How To Start A Profitable Subscription Box Business

Start A Subscription Box Business

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If you ask any entrepreneur, starting a business comes with its fair share of challenges.

Starting your own subscription box business requires a great deal of effort, dedication and most importantly passion.

If you're willing to put in the effort to build your own subscription box business, you're going to want to follow the critical steps to creating a successful brand.

We've created a guide that covers each step of the process - from making key financial decisions, to launching and marketing your business the right way, and tips/strategies on how to grow your subscription box business effectively.

market size
$15B
avg revenue (monthly)
$99.1K
starting costs
$23.5K
gross margin
60%
time to build
12 months
growth channels
Word of mouth
business model
E-Commerce
best tools
Instagram, Google Analytics, MailChimp
time investment
Full time
pros & cons
6 Pros & Cons
tips
15 Tips

💡 Introduction To Starting A Subscription Box Business

Is The Subscription Box Business For You?

Let's look at the pros and cons of starting your own subscription box business

Pros:

  • Flexibility: One of the biggest advantages of starting a subscription box business is that you can put as much time into the business as you'd like. If you like the work and have some initial experience, you can start small and manage all aspects of the business on your own.
  • Ability to start your business from home: It's not necessary to have a physical storefront or office space to get your business started. You can do everything from the comfort of your own home, at least in the beginning!
  • Little startup costs required: The cost to start a subscription box business costs significantly less money than most businesses, ranging anywhere from 1,467 to 42,069.
  • Rewarding work: Starting a subscription box business can be really rewarding and fun work. After all, you're bringing joy and excitement into peoples lives.

Cons:

  • Crowded space: Competition is high when it comes to your subscription box business, so it's important that you spend a good amount of time analyzing the market and understanding where the demand lies.
  • Finding the right supplier: Most businesses in this space go the supplier/manufacturer route, which isn't a bad thing! However, finding the right supplier can take a lot of time, energy and trial/error. If done properly, this process can save you months (if not years) of time and energy. More on this below in the "finding a supplier" section.

Creating a successful subscription box business means that you will have the ability to sell, provide stellar customer service, communicate with vendors and motivate your team (even if it's down the road)!

Revenue Expectations

We've interviewed several different founders in the subscription box business and asked them how much $ they're making today.

Bambox

  • $720K/year in revenue
  • Sells baby products subscription box
  • 3 founders
  • 7 employees

Vowed Box Co.

  • $4.8K/year in revenue
  • Sells unique gifts for brides
  • Solo founder
  • 0 employees

Mouse Book Club

  • $120K/year in revenue
  • Sells tiny books.
  • 4 founders
  • 0 employees

Southern Cigar Co

  • $240K/year in revenue
  • Sells cigar subscription service
  • 2 founders
  • 0 employees

Candy Japan

  • $78K/year in revenue
  • Sells candy surprise boxes
  • Solo founder
  • 0 employees

Cannabox

  • $4.2M/year in revenue
  • Sells subscriptions for cannabis accessories.
  • Solo founder
  • 3 employees

How To Name Your Subscription Box Business

It's important to find a catchy name for your subscription box business so that you can stand out in your space.

Here are some general tips to consider when naming your subscription box business

  • Avoid hard to spell names: you want something easy to remember and easy to spell for your customers
  • Conduct a search to see if others in the space have the same name
  • Try not to pick a name that limits growth opportunities for your business (ie. if you decide to expand into other product lines)
  • As soon as you have an idea (or ideas) of a few names that you love, register the domain name(s) as soon as possible!

Why is naming your subscription box business so important?

The name of your business will forever play a role in:

  • Your customers first impression
  • Your businesses identity
  • The power behind the type of customer your brand attracts
  • If you're memorable or not

It's important to verify that the domain name is available for your subscription box business.

You can search domain availability here:

Find a domain starting at $0.88

powered by Namecheap

Although .com names are the most common and easiest to remember, there are other options if your .com domain name is not available. Depending on your audience, it may not matter as much as you think.

It's also important to thoroughly check if social media handles are available.

As soon as you resonate with a name (or names), secure the domain and SM handles as soon as possible to ensure they don't get taken.

Here's some inspiration for naming your subscription box business:

  • OverSubscription check availability
  • QuarterlySubscription check availability
  • Syndication Trading Co check availability
  • Individual Unsubscribe Co check availability
  • Additional Membership check availability
  • Conviction Subscription check availability
  • Public Syndication Trading Co check availability
  • Condition Subscription check availability
  • ForeignSubscription check availability
  • Purchase Spot check availability
  • The Durable check availability
  • The Moderate check availability
  • DrivenSubscription check availability
  • Membership Pro check availability
  • Driven Subscribing Group check availability
  • Public Subscribe check availability
  • Public Subscribe Group check availability
  • Original Purchase check availability
  • Syndication Group check availability
  • NonmemberSubscription check availability
  • Pigeon Subscription check availability
  • Driven Unsubscribe Pro check availability
  • Lipton Subscription check availability
  • Nominal Subscribing Collective check availability
  • Dollar Subscribing Group check availability
  • The Nominal Fee check availability
  • The Privileged Subscribe check availability
  • Foreign Fee Collective check availability
  • The Driven Subscriber check availability
  • Privileged Registration Spot check availability
  • The Month check availability
  • Original check availability
  • HandsomeSubscription check availability
  • Purchase Co check availability
  • The Unpaid Registration check availability
  • Modest Registration check availability
  • The Municipal check availability
  • Fruition Subscription check availability
  • Week Purchase check availability
  • Regular Fees check availability
  • Driven check availability
  • Week Subscribe Spot check availability
  • Generous Subscribing check availability
  • MinimumSubscription check availability
  • The Direct check availability
  • The Introductory Fees check availability
  • OriginalSubscription check availability
  • The Conditional Fee check availability
  • Online Unsubscribe Place check availability
  • Postal Subscriber check availability
  • Introduction Subscription check availability
  • Periodical check availability
  • Subdivision Subscription check availability
  • The Over check availability
  • The Annual Fees check availability
  • DollarSubscription check availability
  • Individual check availability
  • Envision Subscription check availability
  • Subscribers Spot check availability
  • Purchase Group check availability
  • Nonfiction Subscription check availability
  • Free Fees Place check availability
  • Complimentary Registration Collective check availability
  • The Charitable Purchase check availability
  • Regular Subscribers Collective check availability
  • Listen Subscription check availability
  • Dollar Purchase Collective check availability
  • Dollar Subscribing Spot check availability
  • Month check availability
  • Institutional Fees check availability
  • Subscriber Collective check availability
  • Fixed check availability
  • Yearly Subscribers Co check availability
  • Charitable Unsubscribe check availability
  • Individual Subscriber Pro check availability
  • The Introductory check availability
  • The Largest check availability
  • YourSubscription check availability
  • Membership Co check availability
  • Free check availability
  • Yearly Syndication Pro check availability
  • Over Fee check availability
  • Fee Co check availability
  • The General Registration check availability
  • Moderate check availability
  • The Monthly Unsubscribe check availability
  • Subscribe Place check availability
  • Prepaid Purchase Place check availability
  • Infliction Subscription check availability
  • Fee Pro check availability
  • Generous Unsubscribe Group check availability
  • The Monthly Purchase check availability
  • The Periodical Syndication check availability
  • Annual Subscribers Co check availability
  • Nonmember Fee Group check availability
  • Handsome check availability
  • The Institutional check availability
  • Introductory Registration Group check availability
  • Prepaid Subscriber check availability
  • Regular Syndication Trading Co check availability
  • Year check availability
  • The Complimentary check availability
  • The Charitable Subscribing check availability
  • Charitable check availability
  • The General Membership check availability
  • Registration Co check availability
  • Yearly Membership Trading Co check availability
  • Subscribing Co check availability
  • Nominal Purchase check availability
  • Additional Subscribing Trading Co check availability
  • Monthly Subscribe Group check availability
  • Science fiction Subscription check availability
  • Yearly Syndication Group check availability
  • The Yearly Fee check availability
  • Generous Fees Trading Co check availability
  • Fee Group check availability
  • Charitable Registration check availability
  • Dollar Subscribe Pro check availability
  • Subscribers Collective check availability
  • Voluntary Subscribe check availability
  • InstitutionalSubscription check availability
  • Yearly Subscribing Spot check availability
  • PublicSubscription check availability
  • Over Registration Collective check availability
  • Initial Membership check availability
  • The Non Subscriber check availability
  • The Popular Purchase check availability
  • Nonmember Fee check availability
  • The Non Subscribers check availability
  • Largest Membership Trading Co check availability
  • Week Subscribe check availability
  • The Free Purchase check availability
  • Clerical Fee Place check availability

