The Complete Guide to Setting Up a Subscription Box Business

Ryan Patrick

Apr 26, 2024 • 13 min read

Subscription boxes are a type of order that reoccurs for a specific period and gets delivered automatically to your doorstep. The subscription box can contain a variety of products, depending on the preference of the person ordering the boxes.

Since COVID, the rate of shopping with subscription boxes has increased and this would be a good business model to venture into. You can create your subscription box business around a particular product or brand and you can also have a diverse structure where you feature different products and different brands.

This article contains detailed information on how you can start up a subscription box business model. Steps necessary for starting up your subscription box business.

Get an idea and develop it
Run a market and competitor research and price your subscription box
Create your prototype box
Prelaunch
Create a website or a marketplace listing for your subscription box
Strong customer service
Received and shipped out orders
Grow your business

we will now explore each of the above in more detail.

1. What is Your Idea?

Getting an idea for a subscription box business is very important as any successful business starts with a good business idea. After getting the business idea, you should also focus on choosing a particular business niche, knowing your competitors, and trying to know who your target audience is. This will help you easily navigate the market after launch.

2. Market Research

Here are some key things to focus on during market research.

1. What is Your Niche?

Your business niche is the particular product or service your business offers. You can choose to go into the wellness niche, skincare, makeup or even food. It is important to settle for a specific niche to help you get an easier understanding of the market. Even after choosing a niche, you can decide to narrow down your products into options like fitness, face care products, Korean makeup or Italian food.

Specificity helps a business develop a good customer experience and also gives the business a unique identity in a particular niche or market. You can also choose to venture into more than one niche but try to be more specific on the type of product in that niche.

2. Who Are Your Competitors?

Analyzing competitors in every business is very important, this helps you to know what the target audience wants, how they get what they want and what they are saying about the services rendered to them. When doing a competitor analysis or research, it is important to narrow down to your niche or if possible, the particular product(s) you would want to start your subscription box business with.

During your research, you should be attentive to the feedback of customers of competitors, what they are complaining about, how they want their service to look like and what they are demanding the most. You will use this basis to firm a strong customer relationship for your business.

3. Who Are Your Target Audience?

Knowing your target audience in every business model is very important. It is very fatal to a business that is advertising to the wrong target audience because there will be fewer sales and poor business performance. When doing your competitor analysis, you can also assume who your target audience is by paying close attention to the customers who purchase from them.

You have to pay attention to the age of these customers, gender, occupation or even residential area to help you know your target audience and who to target during advertising and marketing of your box. You should also make sure to follow market trends to learn new things about your target audience and how to improve customer service.

4. Pricing

The pricing of your products has a very great effect on your business. It can cause customers to come back more, it can chase customers away and it can even run down the business if the production cost is not attained after sales of the products. As a business owner, you should not price too low to be competitive and you should not price too high for a huge profit.

Before pricing your products, you should check out what your competitors are pricing the same or similar products and also check out the following

The costs of the products in the box
Cost of the box and other accessories present
If you have packing materials, you should also include the cost
Shipping and postage fees
Transaction and platform costs
Fixed monthly costs
Costs for advertising and marketing
Costs for physical labor

You should sum all these up and make sure you're not underpricing your products or else the business is found to fail due to less or no turnover of income. You should also make sure to prove your products so it resonates with your customers and in no case should you start up a business with 0 or too little profits.

If your target audience is average income earners, you can choose to go for products with lesser costs but competitive quality to maintain face in your business and to avoid overpricing or making losses. Making losses while starting a business is very dangerous and can lead to debts.

3. Prototype Box

It is very important to note that you must not have all products and orders ready when starting a subscription box business before you venture into advertising and marketing. If you wait for all products and orders to be assembled, you might waste time in launching your business.

That is why it is important to create a prototype box. The major aim of the prototype box is to give your customers an idea of the products they will be receiving monthly. The prototype box must not be the exact one you intend to order but the quality, quantity and value of the products should match what you want to sell out so you give your customers a reason to subscribe to this box.

The other reason for creating a prototype box is to have an image or product to use during advertising and marketing of your business. Customers want to see what you have to offer so they can subscribe. The following are steps you should take in creating your prototype box for your subscription box business.

1. Select a Product

You should select a product that will match the main subscription box products in quality and quantity. If your idea is to send out 5 face care products every month, then the prototype box should also contain 5 face care products that will not look entirely different from that of the main box. If the quality of your prototype box products is higher than that of the main subscription box, the customers might feel cheated and unsubscribe so it is important not to mislead your customers when creating your prototype box.

