Since subscription box business is currently valued over $3o billion, no wonder you’re looking for how to start a subscription box business. Almost everything has or can have a subscription box business idea; just search things like dog food subscription box, snack subscription box or even book subscription box and you’ll be amazed with the results.
So here’s your step by step guide for creating unique subscription box business ideas and get into the subscription box market.
Step 1: 3 types of subscription box business models
Knowing how to start a subscription box business means recognizing a very niche and specific group of audience and providing them with a specific set of products/services. So it’s essential to know how many types of subscription box business models are and what’s the most suitable one for you.
Type 1: Replenishment subscription box business
All of us use daily products that need to be replenished (or bought again); consider things like shampoos, tissues, make-up items, coffee, pet food etc. So replenishment subscription box businesses usually focus on such products and periodically send these to customers. The replenishments might be weekly or monthly.
On this note, you can read the subscription box case study we’ve done on Dollar Shave Club subscription box business.
Pros of replenishment subscription box business
- Demand is permanent: People will never stop needing replenishment items. So you can rest assured that there’s always demand and customers will always need your products. Of course you need to create a good customer experience for them to come back.
- High potential for loyal customers: Once you deliver the customers’ products with good experience, the customers won’t bother looking for another provider for their daily replenishments. So you’ll most probably have low churn rates in your journey of knowing how to start a subscription box business.
Cons of replenishment subscription box business
- Competitive market: Since replenishment subscription box businesses are fairly easy to run, there are a lot of competitors out there. The key to overcome this is to stand out with subscription marketing strategy.
- Lower profit margins: The supply is plentiful and a lot of competitors are out there. So the pricing models in replenishment subscription box businesses are relatively more narrow-margined. You can overcome this by creating a loyal customer base with the best loyalty programs to make the customers come back and cut down on customer acquisition costs.
Type 2: Curation subscription box
Considering how to start a subscription box business in a creative and unique way? Curation subscription box is for you then. In this subscription-based business, the business owner curates a unique set of products and sends them to the customers. The products can be in a specific category (like a snack box, a skin care box etc.) or might have a certain theme (like a picnic box, beach box etc.).
Data shows that a significant portion of curation subscription businesses focus on fashion, food and wellness categories, but you don’t have to necessarily enter these subscription markets and can make your own unique subscription box idea. Here’s 5 tips for those looking for how to start a subscription box business.
Pros of curation subscription box business
- Higher profit margin: These kind of subscription boxes are specifically curated for customers and hence create a very positive experience which means the perceived value of the boxes are greater than the actual cost. Note that while the order volume of curation subscription boxes might be lower than replenishment boxes, their profit margins are higher.
- Customers don’t need you, they want you: Usually the products sold by curation subscription boxes are not essential sustenances. The products are usually gifts are things to make happy and you’re the one creating this positive experience for the customer. So the emotional bond between subscription business and customer is established more quickly.
Cons of curation subscription box business
High initial costs: As we said above, customers usually purchase curation subscription boxes out of desire and want. This can also be a negative point since you’ll have to actually appeal to the customers on some level. Moreover, curation subscription box businesses must also appeal visually, so you might look for package and box design, niche items to stand out etc.
Higher churn rates: It is a fact that curation subscription boxes do not deal with essential items and that means customers might purchase one or a few times and then decide not to. So you better expect this result and prepare for it.
Type 3: Access-based subscription box business
Imagine you own a gym and anyone can enroll and start working out, but there are some VIP perks (like a swimming pool or other services like laundry) that is available to some of the customers who pay a separate price to “access” these perks.
Let’s imagine another scenario to make sure you clearly know how to start a subscription box business in access-based mode. Imagine you have an online shop and some of your products are so popular that they sell out quickly. You create an access-based subscription on these products and those who subscribe will have early access to these products.
These are just a few examples of the access-based subscription box business model; you can always make a creative subscription box in access-based mode and offer perks, services, discounts, early access etc.
Pros of access-based subscription box business
- Increase in sales: Special perks and services allow you to offer more prodcuts/services in your bundle, making more profit. Also, a portion of your customers will definitely go for the perks, increasing their average order value (AOV).
- Long-term revenue: Once customers feel they can access special perks and stand out among other customers, the chances of making them loyal or long-term customer drastically increases.