Read our full guide on naming your subscription box business ➜

Logan Christopher, founder of Lost Empire Herbs tells us the synchronistic story behind their name:

We used to be called Super Man Herbs (2012 to 2016). However, we were forced to change our name due to a trademark issue with DC Comics, the owners of Superman. While they did not take legal action against us it looked to be going in that direction, and on advice from legal counsel, we decided to be proactive in our efforts.

The new name selection process was not easy. Finding something that was open in a .com domain name and free of any other possible trademark issues was an arduous journey.

The brainstorming sessions, loaded up on bacopa and other herbs, went for hours upon hours.

We had come up with Empire Herbs. In some ways we liked it, but it didn’t feel quite right. (Maybe a little too Star Wars-y?)

About to give up for the day, we decided to clear our heads and turned to nature, going on a hike in the forest, with the intent to find a sign on what the name should be.

...and we literally did!

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About an hour into the hike the name of a trail was presented. And the name of our herb company was found.

All of us liked it immediately. We shared it with the rest of the team and we knew we had a winner on our hands.

Thus, with the help of human hands in nature, Lost Empire Herbs was reborn.

-  
Logan Christopher, on starting Lost Empire Herbs ($300,000/month) full story ➜

Search Interest

Let's take a look at the search trends for subscription box over the last year:

Players

Big Players

Small Players

🎬 How To Start A Subscription Box Business

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Write a Business Plan

Writing a business plan from the start is critical for the success of your subscription box business.

Why?

Because this allows you to roadmap exactly what you do, what your overall structure will look like, and where you want to be in the future.

For many entrepreneurs, writing out the business plan helps validate their idea and decide whether or not they should move forward with starting the business.

You may want to consider expanding upon these sections in your business plan:

  • Executive Summary: Brief outline of your product, the market, and growth opportunities
  • Overviews and Objectives: Overview of your business, target customers, and what you need to run your business
  • Products and Services: Specifics on the products and services your business will provide
  • Market Opportunities: Analysis of customer demographics, buyer habits and if your product is in demand
  • Marketing: Outline of your marketing plan and how you plan to differentiate yourself from other customers
  • Competitive analysis: Analysis of your competition and the strengths and weaknesses therein
  • Operations: Hierarchal structure of the company and what it will take to run the business on the day-to-day
  • Leadership Team: Detailing roles and responsibilities of each manager based on their specific skill-set
  • Financial Analysis Understanding of all expenses, operating budgets, and projections for the future.

Learn more about how to write a business plan here

Setting Up Your Subscription Box Business (Formation and Legal)

When it comes to setting up your business, you may find yourself in a place where you have to make some financial and legal decisions.

The first thing you'll want to decide on is whether you want to be an LLC, S-Corp, or C-Corp.

These three options are found to be the most common when starting a small business, and all serve to protect your personal assets and also provide you with certain tax benefits.

  • LLC: All income and expenses from the business are reported on the LLC personal income tax return.
  • S corp: Owners pay themselves salaries + receive dividends from profits.
  • C Corp: C Corps are separately taxable entities that file a corporate tax return (Form 1120). No income tax is paid at the corporate level and any tax due is paid at the owners individual expense.

Depending on where you're conducting business, you'll also want to consider securing the proper permits, licenses and liability insurance.

Learn more about securing the right permits and licenses ➜

Need to start an LLC? Create an LLC in minutes with ZenBusiness.

Determine Which Business Bank Account You Need

There are hundreds of banks out there, and it can be overwhelming to find one that's right for your business.

Here are some factors you may want to consider:

  • Location - Is your bank close enough that you can easily make deposits or get cash?
  • Low Fees - Make sure to understand any and all fees associated with setting up and maintaining your bank account. Ask for a list - banks usually try to keep this hidden and in the fine print.
  • Online Banking Services - Make sure you can easily navigate through your online portal and you have easy access to everything you need.
  • Line of Credit - What do your options look like (even if you don't need this now, you may need this down the road).
  • Every bank has something that differentiates them from the rest, so make sure whatever that is applied to your needs and values.

Check out this list of the 13 Best Banks for Small Business in 2020 and what makes them so unique.

Startup Costs For Your Subscription Box Business

If you are planning to start a subscription box business, the costs are relatively low. This, of course, depends on if you decide to start the business with lean expenses or bringing in a large team and spending more money.

We’ve outlined two common scenarios for “pre-opening” costs of a subscription box business and outline the costs you should expect for each:

  • The estimated minimum starting cost = $1,467
  • The estimated maximum starting cost = $42,069
Startup Expenses: Average expenses incurred when starting a subscription box business. Min Startup Costs: You plan to execute on your own. You’re able to work from home with minimal costs. Max Startup Costs: You have started with 1+ other team members.
Office Space Expenses
Rent: This refers to the office space you rent out for your business. To minimize costs, you may want to consider starting your business from home or renting an office in a coworking space. $0 $2,000
Utility Costs (office space): This refers to the first month's utility bill for your office space. If you are not responsible for this bill, this would not apply to starting your subscription box business. $0 $150
Office Supplies: Although these may seem like minor costs, things like your desks, chairs, pens, paper, filing cabinets do add up. To avoid these adding up too much, try to be as lean as possible and go paperless! $25 $1,000
WiFi: Whether you work from home or in an office space, WiFi is an expense that's tough to avoid. Although the cost is minimal in most cases, it should be appropriately budgeted for each month! $10 $100
Total Office Space Expenses $35 (min) $3,250 (max)
Employee & Freelancer Expenses
Payroll: This number depends on if you decide to pay yourself a salary upfront and how many employees you have on payroll. At first, many founders take on all responsibilities until the business is up and running. You can always hire down the road when you understand where you need help. Keep in mind, if you do plan to pay yourself, the average salary founders make is $50K. $0 $4,000
IT Support: You may find yourself needing IT support when starting your business. It may not be possible (or necessary) for you to hire someone full-time, but hiring on a freelancer platform such as Upwork is a great way to save money and resources. $0 $500
Other Employee Expenses: Aside from payroll and benefits, there are other costs associated with hiring employees. This includes the cost to advertise the job, the time it takes to interview candidates, and any potential turnover that may result from hiring the wrong candidate. $0 $1,000
Employee Reward Ideas: It's important to recognize and reward employees - whether they hit their goals or are doing an exceptional job. This doesn't have to cost you a lot - simply taking them out to lunch, giving them a gift card or offering a pay-check bonus are all ways to recognize your employee! Here are 65 ways to reward your employees. $0 $500
Total Employee & Freelancer Expenses $0 (min) $6,000 (max)
Equipment & Supply Expenses
Technology Office Equipment: This includes (but is not limited to) physical items such as: laptops, cameras, monitors, microphones, speakers, headsets. Technology needs grow as your company evolves, so to minimize costs, try and only purchase what is needed for you to run your business at the time. $500 $5,000
Total Equipment & Supply Expenses $500 (min) $5,000 (max)
Website Costs
Website builder: The cost of your website will vary depending on which platform you choose. There are many website builders on the market, so it's important you choose the right one for your business and overall goals. To learn more about your options + how to build a great website, check out this article. $15 $100
Web Designer: If you have the necessary skills to design your website, then it may not be necessary for you to hire someone. However, if you do decide to go that route, make sure you establish an understanding of upfront cost, design and what the ongoing costs will be to manage the site. Here is what to expect when hiring a web designer. $0 $6,000
Register Your Domain: Once you decide the name of your business, you will need to make sure the URL is available and purchase the domain. You can check availability and register your domain here. $12 $75
Email hosting: Email is a critical piece for running your business. Once you have your domain name, you will want to set up email accounts for each user on your team. The most common email hosts are GSuite (typically starting at $6+ per user, per month) or Microsoft Office (typically starting at $5+ per user, per month). The number of email accounts you set up will determine the monthly cost breakdown. $5 $75
Server Hosting: To start a subscription box business, you will need to set up and manage a server. The cost for this is typically billed monthly and depends on the platform you choose (typically ranging anywhere from $0-$50/mo). $0 $50
Website chat function: If customer service is a big piece of your business, you will want to consider implementing a chat bot on your website. Typically, there are different tiers of pricing and some businesses even offer freemium services. To find what chat software is best for your business, check out this guide. $0 $75
Total Website Costs $32 (min) $6,375 (max)
Business Formation Fees
Small Business Insurance: Depending on which state you live in and the business you're operating, the costs and requirements for small business insurance vary. You can learn more here. $500 $2,000
Permit and License Fees: Depending on your industry, there are certain licenses and permits you may need in order to comply with state, local, and federal regulations. Here is an article that goes over all the permits and licenses you may need for your subscription box business. $50 $700
Trademarking: Filing trademark registration will protect your brand and prevent other businesses from copying your name or product. USPTO has several different types of trademarks, so the cost to apply can vary (typically anywhere from $400-$700). $0 $700
Lawyer Fees: Although you may want to avoid attorney fees, it's important that your business (and you) are covered at all costs. This comes into play when creating founder agreements, setting up your business legal structure, and of course, any unforeseen circumstances that may happen when dealing with customers or other businesses. $0 $1,500
Obtain a patent: Securing a patent can be a very valuable tool, but it's important that you are 100% sure this will be a smart business move for you, or if you may not be ready quite yet. A basic utility patent typically costs anywhere between $5,000 and $10,000 to file. Here is a great resource to walk you through the entire process. $0 $10,000
Set up business: LLC & Corporations: The first step in setting up your business is deciding whether your business is an LLC, S Corp or C Corp. The cost for this depends on which state you form your business + which structure you decide on. We put together an article that goes over the 10 Steps To Setting Up A Business. $50 $500
Total Business Formation Fees $600 (min) $15,400 (max)
Inventory Expenses
Upfront Costs For Inventory: This includes all upfront inventory you will need in order to launch. Be sure to compare prices of wholesalers to ensure you're getting the best deal and margins remain high. $300 $5,000
Total Inventory Expenses $300 (min) $5,000 (max)
Software Expenses
Design Programs & Software: These programs might include the Adobe family of design tools: Photoshop, Illustrator, InDesign and others. This is typically a monthly subscription ranging from $10-$50/mo. $0 $50
Email marketing tool: If you plan to grow your email list and email marketing efforts, you may want to consider investing in an email marketing platform (ie. Klaviyo, MailChimp). We put together a detailed guide on all of the email marketing tools out there + the pricing models for each one here $0 $100
Accounting & Invoicing Software: When starting your subscription box business, it's important to have an accounting system and process in place to manage financials, reporting, planning and tax preparation. Here are the 30 best accounting tools for small businesses. $0 $50
CRM Software: CRM (customer relationship management) software is used to track your company’s interactions with clients and prospects. Although this is not a necessary tool to have for your subscription box business, implementing this in the beginning may set your business up for success and save you a lot of time later on. For a full list of best CRMs to use for your business, check out the full list here. $0 $250
Project Management Software: You may want to consider using a project management and collaboration tool to organize your day-to-day. This can also be very beneficial if you have a larger team and want to keep track of everyones tasks and productivity. For a full list of project management tools, check out this full list here. $0 $25
Internal Communication Tool: If you plan to have multiple members on your team, you may want to consider an instant message tool such as Slack or Telegram. The cost is usually billed per month (approx $5/user/month) or there are freemium versions available on many platforms. $0 $20
Social Media Management Tools: If you plan to do social media marketing for your subscription box business, you should consider investing in a social media automation or publishing tool. This will save you time and allow you to track performance and engagement for your posts. Here is a list of 28 best social media tools for your small business. $0 $50
Payroll Software: The main purpose of payroll software is to help you pay your team and track each of those payments (so that you don't have to do it manually). If you do not have any employees or have a very small team, payroll software may not be necessary at this stage. Here are the 11 best payroll tools for small businesses! $0 $200
Online data storage: It's important to make sure the information for your subscription box business is stored and protected should something happen to your computer or hard drive. The cost for this is affordable and depends on how much data you need to store. To learn more about the different options and pricing on the market, check out this article. $0 $299
Total Software Expenses $0 (min) $1,044 (max)
Total Starting Costs $1,467 (min) $42,069 (max)

Leslie Eislen, founder of AlmondClear discusses how she raised the money to start her business

To fund the launch of the business, my husband and I put in about $10,000 of personal savings.

That initial infusion of cash was gobbled up surprisingly quickly, like in a matter of a couple of months, and that was well before any inventory was purchased.

We also took out a home equity line of credit for $100,000. So far I’ve only used $20,000 of the home equity credit, and I intend to never use more than $50,000.

I’m trying to follow the Lean Startup model and well as Profit First, so the goal is to grow the business incrementally as revenue allows, and build a profitable business model from the start.

I know that some people would advise me to get investments or use more of my loan in order to grow the business more quickly, but I’ve chosen to pursue a more lean, build-as-you-go model for now.

-  
Leslie Eisen, on starting AlmondClear ($15,000/month) full story ➜

How To Find A Supplier For Your Subscription Box Business

Here are the steps to consider when finding a supplier/manufacturer:

Know your design

One very critical step to finding the right supplier is having an initial idea of what your design/product will look like.

Sketching is one of the most simple ways to get started in the design phase.

What's great about sketching is that you can practically do this anytime, anywhere - even on the back of a napkin.

To get started, all you need to do is pick up a pen and paper and start drawing - or if you are working on a virtual/software product this can be a diagram that outlines the user interface or experience.

Decide your supplier type

You'll want to identify the type of supplier you are looking for.

Here are some questions you may want to ask yourself prior to searching for a supplier

  • Are you looking for a manufacturer to produce your product idea?
  • Do you want to find a supplier that can simply purchase existing products for you?
  • Do you want a drop-shipper to supply and fulfill orders?
  • Do you want a domestic supplier or an overseas supplier? Read more about the pros and cons of each here

Where to start your search

Once you have an understanding of what type of manufacturer/supplier will be best to bring your idea to life, there are several areas you can start your search:

Domestic Suppliers

Overseas Suppliers

Purchasing Inventory For Your Subscription Box Business

When first starting out, it's important to start small with your overhead to get a gauge for what people want.

Just remember - if you order a line of items that don't sell, it's nearly impossible to recoup the money lost.

Buying the right inventory takes research and planning in order to get it right.

  1. Identify your target audience: Identify the age, gender, annual income that you will be selling to. This is a defining factor in ordering the right inventory that will sell.
  2. Research your competition: Conduct market research and identify the different types of styles, price points, and materials being used. This will help you see what's trending and ways that you can improve/stay ahead of the competition.
  3. Create an inventory wishlist: Identify what you need for the launch of your business and create a budget that you will stay within. Remember, it's okay to start small.
  4. Find a supplier Make sure to first compare prices and analyze different options.
  5. Delivery timing: Schedule the inventory delivery to match with seasonality and trending buying seasons

Pro-tip: It's easy to become biased based on your own fashion preferences on what types of shoes/apparel to purchase. This is where a lot of fashion businesses go wrong. It's important to base purchase decisions on current buyer behavior, trends in the market, and specific to your niche.

