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4 Tips to Know Before Starting a Subscription Business

With an industry growth of more than 100% per year over the past five years, attracting 15% of all online shoppers, the e-commerce subscription market is a promising field for entrepreneurs looking for a way to deliver goods to a specific market. However, despite all the excitement around this growing industry, building a successful subscription box service still requires careful market research and business planning. Below are four tips to help you get started.

Know Your Niche

For your business to take off, you will need to know your audience and the products that they will connect with on an emotional or practical level. For example, a subscription service that delivers “spices” probably won’t attract the same interest as one that delivers “seasoning packets matched with easy dinner plans for busy families” or “a different spice and accompanying recipe to support local farm cooperatives around the world.” Run a Google search to see how much competition there is for your niche and adjust your focus when necessary.

There are some general demographic facts about subscription box customers that are helpful to know – e.g.,  female, living in the Northeastern U.S., etc. – but you can reach almost any market so long as they are comfortable shopping online. Keep an active presence through customer service and social media so you know what they like and what they would like to change.

Dial in on Your Offering: The Prototype Box

Here is where you imagine the experience you want your subscribers to have when they open their first box, and then you see what it takes to create that in a prototype. This prototype does not need to be an actual package you offer to subscribers, but it should be similar enough that they know what to expect.

First, source your products. Request samples and see what kind of arrangement you can make with suppliers going forward. Decide how many items will go in the box each month and what they should cost. Your profit margin, after all product, packaging and shipping costs, should be at least 30%.

Next, package them together. See what the weight and dimensions will be, and experiment with color and design, which can still be changed later as your business develops. For example, you may start with a standard sized box, but switch to a custom shape later. Your subscription box customers may also appreciate a festive unwrapping experience, additional information about the contents, or personal messages from you. You may want to begin talking with a fulfillment service to check the costs of packaging and ask for suggestions.

Then, get feedback on your prototype. Take good pictures of the box and its contents and put it out to your network during your pre-launch stage (see below).

Marketing Matters

Before your official launch date, schedule a prelaunch stage where you can generate excitement and begin building your customer base. Decide on how many subscribers you need in your first year and aim to get at least 20-30% during this phase. (If you fall short now, that’s a warning that you should review your plans before proceeding.)

Set up a landing page on your site to pre-sell subscriptions and collect email addresses. Turn to your friends, family, and network to help generate interest. Post pictures of your prototype box on social media, especially Facebook, Pinterest, and Instagram. If possible, send boxes to influencers in your niche; if they like your subscription box enough to review it, you will get a marketing boost.

After your official launch date, stay engaged on social media and keep in touch with your subscribers. Happy customers will recommend your subscription service to their friends.

Fulfillment Raises Retention

One of the most important things you can do to keep your subscription box customers happy is to let them know exactly when to expect their shipments. You may want to handle fulfillment on your own if your subscriber list is very small, but once your business grows, a fulfillment service will be invaluable for giving your customers a reliable experience in a cost-effective way.

When choosing a fulfillment provider, make sure they can offer the following:

  •       Reliable, on-time shipping
  •       Custom packaging design that meets your needs
  •       Flexibility for handling changes in your product, and
  •       A system for dealing with customer returns

With the right fulfillment provider, you will have more time to focus on building relationships with your subscribers and finding new and exciting suppliers.

To find out more about how EWorld Fulfillment can help you start your subscription box business, call us at (888) 324-9464 or visit us here.