2. Packaging Box

Once you've decided on the type of products to use, next is finding out what type of box to use. You have to consider the material for making the box and also consider the size of the box if it will fit in the products you have selected. You must not make a lot of boxes for your prototype box, you can just make 2 or 3 boxes that will be used for your advertising and showing your customers what they are expecting if they subscribe to your subscription box.

After choosing your box, you should also consider your branding, your designs on the box and the size. Branding is very important as it gives your box a unique appearance and the good appearance of your box might lead people to subscribe to your subscription box. You should print out your brand design or logo on your box so it will be different from others.

You should also consider using quality materials for your box and not cheap materials. Even if it is just a prototype, you should give the customer assurance that what they are getting is quality products and nothing less.

3. Packing Materials

Selecting packing materials is also important. Your packing materials can be crinkle paper, tissue paper or simply wrapping sheets for wrapping your products. It is advisable to use crinkle paper for your products during marketing because this paper does not block or cover the products during photography.

4. Photos

Photos are one of the most important aspects of marketing. Good photos attract customers and subscribers. You should take photos of the products, the box, unboxing photos, short video clips and also lifestyle photos. The photos should be good and clear and be given enough lighting for a better appearance.

If your photos are very good, they will market the products themselves since people get attracted to good-looking photos and videos. The videos should be short and be able to deliver the appropriate information which is an unboxing experience.

4. Prelaunch

During pre-launch, you advertise your box to generate leads before launching your box. This is a very important step since it involves marketing and advertising which is one of the most important aspects of businesses. You get the attention of the audience and make them desire to see the products then you launch the product.

For your prelaunch, here are some necessary steps you should take to have a good outcome

1. Decide the nature and duration of your pre-launch

Your pre-launch could range from 15 to 60 days. Having an extended pre-launch time could make people who signed up early for the prelaunch lose interest. During this period, you create more awareness and gather more subscribers. Good marketing skills are important here since the customers have not yet seen the products but rely on the photos and marketing. Here, the customers have already trusted you and using a long prelaunch period might give some people a reason to doubt.

You should set a goal on the number of subscribers you want to launch your subscription box business with. The signup for your pre-launch emails does not necessarily mean sales. Not everyone who signed up will subscribe to your services so you need to put this in mind. It is advisable to have a 10-20% conversion rate as your goal. That is you need to have at least 500 customers to be able to achieve 50 subscribers.

3. A pre-launch page

To have a successful pre-launch in this digital world, it is necessary to have a pre-launch page prepared in advance. The major aim of this page is to collect emails and keep them before launch. Having a good and attractive pre-launch page is very important as customers will want to sign up for the email sometimes because the page looks attractive. You will need to connect your page to your email service provider (MailChimp is the most preferable for this type of sign-up) and then you will start the collection of emails.

Before you can market your products or pre-launch on social media, you must first create a social media account for your brand. This page will be used to create awareness about your products and their upcoming launch. You also need to connect your social media page(s) to your email service provider to start collecting emails. You can choose to create a social care page on different social media platforms or just one.

You can also choose to run ads on your pages and also host giveaways to attract signups for your email. Facebook and Instagram are a good social media option for marketing. Do a countdown to the day of your launch and accompany them with giveaways.

Once you start your marketing, do not relent or reduce your efforts. Your efforts should only keep increasing if you want to increase signups for your email list.

During this phase, you should also consider product sourcing. You have to contact the vendors for your desired products, make sure the product quality matches the one in your prototype box to avoid misleading your subscribers and begin negotiating with your vendors for the products.

In as much as you want to make profits, you should avoid products with very poor quality so your subscribers will not get discouraged on their first order.

You should also contact other vendors and make a list of vendors you will want to work with and contact them earlier before the launching of your business to avoid delays and disappointing your subscribers. Go with the best and most reliable vendors and if possible, you can survey the products before ordering for them. Some vendors have physical stores, you should visit those stores and compare the quality of the products present.

Getting your vendors ready not only will help you for the prelaunch but also the monthly orders after the launch of your subscription box business. After launch, you don't need to go through the hassle of product sourcing again except you want to add other products to your box. You just need to order from your vendors and serve your subscribers.

It will also help you to give time to other things like boxing, packing materials and shipping when the prelaunch is close.

For boxing, you should go with materials that will not get worn out before they reach your subscribers, you do not want bad reviews on your first sales. Go for hard materials that are flexible and can contain the products you're sourcing. The designing of the boxes should also be done in time to avoid a hurry when the prelaunch is very close. Once the box and the design are done, you should also consider packing materials or any accessories you would want to include in the box for your subscribers. This might include small gifts like little teddies, small water flasks or any other small and affordable things that will encourage your first subscribers.