Erin Hooley, founder of Bailey's Blossoms tells us how poor inventory projections led her to lose over $2M

When we first launched Peyton Bre we did so in a social or direct sales model.

Through poor inventory projections we were forced to change models but only after losing $2 million dollars.

It was a devastating time for us and one we were not sure we could survive.

I have since become very intentional about the way that we project our inventory needs and we continue to refine that quarterly and even monthly. We have created a KPI for the cost of goods sold to help us hold ourselves accountable.

Ultimately, the better we manage our inventory the less we have need to discount and the healthier our profit margin becomes.

This is, of course, a very high-level overview of the importance of inventory control.

To see the full breakdown on how to manage inventory, check out my guide over on my blog..

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-  
Erin E Hooley, on starting Bailey's Blossoms ($750,000/month) full story ➜

Design A Prototype

Turning your idea into a reality can feel like a daunting task - but it's critical that you have an idea of what your product will look like (even if it's just a sketch) prior to finding a manufacturer.

Here are some common ways you can design your prototype:

  • Draw Your Initial Design on Paper
  • Form pieces of fabric together
  • Consider Taking A Generic Product And Putting Your Own Brand On It
  • Try Making the Product Yourself
  • Consider Building A Prototype With A 3D Printer

To learn more about how to design and prototype a product, check out our latest guide here.

Michael Arciola III, founder of Southern Cigar Co dives deep into the process of designing and prototyping their product:

This was possibly the easiest part. Since we aren’t doing anything new or novel, there’s processes and companies in place to help us out.

But first, when I got to this phase I realized I wouldn’t be able to manage the day-to-day activities. Not that I couldn’t, but at the time I was a double major in computer science and business, was running my own web design firm, very active in school clubs/activities, and just got accepted to be an intern at Viacom/MTV at their headquarters in NYC.

Due to my overwhelming schedule, I knew bringing on help would be my best help in bringing this vision to life. I ended up asking my roommate and good friend at the time to manage the day to day operations as I knew I could trust him with that.

With him now onboard we came up with the business name (fun fact: actually with another good friend, originally 3 of us, who ended up leaving after we all agreed we need to put $1,500 each into the company to be a founder as startup capital). The 3 of us after a brainstorm session decided on the name “Southern Cigar Co.” because we all were from the “South” US, and also from South Florida. (Another fun fact: our logo in the center shows M & J for Michael and Jason, and 4 & 15, because we came up with the name on 4/15/15).

how-i-started-a-20k-mo-cigar-subscription-business-as-a-college-student

Next came the product. This was something I refused to skimp on and the bulk of our money went to. We spent ~2k on the website which is still in use today! (which I consider our storefront since we don’t have a physical store).

Another ~2k to have professional boxes designed, manufactured and shipped to us. Next came the customer cigar bars, which is bought and had our logo put on. Last came lighters, cutters, and humidifiers which we standard we bought from wholesalers.

how-i-started-a-20k-mo-cigar-subscription-business-as-a-college-student

how-i-started-a-20k-mo-cigar-subscription-business-as-a-college-student

The rest of the money went towards buying the cigars to fill the boxes each month. At the time Jerry’s was letting us buy singles, so however many customers we had we would grab. Then I would fill in the description card and have that printed. The card was designed once from Freelancer.com contest which we paid like $300 for and are still using it to this day. Below is a photo of the first card we ever sent. We eventually removed the small text, but everything else is the same. I input the details, dates, and photos into the design with a standard backside with our logo and social media handles.

how-i-started-a-20k-mo-cigar-subscription-business-as-a-college-student

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Michael Arciola III, on starting Southern Cigar Co ($20,000/month) full story ➜

How To Price Your Subscription Box

One of the most challenging and critical pieces to starting your subscription box business is determining how much to charge for your subscription box.

When businesses under-price their product, this can be extremely detrimental to their bottom line and reputation.

Often times, businesses under-price their products to drive demand and volume, but that last thing you want is for customers to view your product/service as "cheap." Additionally, this can have a big impact on the type of customer you attract, which can be difficult to recover from.

On the other hand, when businesses over-price, this tends to be just as damaging to the business.

When customers buy, it's likely that they will explore the internet and look at other competitors to ensure they're getting the best value + deal. This is why it's so important that you research your competition and understand where you land in the marketplace.

Here are some factors to consider when pricing your product:

Understand your customer

It's important that out of the gates, you identify the type of customer you want to attract and how much they're willing to pay for your service. One great way to do this is by surveying your customers. Here are some important items you'll want to takeaway:

  • Customer demographic: Age, gender, location, etc.
  • Buying habits of your customer: What they buy + when they buy
  • Level of price sensitivity with your customer

All of these segments will help you identify the type of customer you're attracting and how to price your product accordingly.

Understand your costs

When pricing your subscription box, it's critical that you first identify all of your costs and consequently mark up your subscription box so you can factor in a profit.

The actual cost of your subscription box may include things like:

  • The actual cost to make the product (ie. raw materials, supplies, manufacturer).
  • Shipping + overhead fees
  • Rent
  • Operating costs to run your business

You may want to consider creating a spreadsheet with every single expense involved in operating/owning your business. This will give you an idea as to what you need to generate in order to at the very least, break-even and will help you price your products to factor in a profit.

Create revenue goals

When determining the price of your subscription box, you'll want to create goals for revenue + how much profit you want your subscription box business to make.

This process is simpler than you may think:

  1. Think about your breakeven cost (by completing the above step).
  2. Create a revenue goal based on your break-even cost
  3. Evaluate the # of items you plan to sell in a given period (make sure this is a realistic number)
  4. Divide your revenue goal by the number of items you plan to sell

This figure will help determine your estimated price per product in order to meet your revenue goals.

Evaluate your competition

The last piece in determining how to price your subscription box is by simply looking at your competition.

The best way to do this is by finding like-minded businesses that offer product(s) with similar perceived value. Then, you can compare prices of the different businesses and determine where your subscription box fits best in the marketplace.

All of these factors play an equal part in pricing your subscription box, so it's important you evaluate each one individually to come up with an accurate price that will help optimize your business from the start.

Lauren Costanza, founder of Bluminary provides us with a detailed spreadsheet of all of her costs associated with running her business:

I knew this would be a self-funded adventure, and I set aside $3,000. During the first three months, I had a detailed spreadsheet where I tracked where the money was going and what was going toward products versus researching and developing new products.

The spreadsheets involved columns and rows of numbers to craft a budget and gain an understanding of how much would need to be invested at each stage of the process - from gathering supplies to building a website, and shipping materials.

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Lauren Costanza, on starting Bluminary ($500/month) full story ➜

Identify Target Customer

A very critical piece in building subscription box business is to identify your ideal target customer.

  • Develop a niche and create a consistent brand that reflects your target customer.
  • The colors, logo, content, and overall website should resonate with your target customer and should draw them in by helping them solve their specific "need".

Eddie Huai, founder of Flyby Pill, discusses how critical it is to understand your customer base:

Our flagship product is Flyby Recovery, a pill formulated to help you bounce back after a night of drinking.

I’m sure you’ve heard it over and over again, but understanding your customer base is SO important. Whether it’s a 5, 20 or 30-minute phone conversation, hop on a call with your most loyal customers and really understand who they are.

When you talk to them, I think you learn two things:

  1. Clearly who they are, like what is their demographic.
  2. Why are they buying this? Aside from the functional benefit which we already knew (people go out to drink and buy Flyby because they want to wake up at the top of their game), it helps us understand what resonates with them emotionally, why they bought it in the first place, and why they came back.

