Why and how to launch subscription boxes

If you’ve considered starting a subscription box, there’s never been a better time to pursue one. U.S. eCommerce subscription service income is set to hit $38.2 billion by 2023, more than double 2019’s $16.49 billion take.

Additionally, consumers are adopting subscriptions in increasing numbers: The typical shopper now has five retail subscriptions, and their average spend sits at $187.32 per month. Even more enticing, 35% of surveyed U.S. shoppers said they’re going to hold on to their retail subscription, 51% reported they plan to add subscriptions, and only 14% of subscribers stated they intend to cut back.

 

To help set the stage for a profitable subscription box, we’ll cover the main reasons why subscriptions are so popular. We’ll then share some strategies to ensure your subscription boxes are a hit.

How subscription boxes live up to the hype

If there’s one business model eCommerce businesses and shoppers both love, it’s subscriptions. They’re a popular tactic for businesses thanks to the following benefits.

Generate recurring revenue

Having money coming in regularly each month helps to stabilize your business income. This helps alleviate cash flow constraints, fund new product launches, allows you to better predict your available capital.

Serve a growing need

41% of consumers in the US have active subscriptions, and 65% are open to purchasing a new subscription in the future. With such consumer openness to this new business model, breaking into the subscription box market now can set your brand up for sustainable paydays later.

Increase inventory turnover

Excess and dead stock can stymie profits and conversions. But launching items in a subscription, especially replenishable goods, can increase your repurchase rate, which accelerates how quickly you clear your shelves.

Boost profits consistently

You can make more money when you help customers solve problems, and subscriptions are one such fuss-free solution. Their autopilot nature often removes the time and effort issues that come with shopping, pulling customers in every time.

Strengthen brand loyalty

If you offer spectacular boxes with an exceptional customer experience, customers are more likely to keep their subscriptions and ignore competing offers.

Boost customer lifetime value (CLV) and average order value

Since you can add multiple products to a box, you can sell more items in one transaction, which boosts your CLV and average order value (AOV).

How to launch a profitable eCommerce subscription box business

With the benefits of subscriptions explained, let’s turn our focus to laying a solid foundation to launch top-performing boxes. 

Assess the market

Before you launch a subscription box, it’s important to gain a clear understanding of the market landscape. Run competitor and market research campaigns to discover what you’re up against and think of ways to outshine your competition. 

Also, scope out different pricing models and use these to understand how you can offer competitive prices. For example, your research may reveal you could compete through higher-quality products, more hands-on service, and unique bundles.

You also need to know who your target customer is for each box you’ll offer and their current wants and needs. This information will help you tailor every aspect of the buyer’s journey to their preferences and increase conversions.

Calculate inventory and packaging needs

To ensure you meet your customers’ varying demands, present multiple box options. Consider how you portion out and price these offers so they’re profitable and offer different values to consumers.

For example, if you sell protein powders, you could offer “Lite,” “Value Saver,” and “Pro” boxes to represent small, medium, and large packages.

 

To maximize the longevity of your subscriptions, make it easy for customers to switch between subscription plans. Some things to consider when pricing your subscription boxes are:

• Packaging costs: Include materials for labeling as well as internal packaging (e.g., boxes, labels, bubble wrap, recycled paper, and Styrofoam).
• Carrier fees: You’ll likely need relationships with multiple providers to match consistent delivery speeds to parcel sizes.
• Return costs: Determine whether you’ll price returns into the subscription box price or if you’ll absorb them internally.
• Administrative costs: Consider costs for resources to manage the subscriptions, such as staff wages to oversee the process, including picking and packing.
• Marketing costs: You’ll need to know how you’ll cover prelaunch, launch, and ongoing promotional costs and what the approximate bill will be.

Establish efficient subscription box assembly processes

If you have other offerings besides subscriptions, you’ll fulfill these alongside regular eCommerce orders. This setup can be challenging without a well-organized plan, especially during peak seasons.

