Starting a Product Subscription Box

Starting a Product Subscription Box

Lela Barker

THE BENEFITS OF STARTING A PRODUCT SUBSCRIPTION BOX

Subscription models have significantly changed the face of e-commerce over the past few years. Every time you turn around, there’s a freshly published study or a seasoned marketing strategist singing the praises of product subscriptions. But is all that buzz warranted?

Peel back the curtain, and you’ll discover that there’s a lot to love about subscription models.

INCREASED REVENUE: When transactions are automatic, customers don’t have to remember to return to your site time and time again to make another purchase. Small businesses that offer subscription models typically see revenue numbers trend upwards.

starting a product subscription box increases predictable revenue


STEADIER CASH FLOW: When product subscriptions are in play, the flow of money into the business becomes more predictable, enabling you to better forecast monthly cash flow. One thing to look out for, though, is churn- the percentage of subscribers who cycle out of their product subscriptions each month. Churn is inevitable, but you’ll want to keep a close eye on things to ensure that customers have the flexibility they need to stay enrolled.

BETTER CUSTOMER RETENTION: A foolproof method for boosting the lifetime value of your customers? Offer a subscription model. You’ll ultimately collect more dollars per head while simultaneously reducing marketing expenses by retaining customers over an extended period of time.

ACCESS TO KEY INSIGHTS: Some brands find the data that subscriptions unleash almost as valuable as the cash they deliver. With a subscription model in play, you’ll have a front-row seat to your audience’s behavior patterns. Understanding what they value, how they shop, and how quickly they exhaust a given product supply empowers you to develop smarter marketing strategies. Plus, the insights at your fingertips should make up-selling and cross-selling easier.

IMPROVED CONVENIENCE FOR YOUR CUSTOMERS: Shoppers save time and money by purchasing subscriptions while ensuring that they’re never without their favorite products. A 2018 McKinsey study found that convenience and financial incentives were the top two reasons cited by shoppers who signed on to a subscription model.

Thankfully the learning curve for launching a subscription service isn’t terribly steep, and the impact on your company’s bottom line is absolutely worth the effort.

Expect recurring orders when starting a product subscription box.

TYPES OF PRODUCT SUBSCRIPTIONS

Just as there are several ways to cut my famous lemon meringue pie, there are several ways to launch a subscription program.

RECURRING ORDERS are used by consumable brands that create products that are purchased, exhausted, and replenished. Think: personal care products, candles, specialty foods, cleaning supplies, pet supplies, etc.
In this scenario, shoppers choose the products they want to subscribe to and the frequency with which they want them delivered. Recurring orders (sometimes called “subscribe & save” orders) ensure that a customer never runs out of products, and shoppers traditionally enjoy preferential pricing when signing up. The tech that powers this system of automatic ordering is relatively straightforward, easy to manage, and your e-commerce platform will automatically generate a new order for the shopper each time the subscription is due for fulfillment.

Examples of recurring orders:


CURATED BOXES are an entirely different animal. In this type of subscription, a third-party designs a box by filling it with products from several brands. A limited number of boxes can be sold, and those boxes typically all ship at once. It’s worth noting that the logistics surrounding curated boxess are significantly more complex than recurring orders.

Examples of curated subscription boxes:


CLUB MEMBERSHIPS offer devoted fans guaranteed access to a steady stream of products from their favorite non-consumable brands. Potters often use this method to deliver a hand-thrown mug to club members once per month or once per quarter. Scarf designers, artists, and jewelry brands might offer designs that are either exclusive to club members or only available to members for a finite amount of time before being rolled out to the general public. This structure is ideal for artisan brands specializing in limited editions or those who offer collectible products.

Memberships may be sold on a rolling basis or within a specific timeframe with a limit on capacity. In some scenarios, brands charge the entire club membership fee upfront, while others elect to charge the fee shortly before each shipment is processed. Products are generally shipped according to a set schedule, so club members receive their parcels within days of one another. Increased access, rather than the promise of a generous discount, is the driving force behind club memberships.

Examples of club memberships:

The psychology behind product subscription boxes.

READY TO LAUNCH YOUR OWN PRODUCT SUBSCRIPTION?

For the month of July, my mastermind members will be studying how to launch product subscriptions. We’re talking about the best subscription apps, how to style a subscription sales page, and I’m sharing the best practices for launch product subscriptions that gain traction and grow revenue. I’ve got two sweet bonuses on deck:

  1. Arianne and the Aeolidia team will be giving us a video breakthrough comparing the two most popular subscription apps for Shopify. Members can see which platform suits their needs and pick up insightful tips for making the most of a subscription model.
  2. Longtime Lucky Break client Danielle Vincent of Outlaw will join us to answer member questions about what subscriptions have meant for her business, how she structures her subscription programs, and what technology she uses to make it all work.

I’d be honored to save a seat for you in the Think Tank, my mastermind for product-based business owners! We tackle a new strategy each month, and I release detailed curriculum developed exclusively for my membership to bring them up to speed. We huddle around that curriculum all month long in our private Facebook community, we launch member challenges to help you put those strategies into action, and we welcome a special Expert Guest each month, giving members the opportunity meet some of their favorite brand owners while picking up juicy morsels of wisdom.

There’s still time to join us in July and learn how to grow brand loyalty, boost revenue, and stabilize cash flow through product subscriptions. Grab your seat– you can cancel at any time!

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About the Author

Lela Barker

Lela Barker hails from the deep-and-dirty south (ATL, represent!), where she spends her days helping makers and product designers navigate the pitfalls of product pricing, brand development, and wholesale strategy. She launched her apothecary brand in 2003 and bootstrapped the hell out of that little business to cultivate a portfolio of 1500+ stockists worldwide, generating $12million in revenue and establishing successful distributorships in the Middle East, EU, Scandinavia, and South Korea. Lela is the keeper of a well-worn passport and the maker of the finest lemon meringue pie you’ve ever put in your mouth.

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