We learned something very interesting in this. Demographic wise, we thought our main customer base would-be college students, fraternities, and sororities in the U.S so a lot of our messaging revolved around that age group.

But a lot of our customers turned out to be in their late twenties to forties. They were buying our product and only having a few glasses of wine instead of binge drinking.

They have to wake up, take care of their kids, prepare for work, that important presentation, or go for a run.

Time is very valuable for them and they’re not buying this product to party harder but instead to be more productive the next day. So after realizing that, we pivoted into really focusing on that angle in order to target the right audience.

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Eddie Huai, on starting Flyby ($200,000/month) full story ➜

🚀 How To Launch Your Subscription Box Business

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Build A Website

Building a website is imperative when launching your business, and with the right tools in place, this can be a simple task to check off the list (without having to hire someone).

  1. Pick a domain name that's easy to remember and easy to type
  2. Choose a Web Hosting Plan (ie. Shopify, Squarespace)
  3. Make sure you choose the right theme and design
  4. Implement the proper page structure (ie. about page, contact page, pricing etc)

To learn more about how to build a stellar website with little stress, we give you all the details on this step-by-step guide.

There are a ton of different websites platforms out there, and it's important to choose the right one that will set you up for success

Shopify is most commonly used for eCommerce boutique businesses and Squarespace is most commonly used for physical storefronts.

Here's everything you need to know about these two platforms:

Founder, Marc Debnam on recommending Shopify

The best move we did was to switch to the Shopify platform in 2016. Everything became simple.

Shopify is an easy to use software with great add-on apps so you can build your ecommerce business exactly how you like it.

And it intergrates with our accounting and logistics platforms. Xero, Auspost, DHL. As well as most sales and marketing channels.

It freed up so much time working in the business, allowing us time to focus on growth and brand awareness.

With my basic technical skills, I built a great site. The one we still have. I experiment with apps that just plug in and if they add that’s great if they don’t we move on.

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Marc Debnam, on starting Stonemen ($80,000/month) full story ➜

Web Design

Once you have chosen the domain, web hosting, and platform, it's time to get started with the design phase.

Themes are a great way to produce the fundamental style and identity of your website - this includes everything from your font design to your blog post styles.

One of the best ways to get started is to simply explore the various themes (free or paid depending on what you're looking for) and test them on your site.

If web-design really isn't in the cards for you, you may want to consider outsourcing a web designer to help bring your vision and brand to life.

Launch Strategies For Your Subscription Box Business

There are various different ways you can launch your subscription box business successfully.

Here are a few different strategies to get customers excited about your subscription box business.

  • Build hype with a landing page: you can effectively do this through waiting lists, discounts, countdown timer etc
  • Create a teaser video: even just a 30 second video is a great way to exposure for your subscription box business, and possibly even go viral
  • Reach out to influencers: The right influencer for your product has the ability to reach your audience with just one post, and because of their loyal following, this could lead to a big return for you.
  • Get Press: Whether you plan a PR stunt or get exposure through a popular news outlet, this is a great way to attract initial customers
  • Launch on popular sites: A great way to get buzz about your subscription box business is to submit your launch to popular startup sites.

Here are a few popular sites to launch on:

Learn more about how to launch your business successfully ➜ here

Nelli Jeloudar, founder of Bundleboon dives deep into the process of launching the business:

The MVP page was built in Weebly - a simple and easy drag & drop platform.

I built a style quiz in typeform, added some stock photos, and used HTML code to implement it to the website. It was a good setup to get more box orders in.

It wasn’t until April 2018, during our time at Startupbootcamp, where we decided to launch a full-blown, customized website and style quiz by using Shopify. We paid a branding agency plus a developer for something, we decided to change later. Our new website and quiz had everything we wanted.

The quiz looked super professional, the visuals and branding were beyond our dreams! But in reality, we found out that our users and paying customers didn’t find our customized style quiz engaging enough, causing a fall in our online conversion. We decided to keep it running and in the meantime, we went back to bootstrapping, analyzing the customer behaviour and gather as much feedback as possible by calling all of our customers. The quiz we have now is built based on what our customers wanted.

We didn’t hire employees until late 2018, so my co-founder and I did everything from customer service, styling to shipping and sending invoices. By this time, we were also dealing with our third co-founder leaving and cash flow running tight.

All of the investors we spoke to told us that we need to show more traction and show how we can scale. We needed an investment to really show the potential of the concept, so we started a small crowdfunding campaign on a Dutch platform called Leapfunder, which secured us €15.000 in convertible loans. We decided to use the money on hiring an employee and on online customer acquisition.

In August 2018, we moved to a small office in Amsterdam and hired our first employee, Noga. She has a broad background in fashion and she was one of the best performing stylists at The Cloakroom. She was actually one of our first customers and she had shown interest in joining our team. She is now running a team of 3 stylists and has the highest AOV (Average order value) and revenue of everyone in the styling team.

how-i-started-a-subscription-box-business-for-kids

Month over month we secured small loans and investments. On top of that our monthly growth rate grew at 25%.

How have you attracted customers and grown the business?

Our customer acquisition strategy is built up in three groups; online customer acquisition , retention and referrals.

Online customer acquisition

We use multiple channels to acquire new customers, but the one that really works well for us is by using influencers. We reach out to real moms, who are active and engaging on Instagram and have them do a nice unboxing video for us in exchange for a box with clothes. If the influencer uses the right approach, we can get up to 35 new customers in pr. influencer. We have also noticed that the average basket size is almost 30% higher when the customer is acquired via one of our influencers. Next to influencer marketing, we also acquire customers via ads on Facebook and Instagram. The engagement, clicks and conversion are far higher when we use unboxing videos rather than regular photos. Our customer acquisition cost varies between $9-20, depending on the type of ad and target audience.

Retention

Getting our customers back is our main priority and we spend a lot of time on each of the customers, making sure that they receive a great service. We always call or Whatsapp them for a follow up chat after they have sent their box back. This way we can truly understand why they sent some items back and what they are looking for in their next box. 21% of our monthly orders come from existing customers and we aim to get it to 45% by the end of the year.

Referrals

Two months ago, we launched our ambassador program, we will reward our current Bundlebooners when they refer a new customer to us. All they have to do is to share a unique referral code with their friends and family. If the new customer orders a box and keeps for min. €25, the current customer will get €10 to use on her next box.

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Nelli Jeloudar, on starting Bundleboon ($35,000/month) full story ➜

Make Sure You Get The Package Design Right

The way you package your subscription box business is often the first impression your customer has - so it's important to get it right.

You may want to ask yourself these questions:

If my product is on a shelf next to hundreds of other similar products:

  • Will my subscription box business stand out?
  • Will the branding/packaging create a connection with my customer, and hence, lead them to buy?

There are hundreds of tools you can use to help with packaging and design:

  • Canva - Allows non-designers to create beautiful Instagram/Pinterest posts, flyers, business cards, etc.
  • Stickermule - High quality custom stickers you can include on or in your packaging.
  • Noissue - Custom tissue paper and compostable mailers
  • Rollo Label Printer - A great tool to print all shipping labels at home

Sheets & Giggles explains the motive behind their "Premium Unboxing Experience"

Sheets & Giggles explains the motive behind their "Premium Unboxing Experience"

I had a particular vision for our packaging centered around one goal: because we were a DTC company and wouldn’t do physical retail in year 1, we needed to focus entirely on an incredible unboxing experience that made the product feel as premium as possible.

Outside: a white box, nice wax coating, logo front and center with no other copy, easy to open, nice and sturdy.

Inside: make people smile from the get-go, have a social call-to-action, include free extra surprises (a knapsack that wraps the sheets and an eye mask), put funny copy all over the place, and add a donation bag that people could use to donate their now-defunct cotton sheets (sheets & blankets are the #2-most-requested item at shelters behind socks).