Cons of access-based subscription box business
Potentially complicated: By design, creating a set of special perks for a part of your customers is a bit more complex than creating a regular purchase experience. Moreover, since the customers are paying extra for this premium feature, they also expect a premium experience. So you have to be meticulous with the tools and journeys you’re using so the whole experience feels relatable and worthy.
On this note, you can easily rely on Subify’s experience since we’ve been doing access-based subscription box (or membership as we call it) for a very long time and have the expertise and experience. So check out Subify Subscriptions membership features on Shopify.
The perceived value: As we said above, customers who pay more, expect more value. You have to make sure you create value AND the right value for your customers so they feel justified for paying more. You can use the data you have on you customers to select the best set of values to offer in your membership subscription box business.
Step 2: Best business model for subscription box business
Most people get overwhelmed by questions when they hear “subscription box business model” because they have to answer many questions and they don’t know where to start; do questions like what’s the best product or market for subscription box, will I offer something new, what other business are doing the same thing and many more sound familiar to you when you’re thinking about how to start a subscription box business?
Well, you don’t need to worry about that all at the same time. We’ll break it down and create a step by step guide on how to choose business model for subscription box business.
If we wanted to over-generalize the concept of business model for how to start subscription box business, it comes down to these three commandments:
A. Choose your (target) audience
B. Determine product relevance
C. Check out your competition
Now we’ll dive deeper into each of these commandments to create a business model for subscription box business.
A. Choose your (target) audience
The complexity here is that you can start a subscription box business with almost any product/service, but what would be the best one? We suggest you review the pros and cons of different subscription box models to get a view of the advantages and challenges that lie ahead.
Next, think about these questions to help you get started with how to start a subscription box business:
1. Product/service awareness: Is your product/service something people know about or is it a new/less-known thing that you have to make people aware of?
PRO TIP: Choosing a known product/service for starting a subscription box business means you’ll have less of a challenge persuading your customers to buy. On the other hand, going for a new and unique subscription box business idea means bridging a gap that has less or no competitors.
2. Recurring purchase potential: Is your product/service something people would come back to? Or is it something people most probably pay for once or twice a year?
PRO TIP: Products/services that are purchased regularly have higher order volumes; on the other hand, unique products/services have less order value but potentially have higher profit margins.
3. Accessibility challenges: Is the service/product you’re offering easily available? How about distribution (in case of physical products)? Does it need a special or expensive form of distribution?
PRO TIP: One of the ways to make yourself stand out against your competition is by communicating information that makes the users feel cared for and valued. In this case, if your service/product is scarcely available, you can clearly communicate this information and even the process of obtaining to the users. They’ll appreciate the effort you make to value their time.
4. Purchase intent: Why would customers buy your product/service? To have fun, to take better care of themselves, to make someone feel loved?
PRO TIP: Understanding the customers’ purchase intent gives you an unfair advantage in marketing! You’ll know what messages, themes and in general, experiences to focus on so that your customer is delighted.
Done with target audience? One more thing
The more you know about your audience, the better you can choose your type of subscription box business model. So it never hurts to get deeper into the audience data. You can do this using audience persona.
Audience persona is basically knowing the real groups of people who might be your customer. For this, consider these questions:
- What are your customers’ age group, gender, location, occupation, interests and pain points?
- Do they usually or ever buy products/services similar to yours? Where?
- What do you know about their average purchasing power?
- How’s their online behavior? Do they use any social media? If yes, on which media are they the most active?
PRO TIP 1: You can go beyond these general information and ask questions that are particular to your market; things like culturally important data or maybe legal specifications (in case of international subscription box businesses).
PRO TIP 2: You can use any tool you see fit for gathering information about your audience; however, never miss a chance to get it right from the audience itself. You can create online surveys or personally ask for feedback if you have direct access to your audience persona.
PRO TIP 3: There’s no “right” number of personas for each business but usually 2-5 personas is what most businesses would go for.
B. Determine product relevance
This is where you start looking for problems instead of solutions! When we say a product is “relevant” to the audience, we mean that it meets the customer’s goal or solves their challenge; It can be the goal of having premium ground coffee every weekend or the challenge of being a romantic.
So once you have determined your audience and their personas, look for the specific problems, challenges, wants or needs that makes them purchase products/services from your subscription box business (or your competitors’).
As you progress, you’ll most probably see some gaps, some problems that are not dealt with or you can deal better with. Building on the data you get from that gap will make the customers easily “relate” to your product.
