Subscription Box eCommerce: Why and How

What is the subscription box eCommerce?

Subscription boxes are regularly sent custom-made boxes, they can contain anything including make-up, clothes, snacks, coffee & tea, fitness supplies, pet supplies, etc. Both the business owners and consumers benefit from this model, online sellers get profits by providing great products and services, buyers can try out all kinds of products without doing researches and constant shopping.

Usually, subscription box businesses have the following features:

  • With well-designed custom packaging
  • Beautifully organized products in the boxes
  • Are sent weekly, monthly, quarterly, etc.
  • Subscribers don’t know what products they will receive next time
  • The subscription price is lower than the total cost of the products in the box

Subscription business takes its rise from newspapers and magazines, in the era without smartphones and mobile Internet, it meets people’s demand for daily information acquisition. Nowadays, people subscribe to anything, making subscription box eCommerce a proven profitable business model.

Subscription Box

Why subscription eCommerce businesses are profitable?

Subscription eCommerce businesses are booming.

Subscription eCommerce is a new popular business pattern in the last decade. In the year 2010, Birchbox starts the trend of subscription boxes by sending quality personal care sample boxes. Soon, it got 800,000 subscribers, showing excellent market potential. As a result, some brands used to focusing on the traditional sales model also entered the market soon, such as Walmart, Adidas, Macy’s, Starbucks, etc. By the year 2016, subscription box website visits have grown into 21.4 million.

Cosmetics Subscription Box eCommerce
Image from Birchbox

Subscription boxes are addicted.

According to statistics of My Subscription Addiction, there are more than 2,000 subscription box companies. How did they become so popular? There is psychology behind subscription eCommerce. Just like gambling, subscription boxes are addicted.

Behavioral consistency: most subscription boxes are sent monthly, it’s the right cycle for people to form habits. When consumers are used to enjoying receiving new products every once in a while, they will feel lost when the subscription stops, and then continue to subscribe without hesitation.

Reward uncertainty: people like surprises, like a continuous flow of surprises better. Consumers will keep their interests as long as they receive different things from the subscription boxes every time.

Scarcity principle: people are afraid of missing out, so they prefer to buy scarce or limited products. Some consumers are willing to subscribe to a whole year of boxes, to collect the products that are not available elsewhere.

Using these psychological principles, you can suck in more subscribers. Unlike gambling and other addicted things, subscription boxes can actually save money and provide a better life.

Subscription Box eCommerce: Why and How

How to start a subscription box business.

The first thing is to find the right niche. These types of products have natural advantages as subscription boxes.

Products need to be tried on: some products have to be tried on before consumers know which one is best for them, that’s why make-ups and skincare products are the most commonly subscribed products. Other products like perfume samples, pet supplies, jewelry, sunglasses, etc., also have great potential because people always want to try something new.

Products requiring regular replacement: toothbrush, razor, underwear, sock, etc.

The specific combination of products: ready to cook meal-kit, DIY kit, etc.

Design a special box and get a prototype

Once you’ve decided what to sell, the next step is to know how to pack them. The packaging you use represents your brand and ensures the safety of products inside during long-distance transport. By providing subscription boxes, you have promised your customers that they will be surprised every month, so it’s better to make the box like a gift, or the subscribers will lose interest and won’t order the next month.

If the product sizes are very different, to reduce the box volume and provide enough protection, it’s better to design boxes in different sizes and specify the size of the packing box for this shipment to the fulfillment service provider before each shipment.

Make a fulfillment plan as well as the marketing plan

Although outsourcing the fulfillment part to a 3PL company is a good way to reduce fulfillment costs and save energy, it’s still essential to make fulfillment plans, so that you can take full control of the process and choose the right fulfillment option. For example: What is your shipping budget? What is the ideal shipping time? Do you need pre-kitting or kitting after the fulfillment center getting the orders? List as many questions as possible, you will know your needs better after answering them one by one.

Subscription Box eCommerce
Avenue A by Adidas

Difficulties of fulfilling subscription boxes

Subscription box fulfillment is a little different from normal eCommerce order fulfillment because of the following reasons:

More complicated SKU: item A=SKU A, item B=SKU B, item A+item B= SKU C

Have to ship out all the boxes in a short time

New product placement is needed each time to adapt to changing products

Hard to control shipping cost: each subscription box has a different weight

In this case, there are some challenges for fulfillment companies to send boxes to global subscribers in a cost-effective way. Some adjustments are needed in the fulfillment processes.

Kitting for fulfilling subscription boxes

Custom packing

Packing multiple items in one box is tricky: poster full of creases, crumpled T-shirts, broken eye shadow or flattened outer packing box cause bad customer experiences, the packing staff have to ensure everything fits in the box without too many folding. It’s essential to make plans early and prepare multiple sizes of boxes if possible.

SKU management

Flexible SKU management is important for subscription box businesses, if the kit has an SKU and each of the items in it has an SKU, you can easily sell them separately once the subscription boxes don’t get enough orders, get extra profits instead of letting the inventory dust on shelves.

Order management

It’s better to set a fixed time for box subscription, fulfillment handling, and shipping. So the customers can expect their boxes at a specific time of each sending cycle. For example, you sell monthly subscription boxes, open the subscription entry from Oct.1 to Oct.31, so on Nov. 1, you can sync all the orders to your fulfillment center, they can start to pick and pack, then ship the boxes to customers. If the estimated shipping time is 3-7 days, consumers around the world will happily get their November boxes before November 10.

Inventory management

Proper inventory management not only prevents out-of-stock and oversell but also ensures subscribers can receive the freshest products on a timely basis.

After knowing all the facts and tips about subscription box eCommerce, do you think it’s the way to boost your sales? If you already got a subscription eCommerce business and need to cooperate with a fulfillment center to make the magic happen, welcome to contact us.

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