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Colin McIntosh, on starting Sheets & Giggles ($200,000/month) full story ➜

🌱 How To Grow Your Subscription Box Business

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Authenticity

As a brand, you want to deliver an experience that authentic, honest and transparent.

Don't make the mistake of giving your audience less credit than they deserve.

Be Authentic

Example from Monika Reti, founder of Hipcooks

Hipcooks is different from other cooking schools: we give confidence and inspiration to home cooks through our communal approach (we don’t divide people into teams).

We don’t use recipes or measuring implements. We make cooking stress-free and make sure that all leave inspired and confident they can make delicious food.

Each class ends enjoying great food, sipping wine, and making new friends around a large communal dining table.

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Monika Reti, on starting Hipcooks ($100,000/month) full story ➜

Get Press Coverage For Your Subscription Box Business:

The more buzz around your brand - the more the phones ring, the more traffic to your website, and the more customers as a result.

Here are a few ways you can get press for your business:

Press releases:

Press releases are a great way to share big announcements or news, but in order to get any traction, you'll need to find a way to make your press release stand out amongst others.

Try to convey a story that really matters, not just to you, but to the reporter and to their audience.

Here are some things to consider when submitting a press release:

  • Craft a catchy subject (keep it short and sweet).
  • Acknowledge the journalist's past work and interests - this is key!
  • Include the main point of the story in the first paragraph, heck, even the first sentence. Reporters want to hear the juice first and foremost.
  • Focus on the facts and try to limit the amount of jargon used.
  • Pitch yourself! Help them put a face to the story.
  • Make sure your topic is newsworthy. If it's not, find a way to!
  • Try not to include any attachments of your release!

Email is one of the most effective and preferred way to send your press release, so as long as you keep your pitch brief, interesting and personalized (no cold emails), you should stand a chance!

Get Press Using HARO

HARO, otherwise known as "Help a Reporter Out" is an outlet for journalists to source upcoming stories and opportunities for media coverage.

The best part is, HARO is free to use! There are, of course, premium versions you can purchase, but the free version is still an accessible way to get press.

Once you set up an account, HARO essentially will email you based on stories (that are relevant to you) that need to be covered where you will then have a chance to essentially "bid on the story."

Here are some tips when crafting your pitch:

  • Discuss your experience and expertise in the space. Make sure it's obvious why you're relevant to this story.
  • Answer the question in 3-4 sentences. Try and be as direct as possible
  • Offer to provide the reporter with more information and make sure to give them your contact info

Plan a Publicity Stunt

Planning a publicity stunt is an effective and quick way to raise awareness for your brand and gain some traction from the press.

If you're looking to plan a stunt, the objective should be to be bold and create something memorable

However, being bold has a fine line - it's important that you consider the timing of your stunt to ensure you don't come off insensitive or unethical. For example, timing may not be in your favor if you plan something during the general election, or in most recent cases, a global pandemic.

In order to measure the success of your stunt, it's important that you first determine your end goal, for example:

  • Is the stunt aimed to raise money for your business or a particular organization?
  • Is the stunt aimed to drive more traffic to your website?
  • Is the stunt aimed to get more followers and engagement on Instagram?

Here are a few tips for creating a great publicity stunt:

  • Research to ensure that there haven't been similar stunts done in the past by other businesses - this could easily turn off journalists and your audience.
  • Make sure you can explain the stunt in one headline - this will help grab the media's attention. In other words, simplify!
  • The stunt should be related to the product you are promoting. Even if the stunt is a success in terms of viewers, but it doesn't tie back to your original goal, then it's not useful.
  • Keep the stunt visual with videos/images.
  • Leverage the internet and social media platforms for your stunt by sharing your message across a variety of audiences. This will help with word of mouth and the overall success of your event.

To learn other strategies on how to get press, check out our full guide here.

Build A Blog

One of the most effective ways to build brand awareness and grow your business is through consistently blogging.

We've outlined some useful tips for you to consider when creating content:

Consistency and Quantity

Quality is important, but it should be the standard for any content you publish.

What’s more important is consistency and quantity.

Consistency is as simple as committing to publishing and sharing a certain number of posts per week. For me, that’s three per week right now.

This kind of commitment is key, because one day, a random post will blow up, and you will have never expected it.

Oversaturation

The easiest mind trap is to think "I’m posting too much", and “I need to give my readers/audience/this platform a break”.

This is nonsense.

There is no such thing as oversaturation. Well, there is, but it is just someone else’s opinion.

For every person that tells you you are posting too much, there is another person that wants even more of your content.

You should ignore people’s opinions on how much you post.

Patience & Persistence

Keep posting, keep trying, and keep putting out good content on the regular. Your time will come, and when it does, it will change everything.

The only thing you have control over is your content.

You can’t control how people will react to it. You can’t control pageviews, likes, or shares.

So the only metric you should focus on is how much content you can put out in a week, month, etc.

Where to share your blog content

Mailing List

I know it sounds obvious, but the best places to share your content is on your mailing list. It is guaranteed traffic and it is a great way to get rapid feedback from your most loyal readers.

Send newsletters often. I have done once a week since starting, and I’m moving to twice a week soon.

Work on increasing your mailing list as well. Look into ways to increase your conversion rate to your mailing list. I added a flyout popup thing to my site and now I’m collecting ~30 emails per day.

An email newsletter is one of the most powerful assets you can have and it is worth its weight in gold.

Reddit

Reddit is one of my favorite places to promote content.

It is a very scary place because you will often get banned or heckled, but it can really pay off.

Create social media accounts for your blog, the main ones I use:

Twitter Facebook Instagram LinkedIn

Set up Buffer and share all of your blog posts to all of your accounts. All of these little shares really do add up.

Automate this as much as possible. I automated all of my social media for Starter Story.

Facebook Groups

When I started out, I put together a spreadsheet of relevant Facebook groups for my niche, and I would post to these groups whenever I had a big story I wanted to share.

Improve your SEO

SEO is not just about driving traffic to your site, it's about driving the RIGHT traffic to your site, and ultimately, converting leads into customers.

One of the most important aspects of SEO is understanding what your customers are searching for, otherwise known as "keyword research."

Here are some tools that can help you choose the right keywords for your subscription box business.

Publish Great Content

Finding keywords is an important piece of the puzzle, but Google also ranks your site based on the actual content you produce, as this is what your customers are reading and engaging with.

There are various different "forms" of content that you may want to consider diversifying on your sites, such as blog posts, articles, studies, and videos.

So let's discuss what google considers "good content:"

  • Length - This will vary depending on the page, however, generally having a sufficient amount of content helps search engines recognize that your site is a good source for a specific topic
  • Engagement - The longer people stay on your website to read your content, the higher Google will rank your website. It's important to have informative and "thick" content that keeps people reading
  • Avoid Duplicating Content - Google will recognize this and may consider your content to have low value
  • Ensure pages load quickly - This will also help with engagement and time spent on your website
  • Shareability - Create content that people want to share, and is easy for them to share, especially to their social media accounts (ie. "click to tweet" is a great example of this).

Another element of creating good content is creating consistent content.

If (and hopefully you are) publishing content frequently, it's important to stick to a schedule - this helps build brand trust and easy user experience with your customers.

Planning out your content with a content calendar is key to staying consistent.

Here are a few great content calendar tools that can help you:

  • Trello
  • Airtable
  • If you prefer to keep it simple, your average spreadsheet is just as useful!

Backlinks

Backlinks are an important piece to SEO, as they allow for other websites to link to your content.

Search engines recognize that other sites are essentially "verifying" your content and essentially rank you higher because of this.

Of course, some links are more valuable than others and can affect your site in different ways.

For example, if a highly valuable and credible site like the New York Times links to a page on your website, this could be remarkable from an SEO perspective.