C. Check out your competition
When looking into how to start a subscription box business, most people identify their competition but they don’t know what to look for in those competitors. Almost any statistics could be helpful but before that you have to realize that knowing how to start a subscription box business is in fact more than just coming up with an idea and acting on it. You need to market your product, make sure your supply chain is smooth, and understand the user journey data to keep them coming back.
How does that relate to checking out your competition in subscription box business? Well that’s exactly what you can learn from your competition. Check out to see what tools they’re using, what identity and tone is working best for them etc.
Step 3: What is your brand’s identity?
Let’s get something out of the way: when small business owners hear the word brand identity, they usually think they have to compete with Amazon on that and get everything right down to a detail. It’s not like that at all. Identity of brands improve and change as the business gets more and more mature; very much like a human being.
We go through different phases of identity throughout our lives and after a certain point it stabilizes. It is very much like that.
So now that you’re looking for how to start a subscription box business, just know that the most important thing in your brand’s identity is the experience you create for the customer and the values they perceive.
It doesn’t matter if your subscription box business idea is in replenishment, curation, or access field. What matters is that you build an experience that resonates with your real customers. Let’s look at some statistics:
As you can see in the picture above, customers in different types of subscription box businesses have slightly different expectations but having a personalized experience is the most common and important one among all categories.
So now comes the big question: How do I build my brand’s identity?
In the brand identity step of knowing how to start a subscription box business just follow these four steps:
1. Determine the value you propose
Subscription box businesses might create a lot of good experiences for their customers, but as the saying goes, if you focus on many things, you’re not focusing on anything. So determine the most important value you want to be remembered with.
In the Dollar Shave Club case study, you’ll see that they’ve created a loyal customer base for many of their good services and products, but it is “reasonably priced quality razors” and “customer-centricity” that are their core values and that’s what they use for their marketing.
2. What is your unique selling proposition (USP)?
If you’re going to start a subscription box business, you might know some competitors that are doing the same or similar thing. What will make you stand out against them?
The image above should make it clear where you need to focus in starting a subscription box business idea. It is the area where what you do best and what your customers want the most, but your competitors have not entered or are pale.
3. Find your tone and color
First let’s talk about the tone of voice. If you remember the audience persona section of this article, we talked about getting to know who we’re going to sell to. Now that makes a huge difference in how we’re going to talk to them. For example, for a pet food subscription box, the customers would most likely prefer a tone that sounds reliable and caring while for a fitness supplement subscription box, the customer probably goes for a knowledgable and exciting tone.
So the takeaway is that after you know your audience, determine what kind of tone of voice would attract their attention. Now comes the commitment part; once you’ve determined your tone of voice, you should stick to it so you come off as consistent.
Of course tone of voice needs to be adjusted based on the channel you’re using (for example, having the same tone of voice in TikTok and an email might not yield the best results) but the core remains the same.
The image above can easily guide you on adopting the best tone of voice that aligns with your product and your audience.
4. Delight customers upon delivery
By now you’ve probably seen hundreds of unboxing videos on a variety of products. When you start a subscription box business, the part where the box actually reaches your customer is a crucial step in making a mark in their minds.
We suggest you do your research and talk to design experts to come up with a customized design for your boxes. Try to reflect on what you know about your customers and then see what would delight such people.
PRO TIP: There’s a small chance that you do your research, come up with a box design and invest on it but it does not create the effect you want. Instead, you can go with the A/B testing method, which means you can create two or three designs (in low volumes) and deliver them to different segments of your customers. This way you’ll see which subscription box resonates more with them and with this feedback, you can make a safer investment on your subscription box design idea.
Step 4: Subscription box pricing
Of course we’ve talked much about knowing your audience and offering a worthy value to them and how important the whole process is, but one of the first things your customers are going to look at (even before the value you offer) is the price. It is tangible, it can be easily compared to those of competitors and it is something people are sensitive about.
Before we get into the best subscription pricing model, let’s make sure that your chosen price checks these boxes:
- It covers the costs you’ve had from start to end
- It is a reasonable number considering your audience’s purchasing power (not too low, not too high)
PRO TIP: It is about striking the right balance. If you set your subscription box pricing too low, you might not get enough revenue to continue or you might come off as unreliable and “cheap” to your customers. On the other hand, if you set your subscription box pricing too high, people might avoid buying from you or your competitors might snatch away your customers with competitive pricing.