Accuracy and speed are key in eCommerce, no matter what business model you use. So, prepare now to build a fulfillment process capable of executing both regular and subscription box orders efficiently. Here are some steps you can take to optimize your operations:

• Train staff on fulfillment best practices
• Remove unnecessary steps from your fulfillment process
• Pre-assemble packaging
• Create purpose-built workstations
• Incorporate tech tools to remind you of what to send, when, and where

As a concrete example, say you sell a snack subscription box. You could:

• Pre-pack contents in the combinations you offer and store them ready for packing and shipping
• Pre-label boxes and items
• Prepare shipping boxes complete with thank you cards and any marketing materials
• Use fast LaserJet printers for labels and receipt printing

Test small with a minimum viable product

While you should offer multiple subscriptions, if it’s your first time selling subscription boxes to your niche, reducing your risk is imperative. That’s where a minimum viable product (MVP) can save you.

For example, you could offer three subscription options using products you already stock, assess your results, and revise your offerings based on your findings. You can also use the cash generated from your MVP to fund your subscriptions, shielding your business further.

Go multi-channel

Another way to test your MVP is to sell your subscription boxes on multiple channels with dedicated subscription solutions. Not only can this strategy increase sales, but you’ll also gain more insight into your customers. 

For example, Amazon offers a subscription service called “Subscribe and Save,” where shoppers can opt in to recurring scheduled deliveries for items they need replenished regularly.

Wherever you choose to sell, be clear about your offers. State what each box does and doesn’t include, with side-by-side breakdowns for easy comparison. Add high-quality pictures and videos to your listings, and highlight user-generated content like reviews to increase perceived value and, ultimately, conversions.

Create a multifaceted marketing strategy to boost sales

Once your subscription boxes are ready, you need to attract attention to them. This is especially important if you sell on a marketplace where organic traffic and sales early on will help you gain traction quickly. Some strategies you can implement include: 

• Prelaunch marketing campaigns to generate initial buzz (e.g., influencer marketing, public relations, and PPC ads directed to the presale landing page).
• Presales to gauge market fit and generate income
• Exclusive launch offers and discounts
• Ongoing PPC campaigns focused on long-tail keywords

Work with a fulfillment provider that specializes in subscription boxes

You don’t have to handle your subscription box fulfillment alone; work with a 3PL or 4PL to execute tasks for you.

Apart from being reliable, cost-effective, and experienced in fulfilling your product, the right provider will offer a blend of value-added services such as:

• Product kitting and bundling
• Labeling
• Prepping, packing, and shipping
• Reverse logistics

The 3PL you choose will play a critical role in your subscription service’s success, so take your time to find the right match. Research your options, gather testimonials, and conduct interviews before you commit.

Take off with extraordinary subscription boxes

If you’re willing to put in the work and resources, subscription boxes pose a rich opportunity to multiply your business income. You can satisfy a wider audience, strengthen brand loyalty, and grow your brand fast.

However, the subscription box market faces some stiff competition. To succeed, you’ll need to create offers that stand out. Introduce something different to the market and stay on the pulse of customers’ needs to get ahead of your competition.

Test small and make adjustments based on solid data. Then, watch your subscription box business skyrocket.

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About the Author

Rachel Go is the marketing director of MyFBAPrep, the leading eCommerce warehouse network for Amazon aggregators, enterprise-level brands and top Amazon sellers. Operating a global network of more than 50 warehouses and seven-million-square-feet of operating warehouse space, MyFBAPrep offers a full suite of ecommerce 3PL services including Amazon wholesale and private label, direct-to-consumer (DTC) fulfillment, and B2B retail. Powered by its SaaS technology platform Preptopia™, sellers get access to unified billing, analytics, business intelligence reporting tools and real-time inventory views across multiple warehouses in the network. The company provides FBA Prep automation, modern robotics item picking, and a dedicated account management team. Based in Coral Springs, Florida, MyFBAPrep moves over $1 billion in Gross Merchandise Value (GMV) and processes over 10-million units annually. For more information, visit MyFBAPrep.com.

 

About BASECAMP

BASECAMP Consulting Group provides outsourced bookkeeping, financial modeling, and Fractional CFO services to scaling CPG brands. They focus on being good people doing great work, building community, and being true business partners.