While subscription services have been around for longer than a lifetime, the subscription box model is a relatively new concept that’s evolved over the last decade into a multi-billion-dollar industry.
Today, subscription box brands like Birchbox, Hello Fresh, and Graze have revolutionised retail, offering curious consumers the perfect blend of convenience, personalisation, and discovery.
The growth of subscription boxes shows no sign of slowing, with estimated projections forecasting a 30% rise in subscription services by UK retailers in the next 12 months. So, if you’re considering starting your own subscription box, the timing has never been better.
This guide will cover everything you need to know about setting up your subscription box business. Let’s get started.
Types of subscription box businesses
Put simply, a subscription box is a recurring service that delivers products or experiences to customers at regular intervals through the year, based on their interests and preferences, for a fixed fee.
From make-up samples to gourmet snacks, tech and gadgets, to art and craft supplies; there’s a subscription box to suit every audience.
Subscription boxes range from providing a replenishment of products that are required on a regular basis, to offering a curation of products that are often a surprise to the consumer, allowing them to sample something brand new within a genre of interest to them.
Some of the most popular types of subscription box businesses include:
- Food and drink: from the likes of Hello Fresh and Gousto, which generate regular recipe ideas and fresh ingredients to your door, to Wine Club by Majestic which delivers themed cases of wine throughout the year.
- Beauty and personal care: brands like Glossybox bring a selection of new or trending beauty treats to their subscribers’ doors each month, while Million Dollar Shave Club keep their customers topped up with their favourite grooming products.
- Pet treats and toys: Boxes such as Woofbox deliver a selection of dog-friendly snacks and toys every month.
- Fitness and wellness: FabFitFun sends its subscribers a variety of seasonal accessories and equipment to promote self-care and healthier living.
- Books: Companies like Happily Ever After Book Box keep subscribers topped up with new reads, while brands like Tea Time Bookshop and Words with Wine send new books along with thirst-quenching treats.
Why should I start a subscription box business?
Subscription boxes offer a win-win scenario for customers and companies alike.
For customers, the appeal is the effortless convenience of receiving expertly curated products at their door without the need for arduous decision-making and shopping. The element of surprise, paired with the discovery of new brands, trends, and products offers a sense of exclusivity and fosters a community of like-minded individuals, perfect for brand-building and referrals.
Meanwhile, for companies, subscription boxes open doors to a steady stream of recurring revenue, enabling smarter financial planning and better customer engagement.
The data insights gained from feedback can prove invaluable, allowing for refined targeting and product development, whilst encouraging organic word-of-mouth promotion and cross-selling opportunities.
As a testing ground for new products and a tool for building brand loyalty, subscription boxes have become a powerful asset in modern business strategies.
How to start a subscription box business
So now that we’ve confirmed the benefits, let’s explore how to get your subscription box business off to a successful start.
1. Know your target audience
Creating the perfect subscription box goes beyond the contents inside. Before curating your products and designing your concept, invest time in gaining a comprehensive understanding of your target audience. Tailoring your experience to their needs and preferences will be critical to your success.
Start by conducting thorough market research using surveys, online polls, and in-person interviews or focus groups, to gather insights about your prospective customers’ interests, pain points, and shopping habits. Having this information will help you personalise your service and enhance your competitive edge.
By connecting with your target audience, you can craft a subscription box that resonates with them, leading to customer satisfaction and loyalty.
Don’t forget to continue this engagement once you launch your box, and stay attuned to emerging preferences along the way, so you can continue developing your service and evolving it as your customer base grows.
2. Partner with quality suppliers
If you’re planning on outsourcing products for your subscription box, then building relationships with reliable suppliers will be vital to ensuring the quality of your content.
You should research different brands and artisans and seek out reputable suppliers. Only collaborate with producers whose products align perfectly with your vision.
If you haven’t experienced your supplier’s products before, then it is essential that you order samples and try them out for yourself. Having this personal experience will allow you to confirm quality and gain a greater understanding of what you’ll be sending to subscribed customers. This will enable you to enhance your customer service and marketing efforts.
3. Determine your operations and pricing
Next, you’ll need to determine the parameters of your subscription box business itself, including how it will work and the costs involved. Some key things to consider to ensure a seamless experience, include:
Frequency
How often you deliver your subscription box will ultimately depend on your chosen model, your customers’ preferences, and your sourcing capabilities.
When deciding your ideal subscription frequency, you should consider elements like how often customers will need your products, how long your products will last, and whether or not your goods will need replenishing. For example, food may work on a more frequent weekly basis, whereas cosmetics may be better suited to a monthly or even quarterly delivery.
