How to Start a Subscription Box
Over the past five years, the subscription box industry has exploded. There’s no question why: they’re fun, they help consumers try new products at an affordable price, and they make great gifts. Plus, starting one can be a fun and profitable business endeavor. Interested in learning how to start a subscription box? Check out our six-step guide to success in the subscription box industry!
The Basics of Subscription Box Businesses
On paper, starting a subscription box business is easy. All you need is boxes, products, and customers, right? While subscription boxes can be efficient business models, there are so many other facets to consider, like logistics, a digital storefront, customer service, quality control, and packaging.
How Much Does it Cost to Start a Subscription Box Service?
The short answer is: it depends. If you are an established company with a loyal customer base and high-quality products ready to go in their boxes, it can be very affordable. Your only investments would be boxes, packaging, and potentially, additional workers (or a 3PL partner) to kit the boxes.
If you have no existing company, starting a subscription box business can be much more costly. You’ll need to consider logistics, staffing, product sourcing, and more. But, as shown by thousands of businesses, it’s very possible to learn how to start a subscription box and create a profitable product quickly.
Let’s start by taking a look at the two main types of subscription boxes that have seen success in the past few years: refill boxes and variable boxes.
Refill Subscription Boxes
Refill subscription boxes address recurring needs, like razors or cleaning products (e.g. Dollar Shave Club). You typically receive some sort of starter kit, followed by regular refills as you use up the product. These boxes often address essential needs and have a low-to-moderate price point.
The production of these boxes is relatively simple, but it can be difficult to find an untapped niche or develop a product that is better than what is already on the market.
Variable Subscription Boxes
Variable subscription boxes address consumer interests around a theme or hobby, like international snack foods or dog toys (e.g. BarkBox). The contents of each box are a surprise, but you typically have some idea of the value of the items inside (and some even provide sneak peeks online). These boxes typically address hobbies or interests, rather than essential needs, and often have a slightly higher price point.
These boxes can be much more difficult to produce, because they often rely on a network of manufacturers to provide consumers with an exciting variety of products each month. The creators of these boxes have to constantly monitor trends to identify hot products and consumer interests in order to keep their subscription box business relevant.
Step 1: Start With a Great Idea
When considering how to start a subscription box, one of the most important things to research is your audience. The most successful boxes play into existing niches with strong followings. You’ll need to find an untapped market, or take a new angle in a market that already has subscription box offerings. You should complete thorough market research to understand existing offerings and how your box will compare.
You’ll also want to consider the longevity of your idea if you’re considering a variable subscription box. If you can’t come up with at least a few dozen product ideas for your box off the top of your head, it may not be sustainable in the long term. Ideally, you want a theme that can be customized and updated endlessly around holidays, events, and trends.
Step 2: Explore Logistics Options
Once you have an idea, you’ll need to research the logistics to make it happen, including:
- Warehousing and storage
- Freight and transportation
- Order fulfillment & kitting
- Special packaging
- Ongoing customer service
- Reverse logistics
If you’re just beginning to learn how to start a subscription box, you may be tempted to handle logistics yourself from a garage or small warehouse. But once your order volume increases, you may need the help of a 3PL fulfillment provider. They can help coordinate incoming shipments, store your products, fulfill and kit your orders, and even handle customer service and returns.
You’ll also need to vet your product from a logistics perspective. Ask questions like:
- What is a reasonable price point for this market?
- How easy will it be to store and ship the components of each box (in regards to weight, size, and perishability)?
- How many different companies will I need to establish relationships with to source products?
Step 3: Source or Manufacture Your Products
Once you’ve come up with your idea and created a blueprint for your logistics strategy, you’ll need to source all of the items that will go in the box. If you’re creating a refill subscription box business, you may opt to design and manufacture all of your products yourself. This is typically only possible if you’re a well-established company already manufacturing products onsite. However, if you come up with a simple, proprietary idea that requires limited machinery, you may be able to rent or buy a small space and manufacture your products yourself.
The more common option is to source products from other businesses. This way, you can simplify your process, and get a boost from brand name recognition of major industry players. You may eventually want to create some proprietary products, but in the meantime, you can streamline your workflow by buying wholesale instead.
Step 4: Assemble Your Kits
Once you have all of your products sourced, you’ll need to find a place to store and assemble your kits. If you have an existing storefront or warehouse, you may be able to make room, but many small businesses find that they simply don’t have the space, and end up partnering with a 3PL provider at this point.
When assembling your boxes, consider branding at every turn. Subscription boxes (especially ones with surprise contents) are all about the experience, so you’ll want to consider what packaging materials can make each delivery extra special. You’ll also need staff to help pick and pack the items and assemble the boxes, so don’t get too complex with your packaging and kitting.
Step 5: Take Orders & Ship Your Boxes
You’ll also need to create a digital storefront for people to sign up and pay for their boxes. While there are many platforms on which you can build your eCommerce store, we love Shopify. They have a library of add-on apps that help you customize your store for your subscription model, and integrate easily with most fulfillment systems.
Once the orders are rolling in and your boxes are assembled, the final step is to ship your boxes. One of the benefits of a subscription service is that you can often save money with slower shipping, since you know ahead of time how many boxes you’ll need to ship. Be sure to negotiate with your shipping provider (or have your 3PL partner do so on your behalf) to capitalize on any savings available.
Step 6: On-going Customer Management
Since customers are subscribing to recurring deliveries, you’ll also need to dedicate time to customer management. You’ll need to send out emails each month before the boxes ship. You’ll need to handle any cancelled or new subscriptions each month. You also may want to follow up with customers to ask for reviews or to allow them to vote on themes for future boxes.
You’ll also need to manage customer service and reverse logistics. Customers may not be happy with their box and want a return, refund or exchange. These reverse logistics are often outsourced to 3PL providers, who are trained to balance customer satisfaction with inventory loss and return shipping costs.