Never expect to hit the “right number” in your first try, or ever. The right price is always changing based on the general economy, market dynamics, audience etc. So what’s important here is that you do your research and read our subscription pricing guide, and then after some time, use the data and feedback to adjust your prices.
Also there are metrics you can read about and consider in your pricing (like customer lifetime value subscription), but remember to keep things simple and just get rolling in the beginning and while you’re growing, use your data to find the sweet point.
Step 5: Build a store for your subscription box business
This is where your customers and users will face all the things you have to offer; your products, prices, values, experience and even other customers’ experiences with you.
The best way to handle this important part is to talk to experts who have great experience and expertise to give you exactly what you want. As an example, on Subify’s demo store you can see the widgets, its features and looks before you buy or implement it.
That’s why it is important to choose the right platform and launch a store that reflects your brands story and values while considering any interests or limitations your audience might have.
Step 6: Subscription box delivery and fulfillment
If there’s one thing EVERYONE hates its a delayed deliver or a mismatched delivery. Even if you create the perfect experience right to the point of delivery, that kind of mistake can drastically influence the customers’ experience in a bad way. So make sure you think about it and come up with a solid plan. Basically you can choose any of these three methods:
In-house delivery: If the volume of your orders is manageable enough so you can deliver them yourself, think of a time plan, delivery days and safe transportation.
Outsourced delivery: You can also outsource the delivery of your subscription box to an agency, but you have to make sure you brief them on the details. Also do a good research before choosing an agency to make sure they’re committed to delivering safely and timely.
Hybrid delivery: You might decide to mix both options; for example, you handle the local deliveries and your outsource the out-of-town deliveries.
PRO TIP: Clearly communicating the delivery timeframe with your customers takes a huge load of your customer support and also makes for a smooth customer experience.
Step 7: from how to start a subscription box business to the actual launch
Now comes the big day. Your store goes live, you start posting on media, you’re maybe sending emails etc. Amid all this excitement, you should pay attention to what’s happening with your customers. Of course you possibly can’t expect to get many visits and sales on the first couple of days or even weeks, but the important thing is to notice what’s working, what could work better and what’s causing your customers to drop off.
For example, you look at your data, you see that some customers have chosen products/services, but the drop off at the checkout page. It sends the sign that you might have an issue on that page, or you lack something customers are looking for (maybe a certain payment method, or it might be a technical error where your discounts are not working etc.)
We’ll talk about some tactics that can help your subscription box business grow more efficiently over the time:
1. Time & expectation
When you’re testing a new message or a new campaign, give it some time to settle and yield results. Most marketing activities are mid-term and long-term actions that need time and consistency to show results. So don’t get frustrated if the things you’ve tried did not turn out to be your perfect solution. Instead, dive deeper and see what parts worked better and why.
Also, when you’re testing with a new campaign or a new product, it is important to set a time limit and measure the results in that timeframe. For example, you start a new campaign with new messages and discounts; this campaign cannot go on forever to yield better results. Instead, it is best to set a deadline (like 1 month) and after that, end the campaign and dive into the data to see what can be better in your next campaign.
2. Track your conversions
Most probably, you have more than one touchpoint; like an online store, pages on social media, email list and so on. Every time you approach customers on these channels, measure how much they pay attention and convert, which shows the platform they’re most active on. Also look for platform they usually share their experiences or look for advice related to your subscription box business idea.
3. Don’t stick to one method
One way to boost subscription box sales is to experiment with different content, different messages, discount types etc. to see which method gets in more customers and sells more. Of course you might test two types of content at the same time, but the important thing here is not the testing itself but analyzing the results of the experiments and acting on them.
Step 8: Learn and Scale
Now you can say you know how to start a subscription box business and go through a full cycle. So what’s the next step? Should we leave the business as it is and see how it does? of course not; it is time for scaling.
Scaling basically means realizing what things have yielded the best results and then adapting those things to be used again in other areas of your business, or doing the same thing bigger. This is where the real growth stage begins.
PRO TIP: You can also use the technique of negative scaling, which means you focus on the things that haven’t worked so far, then look to reduce or improve them.
Questions on how to start a subscription box business?
As we promised above, now you have a good knowledge of how to start a subscription box business. Just follow this guide and you’ll see that you’ve got the essentials down. Then comes the time for refinement and polishing, to make it fit for your specific market and product.
While reading this or working on your subscription box idea, if you have any questions, feel free to leave a comment and our subscription experts and success managers will give the best answer they can!