversee that all these boxes are packed correctly. Make sure that you have enough space, or you can even rent a space out.

But as you grow, I would recommend hiring a student to manage your fulfillment. You might be entitled to go with a budget fulfillment company, but I would highly recommend against that. Fulfillment companies that charge a dollar per package sent are not going to go the extra mile to get your order sent outright.


Top Subscription Box Companies

So let’s take a look at some of the most successful subscription boxes, and that should start giving you some ideas.


Birchbox

Birchbox

Birchbox sends it subscriber a box of 4-5 selected samples of makeup or other beauty-related products. Their plans start at $13 a month, and as of 2014, the company was valued at $485 million. As of May 2019, Birchbox had over a million subscribers and 2.5 million active customers.


Birchbox Man

The first box was a beauty subscription box originally created for women. But they have since started targeting men, they offer men’s grooming products like beard oil and body wash. Male grooming is on an upward trend, so this was a smart choice for Birchbox.


Dollar Shave Club

In 2012, Dollar Shave Club was one of the first to break into the subscription box scene. After they released a funny video ad that went viral. They are highly competitive with their intro offering, including handles, blades, and aftercare for the price of just blades at the drug store.

Subscription boxes for men is a trending niche. Some of the best subscription boxes for men include bespoke posts, style plans by Frank and Oak, and society Socks.

By now, you should be pretty comfortable with getting your subscription box business started. Do you still have questions? If you have some questions, make sure that you’re leaving them in the comment section below, and I will do my best to get back to each and every single one of you.

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Anthony Ferrara
3 months ago

Wow! great idea indeed. I usually work with food items. Can you give the real picture of the competition in this field.