📦 What Is a Subscription Box?
A subscription box is a form of product bundling where multiple products are shipped to customers on a recurring basis. There's a lot of variation between different industries, but they work in similar ways.
📦 Types of Subscription Boxes
There are many types of subscription boxes on the market today, but a few have seen massive growth in recent years.
The top subscription box types are:
Beauty subscription boxes. One of the biggest industries taking part in the subscription box model is the makeup industry. They can include products from a single brand or a range of brands.
Food subscription boxes. Fresh meat, groceries, and snack boxes are a fast-growing sector of the subscription box industry. They're a great source of revenue for food suppliers.
Shaving supply subscription boxes. Unsurprisingly, razors and grooming supplies are what many people think of when it comes to subscription boxes. That's because they're some of the most successful. This is because people need to purchase the products multiple times a year anyway, so the box makes it easier.
Pet subscription boxes. Another industry that relies on repeat purchases is the pet industry. Monthly shipments of pet food, medicine, and toys are common. Many large dog food brands are using subscription boxes to grow their sales.
Coffee subscription boxes. Since coffee people are particular about what coffee they drink, and they generally drink every day, a coffee of the month club is highly valuable. If you're one of the best coffee roasters around or are looking for a coffee marketing tool, learning how to start a subscription box for coffee is a great choice.
Book of the month subscription boxes. The next evolution of book club, book of the month subscription boxes has been a staple of the industry for a while. They are highly curated boxes that have a big impact on book sales.
Clothing subscription boxes. Clothing boxes are a fast-growing segment of the industry and come in a few varieties. Some are personally curated for the customer, while others change themes each month. The customer pays a monthly fee for the box and then will pay for the clothes they choose to keep.
Toy subscription boxes. Another industry that's built for subscription boxes is the toy industry. There are always more children being born, so toys are always needed. These boxes are often themed by age and offer developmental or educational toys on a monthly basis.
Hand-made goods subscription boxes. Though much more niche than many others on the list, boxes featuring hand-made products are growing in popularity. They are great tools for small businesses to gain exposure to their lovingly crafted goods.
Your innovative subscription box idea. The boxes listed above are all popular and profitable, but what if you want to invest in a more unique subscription box? If you do your research and find a market of substantial size, you can create a subscription box for nearly any type of product. The most important thing is to thoroughly vet whatever ideas you have by looking at the existing market, the margins involved, and if there are already suppliers operating in the niche. If all of these answers are satisfactory, you’ve found a great place to start a new subscription box. If not, it’s probably time to move on to a new idea.
📊 Subscription Box Industry Statistics
Subscription boxes are offered by some of the fastest growing and successful businesses in the world. But, you don’t have to take our word for it, here are a few pertinent subscription box industry statistics:
More than 20% of all subscription box sales are in niche markets.
In 2020, more than 2/3rds of US consumers subscribed to one or more subscription boxes.
Nearly a quarter of consumers chose a subscription box based on recommendations.
More than 60% of subscription box sales come from beauty and food niches.
💰 How Much Do Subscription Boxes Make?
Though it varies greatly by industry, most subscription boxes have a profit margin of 40-60%. This number can further be increased if you offer one-time purchases or multiple pricing tiers.
💵 Average Subscription Box Price
The average subscription box price varies by industry but generally ranges between $10-$40 per month. Curated or higher-value boxes may go upward of $100, while some companies also offer the first box for under $10 to incentivize new customers.
💵 How To Price A Subscription Box
Pricing a subscription box is based on a number of factors.
Here's what you need to consider:
Total product cost. The most obvious thing to account for is your cost of goods sold. If the price you set doesn't cover what you spent on production or procurement, you'll never succeed. This is why many subscription boxes include products with varying values or multiple lower-cost products. You need a firm understanding of the costs associated with all of your products and the margins required to cover those costs. You also need to account for costs associated with procuring products from outside subscription box suppliers.
Fulfillment costs. eCommerce fulfillment isn't cheap, so your pricing will need to cover the cost of custom subscription boxes and eCommerce shipping. Remember, fulfillment costs tend to increase as order volume increases, so you may need to revise pricing models as you grow. These costs are often forgotten by startups, which lands them in hot water when sales start to take off.
Customer acquisition cost. The final piece of the equation is factoring in how much it costs for you to land and retain a paying customer. These are both valuable eCommerce KPIs to stay on top of. If you spend more attracting customers than you make, you’ll be out of business before you know it. You can combat this by looking at your marketing efforts and associated subscription website costs.
🚀 How much does it cost to start a subscription box business?
On average, it costs about $17,000 to start a subscription box business. Because subscriptions usually imply physical products, your initial cash outlay to get products manufactured and shipped is significant.
The typical subscription business has the following expenses: rent, equipment and manufacturing, IT and software, website fees, marketing and advertising, and labor. Some costs like marketing can be increased or decreased, whereas others like rent and equipment are fixed costs and require significant upfront investments.
Due to the large expenses involved, your subscription business goals should always be accompanied by a strong eCommerce marketing strategy. This helps you recoup your initial investments faster so you can reach profitability sooner.
📦 How many items should you put in a subscription box?
There is no right or wrong amount of subscription box items, but most industry professionals recommend between five and 10 items. This gives your subscribers a valuable amount of products for their money, but not so many items that it’s difficult to use up each month.
The more you consolidate what is in each subscription box, the less your shipping and handling fees will be too. Though it’s tempting to sell more products per box to land higher per-unit prices, this carries over to your expenses.
Aim for a healthy medium of valuable goods that justify a competitive price. You can also ask your subscribers what their favorite items are and optimize your subscription box around these products.
🔄 What is the difference between a membership and a subscription?
In membership business models, customers pay for access to content, services, or features that aren’t available to the public. In subscription business models, customers pay a recurring fee in exchange for physical products or exclusive content of some kind.
On the whole, memberships and subscriptions are quite similar. Their differences consist of what products or services a business sells, how said goods and services are delivered, and how payments are processed. Some memberships offer a lifetime account for a set fee, whereas most charge a monthly or annual fee.