How to Run a Successful Subscription Box Business
The subscription box market is expected to grow 72% by 2022 in the UK alone. With this in mind, it’s clear that subscriptions are a great route to go down if you’re thinking of starting an e-commerce business. These services offer an element of surprise and regular deliveries, making them hugely popular. In fact, some people relate the appeal of subscription boxes to the concept of ‘reward uncertainty’, which states that unpredictable rewards lead to long-lasting interest and even addictive behaviour. In business terms, we’re talking plenty of customer loyalty!
Allegro Logistics have helped a wide range of clients take their e-commerce businesses to the next level. We provide forward-thinking fulfilment that incorporates the latest technology with a family-run ethos. Our super-fast service ensures a seamless customer journey time after time.
It’s important to start as you mean to go on with effective strategies that set you up for success. Below, we offer some of our best tips for launching and running a profitable subscription box business.
Why Start a Subscription Box Service?
There are plenty of benefits to a subscription box business over the traditional e-commerce model. Firstly, once you have acquired some customers, you will have a predictable and reliable month-by-month income stream. Offering a subscription also serves as your USP, differentiating your brand in a crowded online marketplace. As well as this, costs are unlikely to change dramatically because you will always be offering a similar value box. From a logistical point of view, you will have one period to coordinate your shipping, as opposed to changeable order volumes across the whole month.
See more: How to Create an Effective E-Commerce Delivery Strategy >
How to Run a Successful Subscription Box Business
Find Your Niche
As subscription boxes are so popular, distinguishing yourself in a saturated market is key. Once you have decided on the area you are interested in, get specific. Narrow down your unique offering and resist the urge to chase broad appeal. Subscription boxes that are highly specialised and target a limited range of customers are generally more successful and experience reduced customer churn. To maintain interest, you could further narrow down each box with changing monthly themes.
Part of this process will involve deciding what type of business you wish to be. The three main types of subscription model are:
- Access – A box that provides exclusive discounts and members-only perks.
- Replenishment – A box that allows customers to top-up on regular items.
- Curation – A box full of new, exciting products on the market or a personalised selection.
Conduct Market Research
Take the time to get to know your market. Identify your potential competitors by searching for related keywords and investigate how their businesses works and what they offer. It’s also important to define who your target customer is and flesh out their persona. This will allow you to work out the best way to target them and meet their needs.
Establish Brand
As the subscription market is crowded, differentiating your business with a unique brand and aesthetic is more important than ever. Effective marketing can make all the difference before and after launch day and develop awareness for your brand, so make sure to increase your presence on social media and in email campaigns.
Come up with a catchy business name, a bold logo and well-designed website. Your website should be simple and clean with clear call-to-actions and a distinctive aesthetic. It should also be filled with high quality photographs and transparent, easy-to-understand descriptions of your service.
Price Box
Margins are key when it comes to subscription box businesses. It’s a careful balance between pricing too high and not being competitive, and pricing too low and not making a sustainable profit.
When you’re formulating your strategy, think through the cost of your items, box and packaging, your time and all other business expenses like hosting, transaction fees and fulfilment. When you’ve got all your costs together and a tentative price, check back in with your competitors and see how they compare.
Create Example Box
To convince customers to part with their cash, you’ll need to create an example box to showcase the kind of products they can expect to receive. This prototype should be enticing but realistic otherwise you risk disappointing your first lot of subscribers.
At this point, you can begin establishing relationships with suppliers of high-quality products and start negotiating the best price. Having suppliers you can rely on will streamline your business in the future and ensure you’re able to offer a desirable selection of products.
Once you have a prototype, you could consider sending it out to friends, family or even influencers for some early opinions and reviews and to start building an audience.
Consider Unboxing Experience
A key part of any subscription service is the so called ‘unboxing experience’. This is the moment your customer receives their box and opens it. The way in which your products are packaged and displayed will determine the experience your customers have of your brand, so make sure you bring the gold-standard and incorporate branded, bespoke packaging. Wrap or cover the items inside the box for that extra moment of anticipation and arrange the products so the customer can’t see them all at once.
See more: Bespoke Packaging – Why is it Important & What Are its Benefits?
Efficient Order Fulfilment
With any e-commerce business, first-class fulfilment is a must. These days, shoppers don’t expect to be kept waiting more than a few days, so get your box to your customer efficiently. As they will receive a box a month, coordinating your shipping so that the boxes always arrive on the same day is a great way to provide continuity and create excitement in the days leading up to arrival. It’s also a good idea to provide real-time tracking and notify them when their order ships, so they know to expect a delivery.
As your business grows, make sure you maintain the quality of your order fulfilment and consider outsourcing your logistics to a third party. Allegro Logistics provide integrated e-commerce fulfilment solutions to clients across the UK. We can help you pack and ship the boxes for your subscription business, ensuring a top-quality customer experience every time.
Read more: Benefits of Outsourcing Logistics >
Read more: Shipping Solutions for Small Businesses >
Customer Service
To reduce customer churn, you need to keep your subscribers happy. This means, responding to queries on your website or social media quickly and effectively, offering a convenient checkout process, regular updates, and tracking information.
Grow Subscribers and Scale Business
Once your subscription box business is up and running, don’t get complacent. Keep up with marketing efforts and grow your audience. Focus on customer retention just as much as on customer acquisition, and ensure you offer a consistent and enjoyable experience for all.
Seamless E-Commerce Solutions in Bristol and across the UK
At Allegro Logistics, we combine advanced integrated technology with a genuine passion for seeing businesses grow. With years of experience in the industry, we know how important effective fulfilment is to any start-up’s success, and love using our knowledge and skills to help businesses large and small thrive.
To find out more about what Allegro Logistics can offer you, get in touch with our friendly team today.
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