If you are thinking about starting your own subscription box then this feature aims to provide a great starting point to help kick off your journey into the exciting world of building a subscription based business.
We firstly take a look at the current interest in subscription boxes, trends in the market and then list some of the key stages and considerations we recommend to help you research and plan your subscription box business from concept to launch.
Why a Start a Subscription Box?
Subscription Boxes are arguably one of the hottest trends in UK e-commerce at present. The convenience, value plus the surprise and feel good factor of receiving a box through the post is bringing customers in their droves to sample new products and discover exciting new brands each month.
It has never been a better time to start your own subscription box in the UK.
Subscription Boxes are still booming in the US and naturally this has seen a rise of subscription boxes and services launching in the UK.
The success of market leaders such as Graze, Birchbox and LootCrate has given UK customers confidence in the "no-commitment cancel anytime" concept of a subscription box. This is leading to higher customer demand for new boxes offering more specific products, better value and alternative features.
The recurring revenue from a monthly subscription is one of the biggest attractions for starting a Subscription Box business. Tim Ray, Founder of the Carnivore Club said in a recent interview : "From a business perspective, it’s the most efficient, flexible and easy to operate business model in e-commerce".
John Warrillow, entrepreneur and author of The Automatic Customer: Creating a Subscription Business in Any Industry, believes that any business can enhance value by adopting the subscription model, "It’s the perfect business model because it provides the greatest value to both the entrepreneur and the customer,"
The business model can also be highly lucrative, Birchbox is one of the most successful subscription boxes in the World. Founded in 2010 by Harvard Graduates Hayley Barna and Katia Beauchamp, Birchbox now boasts over 1 million subscribers and has recently been valued at over $500 million.
A modest subscriber list can still add up to a decent monthly income, as Bemmu Sepponen, Founder of Candy Japan and author of How to Start and Grow Your Subscription Box : From 0 to 1000 Subscribers, found when his £3.50 per box profit was being shipped out to around 1000 subscribers. This £3,500 monthly profit may have taken 4 years to reach, but Bemmu admits "many can achieve similar results in much less time. Our competitor JapanCrate has achieved 10,000 subscribers in only 8 months, so much faster progress is possible."
Low Startup Costs and Easy to Launch
The ease and fairly low startup costs of online tools allows you to identify markets and quickly launch online platforms to promote, test, experiment and build a customer base of subscribers. Small agile teams can operate effectively by automating processes with signup pages, automated payment scheduling and delivery tracking. Cloud software tools can handle accounting, stock control and customer relationship management.
Ready To Go Subscription Box Websites
There are now even sites such as CrateJoy, which offer complete turnkey solutions, providing an all-in-one platform to launch and manage your subscription box business. Fill in the signup forms and start selling the same day with a full blown e-commerce website, inventory management and data reporting tools.
Specialised tasks such as branding , packaging, social media and web development can be outsourced to professional online communities such as Freelancer, allowing you to take advantage of skilled professionals from around the world without the overheads of managing teams of on-site permanent staff.
The subscription model also allows for low risk growth, business owners can forecast required stock levels based on new subscriber rates. Feedback from subscribers can allow the subscription to evolve effectively and grow through the direct contact with its subscription base, ensuring customers keep coming back each month.
To get started, we are developing a step-by-step guide on planning, launching and managing a subscription box business in the UK. This guide will delve more in-depth to each stage as we continue to develop it, for now here is an overview of some of the key stages for you to consider :
1. Start with a Great Idea!
The more niche your idea the better. The sheer abundance of products available to buy online has allowed customers to become ultra-specific when shopping. This creates smaller sub-markets that you can target away from highly competitive markets. Your time and energy is far better served identifying a niche that you can dominate and grow instead of launching a rival box in a crowded market.
Take healthy snacks as an example, Graze has dominated this market for a few years now, however friends Chrissy Leyland and Kelly Slade, saw an opportunity to launch a niche within this market by focusing on just vegan healthy snacks and now run their hugely popular Vegan Tuck Box.
Use free tools such as Google Keyword Planner to research what people are actually searching for online. This is a great tool for market research as it shows how many searches a month people are making for your types of products and your how many people are searching for your current competitors. This can show you trends and give you ideas on different products to develop your strategy.
Choosing a product range that you are passionate about can help as this will keep you interested and motivated to live and breathe the items that you are trying to sell. Customers like to hear and feel this passion and will be more inclined to connect with you and your brand.
2. Understand your Customer
Once you have identified your niche product area, the next step is to research further your potential customer base online. Where are they currently buying from? What is the demographic? What is influencing them to buy? What prices are they paying? How can you add value to the market to attract these customers?
Reach out to this community in forums, speak to people and find out what products they would like and what frustrations they have with existing suppliers. Can your box and products provide solutions to their frustrations?
