How To Build Recurring Revenue: How To Start A Subscription Box Business

Key Takeaways

with reoccurring revenue running a successful subscription box company can be more secure than your nine-to-five job when done right subscription boxes provide predictable and stable income so if you want to learn how it's done right just keep on [Music] watching [Music] if you guys are new to this channel welcome to lumber shopify my name is michelle bally and i'm your host we're a channel dedicated for small business owners with big plans and every week we release a new video on how to start and grow your online business so make sure that you're hitting that subscribe button right now so that you don't miss out on any future videos so in today's video i'm going to teach you how you can take your idea of starting a subscription box and turning it into a real business i want you to get started on your business right away so we're going to cover the important details like what items you should include and how you can get started with a small budget subscription model okay first things first let's talk about how the subscription model works customers will receive packages from you on a recurring basis and this could be monthly every few months or annually for you as a business owner this recurring revenue model is going to lead to higher overall revenues look at this chart here the initial outlay gets paid off over time and then it grows exponentially so you can see how this can be pretty lucrative subscription box ideas the first step in starting a successful subscription box is choosing a niche or a theme for your box here are some common niches to give you some ideas you can start a fitness subscription box a food box or a beauty box so for example you can include hot sauces for spice lovers paints for artists or even gear for rock climbers let me know what your niche is in the comments section below and i'll give you an estimate of how competitive that niche is it pays to offer consumables that need to be replaced regularly like groceries home maintenance goods and even books so clothing is not considered a consumable but styles come and go so quickly that this niche works as well in addition to consumables mix in items that can be reused that way every time a consumer uses your item they remember you as the brand that added value to their life i recommend that you choose a niche that's of genuine interest to you your goal is to solve a consumer problem with your subscription box and if you're essentially marketing to yourself you'll have the advantage of understanding the consumer and if you speak your target audience's language and know what they like and they don't like you'll have a better chance at being successful what to put in a subscription box here's what to put in your subscription box start with three to five items that are small enough to fit in your box and light enough so that you save on shipping costs make sure that each item falls under the niche of your subscription box as well and you want to make sure that your products are satisfying an actual need otherwise they're just going to end up in a pile in someone's closet and then they'll eventually cancel capitalize on trending products by looking at publications and google trends so that you can ride a wave before it hits you must absolutely make sure to include a card in there as well with product information communicate why each product is special telling a story makes the experience more enjoyable and it makes the customer look forward to their next box it also helps to list what each product retails for so that the consumer feels like they're getting a really good bang for their buck also if after watching this video you want even more help finding a product make sure that you're checking out our free 40-minute webinar that's going to teach you how to find winning product ideas how to validate them and how to get started just click the link in the description box below to get started with this free training now how to source products for your subscription box to source product for your subscription box start reaching out to companies via emails instagram dms and even linkedin you're going to want to introduce yourself let them know about your business and explain to them why it would be beneficial for their product to be in your box tell them how many of the products that you are looking for so that you can work out a deal for a bulk order here's what an intro email could look like hi my name is michelle i'm the operations manager at beard oil box we're a monthly subscription box that offers sample sized beard oils with scents that are curated for each individual subscriber i'm reaching out to see if you'd be interested in being featured in our september box i would be looking for an order of 50 to 100 units and i'm interested to know what kind of pricing you could offer looking forward to hearing from you be prepared to knock on a lot of doors sometimes you're not going to be able to agree on a budget or the company might just not be interested but don't get discouraged just keep reaching out until you're able to get enough products to fill your box make sure that you're registering your business and make sure that you have insurance because vendors are going to ask you for this before they start to work with you other ways to get products for wholesale prices are on alibaba you can try fair and also local stores and etsy now alibaba is going to have some hit or miss products when it comes to quality so just be aware of that but i particularly like fair because their vendors are vetted and they also have some free returns if enough of you are interested in knowing more about how you can source wholesale products just let me know in the comment section and i can make an entire video on just that shopify is offering a free 14-day trial all you have to do is click the link in the description box to take action so that you can level up your ecommerce business now maybe you want brands to give you