How to Start a Subscription Box Business in 10 Steps

 

Subscription boxes have become one of the fastest ways for entrepreneurs to build a loyal customer base without renting a storefront or hiring a sales team. Beauty brands, snack companies, candle shops, and many other niche companies discovered a new revenue source by mailing curated products to subscribers every month.

First-time entrepreneurs balance sourcing, pricing, packaging, and marketing all at once, often before they know for sure if customers even want what they’re selling. It’s not all challenges, however; there’s also opportunity, as there’s plenty of room in the subscription box space for new niches.

Knowing how to start a subscription box business will allow you to take that opportunity and run with it.

Step 1: Choose Your Subscription Box Niche

Successful subscription boxes begin with a specific audience in mind. Choose a niche you understand and narrow it down to a pinpoint. “Coffee lovers” is an overpopulated category; single-origin coffee for people who grind their own beans is a business.

Take some time to research your niche, including market demand and competition. Perusing your brethren’s reviews can often point you toward unmet customer needs: shipping delays, lackluster products, or even boring packaging.

Step 2: Define Your Value Proposition

Customers subscribe to boxes that solve a problem or scratch an itch they can’t easily satisfy on their own. Whether your coffee box saves them hours of research or your kids’ craft kits give busy parents a screen-free activity without Pinterest planning. Get specific about what your box does that a one-time purchase can’t.

Retention is more important than first sales, so bake in bonus items, seasonal themes, and other unexpected treats that reward loyalty over time.

Step 3: Create a Business Plan

Getting caught up in the fun parts is easy, but math deserves a place at the top of your priority list. Calculate your cost per box, including products, packaging, shipping, and payment fees, and set your price with your margin in mind. Don’t undercut yourself; many new subscription businesses price too low out of fear of chasing away customers, then struggle to stay afloat.

Your revenue goals should account for churn. No matter how good your box is, some subscribers will cancel every month. You should also decide early on whether you’ll pack the boxes yourself, hire part-time help, or use a fulfillment center.

Step 4: Source Products and Suppliers

Maybe you’ll curate existing products, or maybe you’ll create your own private-label items. Many successful boxes combine the two. Curated products get you to market faster, while private-label products earn higher margins and create a one-of-a-kind box. 

If you decide to source your products, creating supplier relationships should be a day-zero priority. Order samples before committing to bulk quantities, and ask about minimum order requirements. If you plan to scale at some point, consider wholesale subscription boxes so your supply chain can grow with you.

Step 5: Determine Your Subscription Model

Monthly boxes remain the most common model because they align with how most people budget and with how often products in most categories need replenishment. Quarterly and seasonal boxes work well for higher-priced items, particularly those linked to specific times of the year, such as holiday gift sets.

While you’re learning how to start a monthly subscription box, you’ll need to lock in your shipping cadence, billing cycle, and lead time between signup and initial shipment. Test your timeline with a small batch before you open subscriptions to the public.

Step 6: Build Your Website and Subscription Platform

Your company’s success hinges on how well your website performs its primary function: convincing a visitor to subscribe within 2 minutes. On the eCommerce side, choose a platform that offers a native recurring billing function, which is more reliable than setting up a third-party integration. 

Allow your customers to pause, skip, or cancel their subscription on your website rather than forcing them to call your customer service line; subscribers who feel trapped are more likely to cancel than customers who know they can pause their subscription until it works better for them.

Step 7: Design Your Packaging

Packaging is more important in a subscription business than in almost any other retail model, because it’s the only physical touchpoint most subscribers ever have with your brand. A flat, generic box tells customers you don’t care much about their experience. 

Custom subscription boxes send the opposite message.

Beyond packaging appearance, great subscription box design also accounts for protecting fragile goods, securing your products without wasted space, and providing a memorable, engaging unboxing experience that photographs beautifully for user-generated unboxing content on social media.

At Box Genie, we offer corrugated packaging, including custom mailer boxes and custom shipping boxes. Our fast turnaround and low minimum order requirements (100 box units) are huge benefits to new businesses who don’t yet know how many boxes they’ll ultimately need each month.

Step 8: Develop a Marketing Strategy

Social media makes another appearance here as a boon to subscription box businesses. First, you can use it to build anticipation with your launch campaign. Once you have some subscribers, include a hashtag or QR code, encourage subscribers to share their boxes, and repost the best content to your company’s social accounts. User-generated content (UGC) is one of the least expensive marketing forms, and unboxing content markets itself, especially when thoughtful packaging makes the experience particularly immersive. 

In the same vein, influencer partnerships can extend your reach, especially with smaller creators whose niches dovetail nicely with yours. 

Between shipments, email marketing keeps subscribers engaged and enables you to announce new themes or referral bonuses directly to a built-in audience. 

Step 9: Launch and Fulfill Your First Orders

Before your public launch, run a test batch: pack and ship a handful of boxes to family, friends, or a small email list of trial subscribers. This way, problems with your packing process or your overall workflow will surface while the affected group is still small (and, with any luck, understanding). 

Inventory management becomes more complex when real subscribers come on board. Track stock closely, and reorder before you run low. As for shipping, shop around for prices before marrying yourself to a single provider.

Step 10: Measure, Improve, and Scale

Track your churn rate every month, and pay attention to when subscribers cancel; that timing often reveals what’s driving them away. Ask for direct feedback, as quietly unhappy subscribers rarely leave a public complaint before they cancel. When your retention numbers stabilize, consider expanding your product offerings or adding a second box tier.

Common Mistakes To Avoid

Many people trying to nail down how to start a subscription box business stumble before giving themselves a chance to succeed. These are some of the avoidable reasons:

• Poor product-market fit
• Underestimating shipping costs
• Ignoring packaging and customer experience
• Overcomplicating their launch

Do your research and start small. You can build from there.

Why Successful Subscription Brands Invest in Custom Packaging

Custom subscription box packaging makes what might otherwise feel like a ho-hum product delivery into an experience akin to receiving a gift. Subscribers notice details like professional presentation, branded boxes, perfectly fitted inserts, and handwritten notes. Thoughtful details create unboxing moments that customers want to share, and that UGC is the modern version of grassroots advertising.

Custom packaging also improves retention. Who doesn’t want to feel like they’re receiving a gift every month? Engaged (and delighted) customers are less likely to cancel. 

Turn Your Idea Into a Subscription Box Business

Learning how to start a subscription box company can seem daunting, from choosing the right niche to fine-tuning fulfillment. Still, countless entrepreneurs have built profitable businesses using this ten-step process. 

Ready to create custom subscription boxes for your business? Get started today with Box Genie.