3. Launch a Prototype Concept
Don't spend months or years secretly developing your business idea behind closed doors in the fear that your amazing idea will be copied. Release images and content about your idea online to gauge the markets reaction.
You can do this with a simple webpage with concept images designed by your professional freelance designers. This test page can showcase what the box will look like and examples of the items likely to be included. Allow visitors the ability to register their interest via a signup form and reply back asking for feedback in exchange for early access offers and incentives.
This technique is a great way to test your products to see what people actually want, allowing you to develop your idea before taking the plunge of buying stock.
Consider how you intend to handle packaging and delivery when selecting items. Only select items that are easy to ship. Large items will increase your delivery charges, smaller items can be packaged in letter-box friendly packaging, ensuring that there is no issues if subscribers are not at home to take delivery. Careful considerations must also be made for perishable food items and fragile products.
4. Pre-Launch Phase
Now that you have identified the products people want in your box, it's time to start negotiating with suppliers on trade pricing and availability. Use your concept images and website to show suppliers the long term plan, ideally they will buy into the potential and cut you a break with low volume order flexibility. Expect to only break even on your first few boxes, with the aim of increasing your margins when higher subscriber numbers allow you to buy stock at discounted bulk prices.
Once suppliers are in place with an agreed pricing structure and delivery arrangement, you can now revise your concept prototype to showcase the actual items that will be shipped in your first box. These items may be a secret if you are developing a discovery style box, but at least you now know the items, so give clues and sneak peak teaser images to get people intrigued. Create this buzz by reaching out to your email list contacts and get busy on social media.
A number of subscription boxes give each months box a theme, which can give subscribers an idea of the type of items they might receive, this creates intrigue and excitement, without revealing what the items will be.
5. Pre-Sales Phase
This is the stage you will raise the finance to fund your first order with your suppliers. The majority of startups handle this stage by allowing customers to signup and subscribe by taking payment for the first month's box as part of a recurring payment. The money raised can then be used to place orders with your suppliers to fulfill your subscription orders.
An alternative approach is to raise the finance for the initial startup costs through crowd funding platforms such as KickStarter or Crowd Funding.co.uk. Successful campaigns have launched a number of UK subscription boxes including Scawlr Box and Orchard Box.
This technique would involve communicating your project as defined in the Pre-Launch phase and offering a number of incentives including first box promotions, exclusive items and on-going perks for those who donate funds to your campaign.
6. Ship Your First Boxes
Providing you have raised sufficient capital to purchase stock and cover shipping, you are now ready to ship your first boxes to your eagerly awaiting subscribers. Ship boxes on time ideally with tracking codes for smoother delivery.
Be organised with your labeling and ensure to include your literature that explains the contents of the box. Some boxes even write handwritten notes in each one, which although time consuming makes the whole experience extra special. You can include sneak peeks of next months box and discount offers to share with friends.
7. Your Up and Running
Your monthly subscribers will stay with you if you maintain good value, good customer experience and keep things interesting. Respond quickly and efficiently to all customer service enquiries. Use your growing list of subscribers to negotiate better rates with your suppliers, allowing you to provide better value to your customers by adding extra items or higher value items in each box.
Keep looking at all of your data to analyse what is working at what needs to improve, ask yourself : Where am I ranking in google for my niche? How many visitors am I getting to my site and how many are converting to sales? Can my signup page be updated to improve conversions? What are people saying about my boxes online?
8. Innovate and Grow Your Subscription
Release your next wave of sneak peaks and listen to your audience to see what has worked and what people are hoping to receive next time. This feedback is vital to your success, so be sure you respond to it when developing your product ranges.
Encourage social media sharing, blogger reviews and box opening videos. This will help build your brand and gain more subscribers for the following month. This activity on the internet has exploded as many high profile bloggers have so much influence with millions of followers. Connect with these bloggers with free sample boxes for review.
Setup an affiliate program that offers incentives to bloggers and your customers to share your website. This will help create an army of enthusiasts actively promoting your brand for a small commission.
How can we help?
We hope this guide has given you some useful tips to consider. Stay tuned as we will be adding regular articles, guides and case studies from actual subscription box companies and news from the industry in our Tools & Resources area over the next few months.
If you are a Startup looking to use the subscription model to grow your business then we would love to hear from you. We can support you by showcasing your journey on our site, connect you to wider audiences and provide you feedback and opinion from our community.
Startups are welcome to give back to the community by sharing experiences, lessons learnt and strategies to help other Startups grow. This also gives audiences a deeper insight into your company and helps build ongoing relationships, vital for a successful subscription based business.
If you are an existing business and simply wish to us to consider your service for a review then get in touch.