Aside from organically getting mentioned from other sites, there are other ways that you can increase and earn backlinks:

  • Create infographics with relevant data that people want to share
  • Promote your content on different sites/look into "guest blogging"
  • Contact influencers/journalists/bloggers and ask them to mention you!
  • Write testimonials for other sites in exchange for a backlink
  • Leverage existing business relationships

Learn more about the fundamentals of SEO ➜ here and check out Neil Patel's 3 Powerful SEO Tips below

Monika with Hipcooks discusses how solid Yelp and Google reviews lead to the business ranking #1 on Google search:

Top Google Placement

We deliver a great quality product each time we teach a class. I call it “pennies in the piggy bank:” one by one, each customer contributes to a solid, dedicated customer base.

Number one Google ranking (or at least the top 5 Google ranking) is important, so we keep our Google business pages full of updated content. Our Google and Yelp Reviews are solid.

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Monika Reti, on starting Hipcooks ($100,000/month) full story ➜

Ryan Schortmann, founder of Display Pros talks about their investment in PPC Ads:

My name is Ryan Schortmann and I’m the founder of Display Pros. We are a custom trade show display booth company offering easy to use portable display “kits” for small and medium businesses wanting to get into the trade show game.

It did not take long to come to the realization that to compete at any reasonable level, we were going to need to take the plunge and invest in Pay Per Click ads and display.

From experience, I know that it is important to give Google’s hivemind some time to settle in before each campaign starts seeing consistent results (this is largely dependent on budget).

A certain amount of PPC budget must be viewed as a “marketing research” expense and then you can look at the analytics data and make informed decisions on where to refine, tweak or plain scrap an idea.

Google Shopping was an entirely new concept for me. You can’t assign keywords to products so at first, I was asking myself “How the hell do you refine these?”. Then I found some good reading material and courses and learned of some advanced methods that the pros are using. It turns out you can utilize negative keyword lists combined with the priority setting on each shopping campaign to “shape” the keywords that are coming in and how much you are spending on them.

To learn more about PPC Ads and Google Shopping, check out this video to learn everything you need to know!

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Ryan Schortmann, on starting Display Pros ($30,000/month) full story ➜

Grow Your Email List

The more engaged list of emails, the more engaged customers, which ultimately leads to more sales.

One of the best ways to start growing your list is by providing your customer with something free (or discounted) in return.

This could also be anything from:

  • Ebook
  • Fascinating case study
  • Video series
  • Free week of the product
  • Discount on the product

Learn more about how to grow your email list and improve email marketing ➜ here.

Add an exit-intent popup to your online store

A great way to double, or even triple, your email opt-in rate and to grow your list is to add an exit-intent popup to your site, and offering a discount or content upgrade for subscribers.

Here's an example of what that might look like:

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One thing that I spent years NOT doing, that I now kick myself about, is adding an "exit intent pop-up" to our site, which lets people enter a sweepstakes to win a Xero Shoes gift certificate.

That one idea has added over 100,000 subscribers to our email list, which is one of our most effective marketing channels.

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Steven Sashen, on starting Xero Shoes ($1,500,000/month) full story ➜

Improve Your Email Marketing

Different types of emails

Here are the most common types of email campaigns you can send to your customers and their benefits:

  • Welcome emails - the perfect way to provide information from the start with a clear CTA. Make sure to tell your customer everything they need to know about your product or service.
  • Newsletters - a great way to give customers updates or send out your latest content
  • Product launch emails - the quickest (and easiest) way to increase sales is by selling to current customers. Make sure they're the first on the list to know about your new product
  • Promotional emails - promote discounts, deals coupons etc. Try and make this feel exclusive and for a limited time only
  • Abandoned cart emails - give your customers a reason to complete their purchase!

Here's a great resource for finding curated email designs, for all types of email campaigns!

Newsletter Example - Food Industry Tips and Tricks

We have a lot of content to share and it is very well received. Most clients need to see your brand a few times before they purchase, and email is great for that. Email is also an effective reminder for past clients to order again.

We have close to 5000 subscribers and we aim for 2 emails per month. Most of our subscriptions came through the website.

So far we have been focusing on practical life hacks and tips on how to stay focused and disciplined. Many of our subscribers are past clients that took a break.

Our open rates are good, we’re averaging 24% - 53%, much higher than the 10% industry average. We need to work on our click rates which are at around 1.2%.

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Here's a look at one of our email newsletters. Here's another one.

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Andrei Calinescu, on starting One Life Meals ($130,000/month) full story ➜

Freemium Model

Offering free trials to your platform is a great way to gain exposure for your business and (hopefully) get new customers!

Finding the right subscription box business platform is a big deal for most people, so it's important to offer a free trial (typically anywhere from 7-30 days) so the customer can test this out prior to buying.

Social Media Advertising

Social Media Advertising is one of the leading ways to get the word out when it comes to subscription box business.

There are various different Social Media platforms available to you. Some may be more critical for your marketing efforts than others, however, it's important to have an understanding of what's out there and available to you.

Let's talk about a few of the main platforms and what makes them unique:

  • Facebook Advertising - more than 2 billion monthly users. Facebook is the best for lead generation + capturing email addresses for e-commerce businesses.
  • Instagram Advertising - approximately 500 million monthly users and has a higher audience engagement rate than any other platform. Instagram ads are best for linking to a product page or landing page and reaches the 18-29 age group most effectively.
  • Twitter Advertising- Small businesses typically use twitter ads to drive brand awareness, but the platform is meant more for organic engagement (and is not as heavily used for paid advertising)
  • Pinterest Advertising - 175 million monthly users and most effectively reaches the female audience. Pinterest is great for promoting products without "promoted". The promoted pins have a way of blending right in.
  • LinkedIn Advertising - 227 million monthly users and is geared towards the B2B market and generates the highest quality leads. Great platform for recruiters, high-end products and services that will help businesses

It's important to first define your goal/objective so that you don't waste time and money into the wrong platform:

Here are some different questions to ask yourself as it relates to your goals:

  • Do I want to simply drive brand awareness?
  • Do I want to drive users to my website to gather information?
  • Do I want to increase sales and get my customer to take action?

From there, choose the platform that targets your audience best and start experimenting!

Learn more about social media advertising ➜ here.

Consider Working With Instagram Influencers

Partnering with like-minded influencers (within your industry) is one of the most effective ways to grow your social media organically.

Industry influencers already have an established and loyal following. With one post, your product immediately establishes a connection with a brand new audience. It's that powerful.

When finding influencers to promote your product, do your research and make sure that their following will actually be interested in your product.

It's easy to be blinded by any influencer with a huge following, but if those followers don't resonate with your product, there may not be any value there... so make sure you do your research!

Evan Marshall, founder of Plain Jane discusses how "micro-influencers" have impacted his business:

Influencer marketing has been huge for us. Our approach is pretty simple. We give out samples of our products and ask people to post about us on social media aka a micro-influencer strategy.

We really like this approach because we get authentic stories and content. We cannot really control the messaging so the product has to speak for itself. We don’t really take product photos at all. Our customers take the photos and we ask to reuse them.

With any influencer strategy, you have to be very sure you’re targeting the right people and engaging with them. You can make sure you’re targeting the right influencers by looking through their posts and then looking through the profiles of their engaged followers.

It takes more time per influencer but the payoff is certainly worth it. Make sure their followers look like your existing customers.

It takes a ton of time and work to grow a social media following this way but it’s worth it. Other accounts have tried to grow themselves through botting or other manipulations. As a CBD company, we didn’t want to give Instagram any reason to shutdown our account so we’ve done everything through content and real engagement. It’s not magic to make this happen. You just have to post consistently and then reply or like every single comment you get. It takes months but it works

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Evan Marshall, on starting Plain Jane ($275,000/month) full story ➜

Host A Social Media Giveaway

People love free stuff and love competition. Giveaways and contests are a great way to create awareness for your brand, grow your email list, and eventually convert leads into customers.

