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Update: the change in the subscription box model…

Diane Hall

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Hands of senior woman choosing subscription or payment plan on tablet computer and paying with credit card

If you read my original article (below), you’ll see that, only a few months ago, I promoted the subscription box business model and all its positives.


However, the retail industry and consumer behaviours have changed massively, due mainly to the pandemic and the subsequent squeeze on people’s incomes. What was an affordable treat may have become an unattainable luxury for some customers, and it’s fair to assume that the price of some subscriptions have increased because a box’s contents has become more expensive for the seller to make/buy.


According to this article, subscription box companies have had to—like a lot of other businesses—adapt and pivot. They’ve had to find new opportunities and create new streams of income, some of which have involved selling through existing retail outlets, which the subscription model was never a part of before now. As well as collaborating with retailers, cross-selling and upselling have become the focus of some subscription companies, after they realised they can make more money from existing customers than what they would spend finding new ones.


So, does this mean that the subscription model is dead?


I don’t think this is the case, but it appears subscriptions have become more of a strand of a brand than the entire brand itself. The original subscription model hasn’t been a waste for these companies as it allowed them to establish their brand with their audience, who won’t care if the business has pivoted if it means they can still afford to buy from them.


Increasing the reasons/methods consumers can buy from you is never a bad thing, and neither is creating new income streams.

Young black women opening a parcel

Young black women opening a parcel
Pallet of boxes ready to be shipped

Original article:


The rise of subscription boxes


Given how much online shopping has become ingrained in our lives, it’s perhaps easy to see the appeal of subscription box businesses.


A subscription box fits easily through customers’ letterboxes, which keeps shipping costs low for an entrepreneur. The model represents regular income, and it requires only a small amount of investment for stock and packaging in order to launch.


According to Royal Mail, the subscription box market is set to be worth £1.8 billion by 2025. Receiving products to your door on a monthly basis is convenient for the consumer. It also allows them to explore new products they wouldn’t necessarily choose.


Subscription boxes work well for books; beauty products and toiletries; food products, cooking ingredients and sweet treats. Most consumers see their boxes are a ‘treat’, which is probably why they proved hugely popular during lockdowns.


So, how do you go about launching your own subscription box?


Choose your idea


Just as you would with any other business idea, do your research first. Is there a gap in the market, or products that would suit the subscription box model that few people are selling?


Obviously, you need to be strict with regards to the weight of the box when full, as well as the dimensions of the products within the box (they have to be small!). You should try and find products that represent a good profit margin, as most subscription boxes will be subject to an upper limit of what people will pay (unless it contains designer perfume/branded goods, for example).


It’s a good idea to stick to a theme, such as the products in your box being of the same type. You can create boxes of different product types if they bring the same result, such as pamper-style boxes, or those that can be enjoyed on a ‘movie night’. This will help your branding and give the box a point/focus, rather than it just being a jumble of random items.


Test your idea


Once you think you know what you’d like to include in your subscription box, ask members of the public their opinion. It’s wise to approach strangers, rather than friends or family who will only tell you what you want to hear. You need solid, unbiased feedback if you’re going to sink your money into an idea.

Think about operations

You will need somewhere to store empty boxes and products until a subscription is ordered. It’s likely that your month will follow a cycle, where you will spend a few days packing and posting before sourcing products for your next box and marketing your brand before the whole thing starts again. This may not seem much of an issue in the early days when you are only posting out a handful of boxes, but if you get to 1,000 monthly subscribers, it’s not convenient to shlep that many boxes to the Post Office—at this point you may need to look at distribution services to see if there are better ways of doing things, such as automated label printing, courier pick up, third-party fulfilment, etc.


You’re not just creating one box in reality…regular subscribers will require something different each month, which means continual product sourcing/manufacture. It’s likely that you will run out of products/inspiration eventually and will be forced to repeat items used in previous boxes; this isn’t ideal, but most people will only subscribe for a short period of time anyway.


Branding


The stronger your theme and gap in the market, the more business you will likely see. Think about your customer and why they’re buying your box. Who are they? What’s stopping them from walking into a shop and buying the same items…is it a treat to have a surprise box of goodies come through the post? Why?


My thoughts on subscription boxes…


There’s a brand that sends items of stationery in a box to customers each month. I’m a sucker for stationery and love pretty notebooks (as well as those with sweary/offensive slogans) and I know I would love most of the items in the box. That’s the key point for me, though—many of the items I’d receive wouldn’t be used. I have a box full of unused notebooks already, drawers full of lovely writing pens and biros from all the places we’ve ever visited (it’s a quirk of mine to buy a pen from the gift shops of various visitor attractions); why would I pay through the nose for a monthly supply of something I don’t actually need, however much I love it?


When I do buy these (superfluous) items, it’s because I want a memento/souvenir that gives meaning to me, or I can’t resist the pretty item in my eyeline when entering a stationery shop. To have someone else choose these things for me could be more miss than hit—an unwanted privilege I’d be paying for.


My eldest daughter got quite into cooking during the lockdowns, and one of the cooking/ingredients boxes proved a good subscription during this time. We tried many dishes that we’d not experienced before, but eventually, we exhausted the range and cancelled the recurring payment. For us, the brand had a short life expectancy, and I suspect this could be the case for most kinds of boxes.


They’re an easy sell, however, as people can try a box and cancel further deliveries if they don’t like the contents. And, unless you physically make the products that go inside the boxes, you’re simply packing items into cardboard once a month and receiving a premium for this, which must be one of the easiest business models around.


A subscription box business is a good way to realise a regular monthly income for a modicum of work. There are worse jobs and business ideas…

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