Subscription box businesses represent one of the strongest segments in the e-commerce industry—and we want to support you in creating your own. By creating functional, attractive, on-brand packaging, you’re going to build customer loyalty and inspire those “unboxing” posts that spread the word on social media. That’s what this two-part series is about: absolutely nailing your subscription box packaging, from design to deployment.
If you’re at the stage where you’re just curious about starting an e-commerce business like this, it’s easy to find reasons for taking the plunge. We shared these stats in Part One, but here they are again:
Despite the impact of the COVID-19 pandemic on the global economy, the growth of the worldwide e-commerce industry continues to be robust. In fact, a growth rate of 8.95% is expected between 2024 and 2028. And within this market, the subscription box business is expected to perform phenomenally well, with a growth rate of 18% for the 2022-2027 period.
According to a survey by Clutch, 54% of online shoppers say they subscribe to a subscription box service; it satisfies their desire for novelty and convenience.
If you’re able to engage a customer’s natural desire for novelty and convenience, you have a good chance of launching an e-commerce business with real momentum: a subscription box business. So, let’s explore how to do that, step by step.
In Part One, we discussed the critical decisions you need to make as you create your box. Those were:
- Choose your box style
- Choose your box material
- Choose your packaging design
- Choose your printing method
- Choose your packaging supplier
As a bonus, to learn a little more about creating branded packaging experiences, read this.
In this post, we’ll cover what happens after you create your box and begin growing your business.
#6: Choose a shipping carrier
Choosing the right carrier will make all the difference in the world when it comes to generating a good bottom line. Here are a few things to consider as you negotiate with potential carriers:
Where are your boxes going?
Obviously, the further the distance, the higher the cost.
What do your boxes weigh?
Once again, the heavier the box, the higher the cost. Note that carriers estimate weight and also factor in “dimensional weight”, i.e., estimated weight plus the physical dimensions of the box.
How large are your boxes?
Smaller is better for saving money—but note that your package still needs to be large enough to protect its contents. It’s a fine balance! Also, customized packaging materials are an extra up-front cost that may save you in the long run, because they’ll allow you to ship the right sized boxes safely.
How quickly do your boxes need to arrive?
Remember that, as an e-commerce business, you’re competing with Amazon, a company known for its fast fulfillment. Is same day shipping an option?
Do you need shipping insurance?
Depending on how valuable the contents of your box are, you may need to consider insurance.
Should your boxes be trackable?
Again, depending on the value of your box, tracking might be a wise feature to consider.
Will you do fulfillment yourself?
Fulfillment is the process of packing and prepping boxes before they’re shipped. If you do it in-house, it’s a great way to save money—at least in the early stages of your business.
#7: Choose your price
Ultimately, you want to be generating a decent living from your efforts. That’s why price per box should be calculated fairly carefully. Don’t make the mistake of just picking a price point that “seems fair” or is merely similar to the prices of other subscription boxes. Here are some questions and guidelines that might help.
First, answer these questions:
- What’s the cost of the products that will fill your box?
- What’s the price of your box materials per unit?
- What’s the price of your packing materials per unit?
- What’s the cost of shipping per unit?
- What’s the cost of your transaction fees (e.g., Stripe)?
- How many months will the average customer remain a customer?
- What are your fixed monthly costs (e.g., rent for a production space)?
And now, consider this:
- The cost of marketing per customer should be about $15.
- Your profit margin should be at least 30%.
When you answer these questions and consider these marketing and profit guidelines, what price do you arrive at?
#8: Choose how to market your subscription box business
We previously said that 15 marketing dollars per customer is a good rule of thumb for your subscription box business. But how should you spend those marketing dollars? Here are some strategies, many of which are working extremely well for our e-commerce clients.
Social media ads
Social media ads are considered by many to be the cornerstone of subscription box marketing. Here are a few things to consider as you prepare your ads:
Feature Packaging— Since attractive packaging is a big part of encouraging “unboxing” posts, it makes sense to showcase that packaging in your ads. It gives customers a preview of the cool stuff they could be sharing with their followers.
Keyword Research— It’s well worth it to spend time researching the keywords that will optimize your posts for showing up in your target demographic’s feeds.
Social Proof— If your ad can highlight a real customer enjoying or benefiting from your box, it proves that you’re the real deal.
Organic social media sharing
Encouraging family and friends to share about your products can start to drive invaluable awareness and sales.
Identify influencers (anyone with a social media following of 1,000 is a min-influencer) who can proudly share your product on their social media accounts.
Remember, there are so many ways to market your subscription box business—these strategies are just the start!
#9: Choose how to grow your subscription box business
Once your subscription box business has enough subscribers to generate the bottom line you need (yay!), you can start thinking about scaling. How big do you want your business to be? And how can you grow it to that size without making your life too stressful?
How can you use technology to perform simple, repetitive tasks?
To get more profit per customer, encourage subscribers to take their subscription to another level. For example, could you sell them on a more exclusive subscription tier that provides more flexibility?
Once you’ve reached a certain threshold of subscribers, you’ll actually save money by getting another company to do your fulfillment.
Churn is the rate at which you lose subscribers. How can you ensure loyalty in your customers? A few winning ideas include personalizing their box with customized messages or offering free shipping after a certain length of time.
If you’ve decided you want to take the plunge and launch your own subscription box business, we salute you! Our e-commerce clients are thriving, with businesses that align with their values and lifestyles.
If you haven’t read Part One of this series, we encourage you to check it out. And, of course, reach out with any questions you have; we love helping great businesses to succeed.
Links to the Entire Blog Series