If your goal is to gather email addresses, make sure the entry criteria is to "enter your email." You can do this by leading customers to your landing page where they can then enter their email to be in the giveaway.

One of the most important aspects of promoting a successful giveaway is having an amazing prize. The better the prize, the more engagement you'll get.

This doesn't necessarily mean choosing an iPad or an expensive/trendy watch, but instead a prize that is actually relevant to your brand/target audience.

Collaborate With Other Brands For Giveaways

Example from Benjamin Hebert, founder of Natural Stacks

Our customers have a billion choices for supplements out there, so if they decide to use our brand then we have to go the extra mile to help them.

Part of that means creating content they love, like coming up with unique promotions with other brands. Since we’re a consumable product, we naturally want them to enjoy our products and consume more. It’s the best use of marketing and sales dollars.

I think a lot of brands try to avoid working with other similar companies which is dumb. The market is big enough for everyone.

If I take supplements from one company, I’m definitely using others as well. Everyone can win.

We will get donations from a few brands and put together a giveaway on Gleam.IO or King Sumo. Then we will promote it on the podcast and in our content.

The trick here is to offer a nice coupon out to everyone who didn’t win the giveaway. It’s a great entry point for your brand.

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Benjamin Hebert, on starting Natural Stacks ($200,000/month) full story ➜

🏃🏼‍♀️ How To Run Your Subscription Box Business

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How To Retain Customers For Your Subscription Box Business

Retaining customers is one of the most effective ways to grow your subscription box business.

Oftentimes, it's easy to find yourself focusing on generating new customers, vs retaining your current ones.

Look at it this way - you are 60-70% more likely to sell a new product to an existing customer than you are a new customer.

That's not to say that finding new customers and revenue streams is not important, however, the easiest (and most inexpensive) source of new revenue is right there in front of you.

Here are some ways you can retain customers for your subscription box business:

  • Responding to comments on social media
  • Send discounts (or freebies) to loyal customers
  • Provide valuable content, for free
  • Write a hand written thank you note
  • Provide awesome customer service and build relationships with customers

To find out more tips and tricks on retaining customers, check out this article ➜ here

Michael Arciola III, founder of Southern Cigar Co dives deep into the process of attracting and retaining customers:

We aren’t able to run ads due to tobacco restrictions on most major ad providers, so we needed to find a work around.

Don’t follow others. Just because <insert newest millionaire overnight business> is the hot new thing and “everyone” is making money doesn’t mean you will.

Since launch, we primarily attract customers via search engines, media, and different marketplaces (including Cratejoy marketplace). We obviously prefer search engines, as there is no finders fees like there is with the marketplaces.

We haven’t been extremely active in the larger cigar community because the hardcore fans generally buy in bulk cigars, which isn’t really our customer. Our customers are generally beginners/novices who are interested in getting started. This is an area we are interested in jumping into soon, however.

Social media has also been a dead end for us, with very little traffic or customers coming from there. This is likely due to our customer’s ages, they aren’t really on Instagram or Twitter. We still keep it maintained and updated but don’t put a significant amount of time into it.

What has worked for us is media and search engines. They have both gone hand in hand with each other as we grew. I spent many hours reaching out and building relationships with blogs (including cigar blogs, mom blogs, fitness YouTubers, mainstream media, etc). This work laid the foundation for the company moving forward and has contributed to over 70% of the lifetime revenue.

Search engines are great because they are specifically looking for it at that time. So someone searching for “cigar subscription service” is a great candidate customer for us. Someone looking for “cigar boxes for sale” isn’t as we don’t sell cigar boxes like a normal ecommerce store does.

Our strategy wasn’t to game the system or make it to the top overnight. It also wasn’t necessarily something I focused on. I focused on everything I mentioned before, and the rankings came with it. I would reach out to hundreds of blogs, anyone who might have an interest. It’s easier for physical products because people feel some sort of value, unlikely online products. I reached out to mom blogs, cigar blogs, men’s blogs, golfing blogs, business blogs, and news sites.

We were looking for honest reviews of our product in exchange for that months box. Many people took us up on this offer, but compared to the amount of people I reached out to it was likely 10-15% response rate. At first I reached out to the smallest of blogs, anyone who would do a review. Slowly we got more reviews I would get stricter on who I would suggest does a review.

With reviews trickling in for over a year, we had all different kinds of blogs reviewing our product which began to grow organically. At about the 2 year mark others were picking up on us and we were getting featured in larger publications. We have now been featured in Buzzfeed many times, Maxim magazine, inStyle magazine as well as many others.

how-i-started-a-20k-mo-cigar-subscription-business-as-a-college-student My originally apartment in college. The living room was always filled with orders.

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Michael Arciola III, on starting Southern Cigar Co ($20,000/month) full story ➜

Provide Great Customer Service

Providing exceptional care and creating relationships with clients is a great way to build your reputation and retain customers.

Whether you are an online business or a physical business, it's highly important to communicate with customers and make them feel like they are the priority.

Just remember: customer service represents your brand, values, vision and YOU as a person.

Lousia with Funky Fat Foods states just how important their customer service is:

We’re consumer-focused and take care of our customers as quickly and correctly as possible.

I believe what is also working for us, is our customer service and the relationships we have created with them.

Even today we see huge support from Instagram, as you can talk directly to your (potential) customers all over the world. Basically, just ask them what kind of content they’re interested in, and always reply to their questions.

We’ve recently started sharing our struggles and learnings via IG stories and see a growth in our engagement. We try to stay in as much contact with our followers as possible and strive to create good and engaging content through social media. As a result, we have been steadily growing our follower base organically.

We also run contests on Instagram in collaboration with other brands and send our bars to micro-influencers, which really help to increase awareness of the brand but there is still a lot of room to grow in this area.

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Louisa Mesquita Bakker, on starting Funky Fat Foods ($20,000/month) full story ➜

Build a Referral Program

Word of mouth is one of the best ways to get the word out about your business and acquire new customers. Especially when you are starting out, it’s important to build a solid referral program to encourage existing customers to help you find new ones.

A great way to do that is by offering a reward (ie. credit on your service or cash) to customers that refer you to their friends and family.

A fantastic referral program will help with clout, credibility, and establishing yourself in the space.

Founder Emma Lovel discusses tips for creating a great referral program:

We have had a lot of success with our Referral Program. Word of mouth is so valuable - happy customers will shout from the rooftops about your product if they love what you’ve done. So why not reward them?

We use a program called Referral Candy where our existing customers get cold hard cash paid directly into their Paypal account for every referral purchase they’re responsible for. Their friends get a discount on the product so everyone is a winner.

A word of warning - make sure you have enough margin in your product to allow for this. The discount, the cash and then the percentage to the referral program can add up to a big cost of sale!

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Emma Lovell, on starting Fly Babee ($26,000/month) full story ➜

Diversify Your Product Line

Adding new products to your business is a great way to expand into new markets and grow your business.

It's important to note that adding new products and diversifying may not be in the cards for you right this moment, and that's okay. You can always consider it down the road.

Here are some reasons you may want to considering adding/diversifying your product

  • Meeting the needs of your customers
  • Establish yourself as a top provider in your industry and stay ahead of the game with competition
  • Resistance to downturns/trends fading
  • Create new revenue streams

Preparing To Scale Up

Example from Hipcooks Cooking Classes

With 7 profitable owner-operated locations and 15 years in the business, I’m (finally) ready to scale up!

What we're looking to do:

  • Open a Hipcooks in every big city in the US (and even internationally)
  • Streamline and get ready to franchise
  • Finish our second and third cookbook
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Monika Reti, on starting Hipcooks ($100,000/month) full story ➜

Resources

We put together the best resources on the internet to help you start your subscription box business.

Tools

Books

Web Resources

Videos

Case Studies

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