Budgeting and logistics
When deciding your timeframe, you should also plan your budget. For example, how often will you be able to afford to ship your products, what are your product sourcing costs, packaging expenses, and marketing investments? Factor in any potential fluctuations in these costs and set clear financial goals to ensure your subscription service remains profitable.
What’s included in your subscription box
If you plan on offering a curation of products in each box, then you should strive for the perfect balance of quality and value, as well as showcasing your brand essence.
Mixing some best-selling products alongside brand-new, lesser-known items is an effective way to achieve this and maintain curiosity and excitement with each delivery.
On the other hand, if you are replenishing products such as toiletries or food, then the focus should be on providing the perfect amount of supplies to keep customers satisfied until their next shipment.
Whatever you decide to include in your subscription box, you should be transparent about what customers can expect in terms of the number of items, their value, and any additional perks included.
Pricing your subscription box
One of the most important steps during the planning stages will be the development of your pricing strategy. How much your subscription will cost will likely depend on several factors, including the total expense of the contents inside, shipping fees, product and packaging sourcing costs, and the subscription length. For instance, you may choose to offer a small discount to customers who commit to a full year of subscription upfront.
It’s also a good idea to investigate the pricing strategies of competitors in a similar niche to yours, to help you evaluate market trends and benchmarks, so you can price your subscription box competitively.
Whatever price point you conclude, be careful to ensure your pricing strategy facilitates a healthy profit margin.
4. Choose your business structure
Once you have the logistics in place, the next step is to officially set up and register your subscription box business. The structure you choose will likely depend on a variety of factors, but let’s take a look at two of the most popular choices.
Sole trader
A sole trader is the simplest and most straightforward business structure. This means you’ll run your business as an individual without forming a separate legal entity. As a sole trader, you will have complete control over your operations; however, you are personally responsible for all business liabilities and debts.
That said, there are few administrative responsibilities as a sole trader. You must register for Self Assessment with HMRC and complete a tax return each year. For this reason, it’s important that you keep an organised record of any expenses throughout the year, to make this process as smooth as possible.
Limited company
The other most viable option for you is to register as a limited company.
This structure provides you with limited liability for any debts or legal claims your business may face, and enables you to access a range of tax-saving benefits.
Limited company status is a popular choice, as it can appear more professional to clients and give you greater credibility. What’s more, raising funding and getting investors onboard is much easier as a limited company.
5. Design your box
When customers receive your subscription box, you want to ensure that their unboxing experience is one that’s unique and memorable.
Designing a box that’s eye-catching and on-brand will increase its shareability, be it to friends and family or on social media, which can have a drastic impact on brand awareness.
Consider the visual aesthetics, colours, and materials in line with your budget and audience. Enhance the customer experience by adding personal touches, like a thoughtful welcome note and an informative insert offering more detail about the contents inside.
You may also consider using eco-friendly resources and packaging wherever possible, to minimise your environmental impact and demonstrate your commitment to a greener and more responsible brand image.
6. Acquire and retain customers
Finding new customers and maintaining their loyalty will be crucial in sustaining a successful subscription box business.
You will need to develop a multi-channel marketing strategy that targets your ideal audience and showcases the unique value of your subscription box. Utilise social media platforms, email marketing, influencer collaborations, and partnerships to reach potential customers and create a buzz around your brand. Engaging content, captivating visuals, and compelling offers will help attract new subscribers.
Once you have acquired customers, focus on building a strong relationship with them. Provide exceptional customer service, seek feedback, and implement their suggestions to improve your offerings continually. Providing exclusive perks, early access to new products, or loyalty rewards can foster a sense of belonging and keep the momentum high in between deliveries.
By consistently delivering value, personalisation, and a great customer experience, you’ll create a loyal subscriber base with the potential to become enthusiastic brand advocates, driving further growth through referrals. Remember, customer retention is just as important as acquisition for the sustained success of your subscription box business.
Wrapping up
So, there you have it; your guide to launching a subscription box business. We hope you’ve found this post useful and that it’s given you the confidence to get started on your journey.
If you have any questions, please leave a comment below and we’ll come back to you. We wish you the best of luck on your business journey. And remember, if you need some assistance getting your company set up, we’re here to help. Contact us today to get started.
Please note that the information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While our aim is that the content is accurate and up to date, it should not be relied upon as a substitute for tailored advice from qualified professionals. We strongly recommend that you seek independent legal and tax advice specific to your circumstances before acting on any information contained in this article. We accept no responsibility or liability for any loss or damage that may result from your reliance on the information provided in this article. Use of the information contained in this article is entirely at your own risk.