Are you thinking of launching a subscription box business? We’ve written a thorough guide on how to start a subscription box and create a successful system that will continue to attract new customers. In addition, we’ve answered the seven most frequently asked questions about this industry to make the beginning stages of your journey so much easier!
How to Start a Subscription Box Business
Like launching any business, starting a subscription box company is a huge challenge. You’ll have to make sure that you generate enough profits to sustain the business without losing customers due to high prices. Luckily, we’re here to guide you through the whole process!
1. What Is a Subscription Box?
A subscription box is a package containing a group of products that is delivered to customers who signed up to receive it on a regular basis. Many different niches thrive on using this business model, and the system is nearly the same in each one of them. The deliveries have to be recurring, usually on a monthly basis, the boxes tend to follow a theme, and the payments tend to be recurring as well.
A lot of subscription box businesses opt for a time-bound subscription, which is usually for receiving boxes for a period of six months or a year. A subscription box presents a great way to learn about unknown brands from a certain industry and gives customers the ability to test out specific labels’ products without spending too much money on them.
2. How Do Subscription Boxes Make Money?
Subscription box businesses have two ways of making money. The first one is through recurring payments by customers who want to subscribe to a box for a certain period of time.
The other type is by introducing one-time payments. In those models, customers pay a smaller fee to receive a box of products and then pay one-time charges for items they actually want to keep. Regardless of the type of model a subscription box business chooses, its profit margin typically ranges from 40% to 60%.
3. How to Create a Subscription Box
As the subscription box businesses continue to thrive, the competition is stronger than ever. That’s why it’s essential to have an excellent, unique idea and to research your target demographic before you start your business. Exploring various options in your niche and investing in market research is really important for the beginning stages of your subscription box business journey.
Another key step in your subscription box business plan is researching the brands you can partner up with. If you’re not a brand owner, it would be wise to find good partners that will help you grow the business. In case you are, it’s always good to diversify your offer, as many customers like subscription boxes because it gives them a chance to learn about different new labels in the industry.
To help you learn the ropes of a successful subscription box business, here are some of the best subscription boxes you can check out:
- Dollar Save Club
- Allure Beauty Box
Once you have an idea of how your business should function, you can think about the pricing of the box. Experts recommend pricing it with at least a 40% profit margin in the beginning. Then, you can create a prototype box and test out people’s engagement.
4. How Much Does It Cost to Start a Subscription Box Business?
According to our research, the average cost of starting a subscription box business sits at $13,936. The costs vary tremendously depending on the industry and the business model you choose. The minimum costs can be as low as $12, while the highest startup charges can add up to $27,209.
5. How to Start a Food Subscription Box
The amount of money spent on food subscriptions in the United States sat at $124 per capita in 2021. Since the start of the pandemic, many people have turned to alternative means of obtaining meals. That’s why the number of subscription boxes keeps rising.
The process of starting your food subscription box business is the same as with any other niche. You’ll have to do good market research, find excellent brands to partner up with if you want, and then explore various subscription box marketing tools.
When it comes to food, your options are endless. You can choose to work with packed groceries or deliver fresh ingredients to customers’ doorsteps. In case you opt for the second option, you should make sure to invest in high-quality storage solutions to ensure that your groceries are still fresh by the time they reach your customers.
6. How to Start a Wine Subscription Box
As we mentioned, subscription boxes work in similar ways no matter what niche you choose. Starting a wine subscription box is no different. Still, you might want to explore regulations in your particular state before getting started, as some areas have specific rules for selling liquor. Entering the nearly $400 billion global market is definitely worth trying.
What’s more, you should think about different ways to make your subscription box stand out. You can offer interesting monthly or seasonal themes and include relevant information about the wine you send out. Moreover, you could put food pairings that go perfectly with your wine, such as nuts, cheeses, meats, and dried olives. Partnering up with a food brand for even more subscription box business ideas will be a great way to save money on those items and still offer an exclusive experience to your customers.
Another tip to make your business stand out is creating challenges and prizes for your customers. For example, you could opt for not including any info about the wine in the box and let customers guess the type and flavors on their own. Then, you can offer prices to the customers with correct answers.
7. How to Start a Subscription Box Business with Shopify
Shopify is a great company (over 1 million merchants) to partner up with when you start your subscription business. The platform offers various options perfect for first-timers, including a free trial. To begin your journey with Shopify, you’ll need to download a subscription management app. Shopify recommends trying out one of these apps for your business:
- Appstle Subscriptions
- Assemble Subscriptions
- Awtomatic Subscriptions
- Bold Subscriptions
- Native Subscriptions
- PayWhirl Recurring Payments
- Recharge Subscriptions
- Seal Subscriptions
After that, you should work on building your custom Shopify subscription box solutions. Shopify offers APIs and tools to make it easier for businesses to develop unique subscription experiences within Shopify Checkout. This makes the process pretty simple for both customers and businesses.
Now you’ll be able to choose products to offer in your box. You’ll find this section by going to the Shopify admin and then clicking on “Products.” Once you change settings for every product you want to offer, you can create your subscription business model. You can choose which type of subscription you want to offer, the specific discounts available, and the frequency of receipt.
Another vital aspect of your box will be a payment processing setting. Shopify offers great step-by-step guides on setting that up, so we recommend that you start there. You’ll be able to set subscription rules and regulations for both customers and brands you partner up with.
Gaining and Retaining Customers when Starting a Subscription box
Once you set everything up, you should work on your subscription page to attract more customers. You could attend a course on the basics of copywriting or hire an expert to create the perfect page for higher engagement.
Once you set up your subscription page, you’ll be able to launch your subscription box. You should make sure to monitor users’ experience and upgrade your system frequently to gain an even larger customer base.
If you want to start a subscription box business, you should be prepared for a challenging period. Starting a business is difficult and will take a lot of dedication. We hope our guide has helped you cover the basics, so you can reap the fruits of your labor before you know it!