Online Subscription Box Business — Everything you need to know!

Last week we read about starting a peer-to-peer eCommerce marketplace. Well, this week we are going to dig in about a different eCommerce business category — Online Subscription Boxes!

Subscription eCommerce, led by the most popular subscription services such as HelloFresh, BarkBox, Blue Apron, and Dollar Shave Club, is a fast-growing new way of shopping online.

Did You Know? The first real subscription box was launched nearly a century ago.

Whenever we delve deeper about the first subscription box business, Birchbox is the name that comes up. But, according to Tedium, The Book of the Month Club was the first true subscription box. It was the brainchild of Harry Scherman, a journalist and advertising pro who believed mail order was the best way to break into the literature-deficient rural book market.

Birchbox introduced its subscription box services in the year 2010, but, till then many other subscription box businesses were established. Columbia House Records and various other wine, cheese, and coffee-of-the-month clubs were there already but, why Birchbox was considered the breakthrough? The reason is very simple yet surprising. People realized that getting a box full of surprises in the mail was much more fun than knowing that a book you are mildly curious about is going to arrive sometime next week.

There are several theories about why this idea appeals to so many people. Forbes seems to think it’s because it’s no longer enough to just give customers what they want. Actually, to make modern customers happy, one must give them something they’re not expecting — a Surprise! And, let me tell you that surprise works on the dopamine system in our brains, helping us to focus our attention and inspiring us to look at our situation in new ways.

Here is a list of some of the ‘World’s First’ Subscription Businesses:

  • Signal — The world’s first snowboard subscription
  • SurfAir — The world’s first airline subscription
  • INFLIV — The world’s first continual cryptocurrency exchange
  • Jackpot.com — The world’s first international lottery subscription
  • Metallica — The world’s first subscription band
  • ReefBox — The world’s first scuba subscription box
  • Shadesclub — The world’s first subscription box for sunglasses
  • Vive — The world’s first virtual reality app subscription
  • Qwest TV — The world’s first jazz video-on-demand subscription

In 2019, Clutch’s survey revealed that the top five subscription box brands were Dollar Shave Club, Ipsy, Blue Apron, BarkBox, HelloFresh, and Birchbox.

Moving forward, let's explore in detail that how the subscription box business works and how it helps you generate great revenue.

Subscription Box Business & Revenue Model —How do subscription boxes work?

The online subscription marketplace brings convenience and satisfies the requirements of an experience-hungry consumer. Being a source of recurring revenue, the subscription box marketplace business idea is the perfect blend of surprise and convenience (which is here to stay).

I have compiled a list with basic details that you must know. It can be the perfect starting point of a long and fulfilling entrepreneurial journey. So, let’s go!

Subscription Box Business Model

Source: FATbit Technologies

Like any other eCommerce website that bridges the gap between seller and consumers, a subscription box marketplace also connects a brand with the customers. There are primarily 3 parties involved in a subscription box marketplace, and they are,

Subscription box Subscriber

  • Register on the website
  • Select a subscription box according to his/her preference
  • Choose one box option out of the many listed by the seller
  • Choose the duration of the subscription
  • Subscription box check out
  • Unsubscribe to stop receiving the subscription box
  • Ask refund or replace the item

Subscription Box Seller

  • Assemble subscription boxes
  • List the admin approved box on the website
  • Dispatch subscription boxes as and when required
  • Answer queries related to replacing an item
  • Coordinate with admin for marketing

Subscription Box Marketplace Owner

  • Check the credentials of a seller and enable or disable his/her account
  • Check information related to a subscription box and mark it as approved or disapproved
  • Receive payment from subscribers
  • After deduction, the commission, send the remainder to the seller
  • Handle customer queries and marketing of the website

Subscription Box Revenue Model

Membership: A monthly or yearly membership fee can be charged from the subscription box seller.

Commission: Behind each subscription box sold, a small percentage of commission is deducted. The remainder is sent to sellers.

Advertisement: The website owner can display advertisements on important pages such as blog post pages, homepage banners, etc.

That was everything you wanted to know, right? Well, I have a secret to share that might help you grow your subscription box business.

“Women are the perfect target audience for a subscription box business.”

It turns out that the subscription-box services have more appeal among women. No wonder, because it’s WOMEN who love SURPRISES the most!!

According to research by McKinsey & Company, women account for 60% of subscriptions, while men have 3–4 active subscriptions. Among the target audience, online shoppers, millennials, and tech-savvy people are also present.

How to Launch an eCommerce Marketplace for Your Subscription Box Company?

First things first. The following infographic shows the initials of starting an online subscription box business. If you have just started planning for a subscription box business, this is the basic roadmap for you.

How to start a subscription box business
Source: entrepreneur.com

You can always code and build your own eCommerce marketplace if you have the required skills. But, if you don’t want to do it on your own then you have two more options to choose from,

  • choose a readymade eCommerce platform like Yo!Kart, or
  • hire a website development company like FATbit Technologies for custom eCommerce marketplace development

These options can help you build an eCommerce marketplace like Cratejoy.

Must-Have Features For A Subscription Box Marketplace

Featured boxes– To improve the visibility of certain subscription boxes, the website owner can ask for additional fees from sellers to list their boxes in the featured section of the homepage.

Recommendation section– To upsell, show products that the buyer is interested in. This section can be shown on the homepage, checkout page, product page, etc.

Popular boxes– Most ordered subscription boxes can be displayed in this section on the homepage.

How it works– Give a step-by-step guide to website visitors regarding how to subscribe to a box.

Gift a box– A gift option can have a similar process to ordering a box. Only the shipping details and billing details will be different.

Blog– Depending on the marketing strategy, the website owner can publish blogs to improve engagement and visibility.

Box Card Design– An image, description, rating, price, and discount are few elements that can be displayed in subscription box card design.

Reviews & Ratings– Rating and review are important factors that influence the purchase decision.

Affiliate module– Whenever a sale is done through an affiliate, a certain percentage of commission is earned by him/her.

In a Nutshell,

Monthly subscription boxes have the potential to become the preferred shopping method in the near future. That puts the online subscription box among the most lucrative & profitable eCommerce niches.

At the forefront of the subscription box is the consumer — the beloved, fastidious, fickle consumer. On the other side, the monthly subscription box business model relies on a steady monthly stream of subscriber money to maintain profit. And this makes the subscription box a win-win business idea for both, customer and the entrepreneur.

Next: How to Launch a Free Ecommerce Store with Tribe?

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MBA — Marketing & International Management | Product Marketing Specialist | Digital Marketing | Sprouting Interest in Psychology

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Akanksha Chandan

Akanksha Chandan

MBA — Marketing & International Management | Product Marketing Specialist | Digital Marketing | Sprouting Interest in Psychology