their products for free this is actually possible brands are actually willing to eat the cost of their product only if your subscribers are an audience they want to get in front of they would consider this to be a marketing cost but in order to get free product that means you must already have an audience it's a bit of a process but to get subscribers before launching crowdfund with kickstarter or indiegogo otherwise you can just adopt this business model once your company is more established free product sourcing of course means higher profit margins but be aware that you'll have to invest time into pitching brands on why they need to make the investment of being included in your box how to design a subscription box there are tons of businesses out there that will customize your boxes for you you can check out arca for example but at the early stages you're going to want to start lean so fancy customized boxes are an unnecessary expense customized boxes can cost you anywhere from two to five dollars per box so you're going to want to find workarounds get a custom stamp made with your logo and use it on blank boxes over and over again you can also brand your boxes with stickers or customized tape you can include colored crinkle shred that matches your brand colors i know uline sells 10 pounds for 47 canadian dollars cost to start a subscription box so how much does it cost to start a subscription box your expenses will include your products your website your shipping and your marketing your shopify store starts at 30 a month plus the cost of any apps so you're going to want to check out bold subscription this is the number one subscription box on the shopify store and that's gonna cost you around forty dollars a month you can sell any product and to make it recurring and that's gonna give your customers the flexibility to update their plan as they like so to cut on shipping costs make sure your box is as small and as light as possible what type of shipping service you go with is also going to affect your profit margins air shipping with tracking will be more expensive than just say ground shipping without tracking but customers do expect little to no shipping charges for subscription boxes so instead of paying full price it might actually be worth it to get started with a shipping brokerage like eshipper eshipper is a free tool that will give you shipping rates at a discount so i'll make sure to link that up in the description box below when it comes to marketing you can use free tactics like seo pinterest marketing and starting your own youtube channel in comparison to paid marketing free tactics take time before you can start seeing results but if you're looking to use paid marketing you can run social media ads you would have to consider the cost of paying someone to set up your ads as well as the ad spend which is what you would pay instagram facebook or google to actually show your ads expect to spend anywhere from two to five thousand dollars a month on this you can pay influencers or publications to speak about your subscription box as well this figure also will vary but you could spend anywhere from 500 to 2 000 on pr once you have an idea of what your marketing budget is the cost of shipping as well as the products themselves then you're going to want to figure out what you'll charge if you position yourself as a value box you can charge anywhere from one dollar to 15 a mid tier box is going to cost 16 to 30. high in boxes will be 31 to 50 and luxury boxes will cost 50 or more so think about a profit margin that you would be happy with and that's going to answer the question as to where you should be positioning yourself handling fulfillment if you start with say 20 customers and you have 5 items per box that's still a hundred items that you have to store somewhere and then you have to oversee that all these boxes are packed correctly so make sure that you have enough space or you can even rent a space out but as you grow i would recommend hiring a student to manage your fulfillment you might be enticed to go with a budget fulfillment company but i would highly recommend against that fulfillment companies that charge a dollar per package cent are not going to go the extra mile to get your order sent out right top subscription boxes so let's take a look at some of the most successful subscription boxes and that should start giving you some ideas birchbox birchbox sends its subscribers a box of four to five selected samples of makeup or other beauty related products their plans start at 13 a month and as of 2014 the company was valued at 485 million dollars as of may 2019 birchbox had over a million subscribers and 2.5 million active customers birchbox man birchbox was a beauty subscription box that was originally created for women but they have since started targeting men they offer men's grooming products like beard oil and body wash mail grooming is on an upward trend so this was a smart choice for birchbox dollar shave club in 2012 dollar shave club was one of the first to break into the subscription box scene after they released a funny video ad that went viral they are highly competitive with their intro offering including handles blades and aftercare for the price of just blades at the drugstore subscription boxes for mend is a trending niche some of the best subscription boxes for men include bespoke post style planned by frank and oak and society socks by now you should be pretty comfortable with getting your subscription box business started do you still have questions if you have some questions make sure that you're leaving them in the comments section below and i will do my best to get back to each and every single one of you learn with shopify is a channel dedicated for small business owners with big plans every week we release a new video on how to start and grow your online business so make sure that you're hitting that subscribe button i'm your host michelle bally thank you so much for watching and i will see you in the next one bye