One important thing to consider also is your mode of shipping. You should get your mode of shipping or sending out orders ready and sourced out. No customer wants a delay for their product and once they cannot reach their products, they become full of doubts for your business. You should go for a good and reliable means of sending out orders to your subscribers.

You should make shipping schedules for your business also and products should be sent early so they reach the subscribers on time.

5. A Business Website

Creating a website for your business is very crucial as customers can go there and register for your pre-launch or even subscribe to your website after launch. You should make sure to have a user-friendly website to ensure easy navigation for your customers and your website designs should be attractive with good colour combinations. Your brand colours should reflect on your website and also on your boxes and other accessories.

You can contact someone to create a website for you or you can access some user-friendly platforms to create your website. Some agents also deal with the creation and designing of websites and you can contact them for a good job but If you can do it yourself, then you should save on cost.

1. Design your website

Your website design should be taken seriously. It should reflect the brand through its colours and your website should not contain too many colour combinations to avoid an odd look. The colour combinations used should match perfectly and be able to fit in the subscription box business.

Your website should be designed so all options will be easily accessible by anyone who opens the website. All templates should be user-friendly and support subscriptions. You can also use the images you have taken for your prototype box on your website. The purpose of the images is to show your customers or anyone who opens the page what they are to expect from the sign-up for the prelaunch.

As for the prelaunch, your website page can show a countdown notice to the day of the prelaunch and also an email sign-up option close by. Customisation to fit your brand is important and you should do it with attentiveness.

2. Marketplace listing

You can upload your products and their prices on your website. This will serve as your online store where customers can subscribe to any subscription box of their choice and receive them monthly. Alongside your various box options, you should try to also include the prices of those boxes so subscribers know what they want and if it fits their budget.

You can feature as many box options as possible in your marketplace listing and make sure these boxes do not contain the same thing and are worth the prices attached to them.

3. Billing and payment methods

This is a very important aspect as it allows subscribers to pay for their product through the company's website without stress. Without a billing and payment method and processors, you cannot accept orders as some customers will not find the business legit enough to order for products. All orders are subjected to transaction fees and you should make sure to include this in your production cost.

You must ensure that your payment processors are working fine before going ahead to receive orders to avoid stressing your customers.

NOTE: Perfectionism is a very bad syndrome and you should avoid this when creating and designing your website and when using templates for your marketplace listing. You should try to make your website simple and unique as too many templates can ruin the appearance of your website to your visitors. The quest to have a perfect website might even bring some delays during your pre-launch period.

6. Customer Service

As a new business, you're to have strong and reliable customer service available to be able to attend to the questions and concerns of your customers. Your customer service during the pre-launch period should be strong and active since a lot of people will want to inquire about the business before they order or subscribe. Your customer service can operate through emails, live chats, calls or messages.

You should ensure to create a good customer relationship with your subscribers and people signing up for your email list and give them good feedback on their questions and inquiries to ensure they come back to order from the business.

7. Receive and Ship Out Orders

Once you've reached this stage, congratulations, your subscription box business has been successfully launched and is ready to serve its subscribers. Once you have launched your business, you should notify your customers on the first shop date and always ensure tracking emails are ready and available for customers to monitor the location of their orders.

You should always make your shipping date very clear to customers and always make sure to ship on time and on that scheduled date.

Your first service will determine how many people will order for your subscription box in the next month so you should try to make the shipping transparent to the customers. You can also choose to include gifts as a form of giveaway to your first subscribers, thereby encouraging them to continue subscribing to the business.

If the service on the first order is poor, customers might unsubscribe to your services and if there are fewer sales, then the business is likely to have a loss and no profits.

8. Grow Your Subscribers

Once you have successfully launched your business, all you need to do now is offer the best services and grow your subscribers. If your subscribers find your services good, they can also refer their friends and families to subscribe to your subscription box.

To encourage subscribers and also increase subscriptions, you can choose to give out bonuses or gifts to subscribers who refer their friends to your business. Once subscribers find that they are getting gifts and bonuses for referrals, they will want to refer more people to your services and by this, you can increase your subscriber's base.

While running your business, do not forget to attend to complaints from customers and find solutions to them. Also, give good customer service to your subscribers and customers and continue marketing your products on your social media pages and your website.

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Conclusion

A subscription box business is a very good business since people want their products delivered to them in the comfort of their house and they do not need to source the same products over and over again. All they need to do is renew their subscription and get their products at their doorstep.

You should make sure you have enough capital to fund your subscription box business and also invest in advertising and marketing. Do have any questions about starting a subscription box business? Kindly contact one of our Incorpuk experts for help today.