The subscription box business has grown substantially over the past decade into a $10 billion industry. It's certainly an intriguing business model. As a fun and often inexpensive way to find new products and brands that fall within your area of interest, these boxes are in high demand. And these monthly subscriptions cover a variety of ground, from beauty and grooming, like Birchbox and Dollar Shave Club, to weekly meals, like Blue Apron.
But what makes a successful subscription box? And how do you get it off the ground? There's a lot of work that goes into starting a subscription box business, from the legal formation and registration of your company to marketing and promoting your boxes to handling those daily administrative tasks.
Even if you have no formal training and you're not sure how to start this e-commerce business, you can still guide a startup to success. We'll walk you through everything you need to know to launch your own subscription box company.
No Special Training Needed
There's no required education or training to launch a subscription box business. Really, all you need is a passion for your idea and an understanding of how such boxes operate. Many of the skills involved are self-taught, although studying business or taking workshops specifically geared toward launching this type of business could help you get off the ground.
Designing Your Subscription Box Business
Every new business owner has to make important decisions while planning their startup. Before you start your subscription box company, here are a few important areas to consider:
- Product line: This is one of the most important decisions you'll make. Every successful subscription box focuses on a niche market and offers different items related to it. Are you interested in books? Vegan meal plans? Cats? As you come up with subscription box ideas, make sure you research them well to understand their viability.
- Target market: You need to understand who the customers buying your box are. Your target audience will depend on the area of focus for your box. In turn, this directly affects your marketing plan and how you promote your business. Make sure you do your market research.
- Average range of prices: Pricing is another area that should be heavily researched. How much will your subscription box cost? The fee you charge needs to remain the same each month, which means the items you include need to cost roughly the same amount for you wholesale. Don't forget to factor in shipping costs and to take a look at what other companies are selling their subscriptions for.
- Hours: Be realistic about how much time you have to dedicate to your business. The odds are you're still working your 9-to-5 and are launching this subscription box as a side gig with hopes that it will grow. This means you'll be putting in a lot of evenings and weekends to build your brand.
- Business costs: It takes money to launch any business and a subscription box is no different. Once you determine what type of items or theme your box will have monthly, you need to find the items you plan to sell. You'll likely work with multiple third-party vendors to purchase these items. Price potential items from multiple companies - as many as you can find - to find high-quality products for the best price. Another major cost of a subscription box business is shipping. Don't forget these other upfront costs when calculating your profit margin: building a website and e-commerce platform, marketing and promotions, and business registration and insurance.
- Business plan: Everything you've considered above will be useful when writing your business plan, the most important document for your subscription box company. Though it varies by industry a bit, business plans typically include an executive summary about your startup (as well as a more in-depth description of who you are as a business), a complete list of your products and services (including items you have shipped, those you plan to ship, and vendors you have contracts with), your business location and where you operate from, a market analysis of the subscription box industry (especially pertaining to your niche area), your business structure and any employees you might have, a marketing and sales plan, and a financial outlook.
Creating Your Subscription Box Business
With your business plan written, you're ready to take the next steps in forming your subscription box company. Here's an outline of what needs to be done as you get started.
The Legal Side of Starting Your Company
The first thing you should do is select the legal business entity for your new subscription box company. There are four main types of businesses you're likely to choose from: sole proprietorships, partnerships, limited liability companies (LLCs), and corporations.
You'll find that each business structure has its own benefits depending on the field you're in. Your business type has an impact on everything you do as a company: how you're taxed, how you find funding, and how liable you are personally for what your business does.
A small subscription box company makes the most sense as an LLC, as it offers you less personal liability and will be useful because of how you're taxed. However, a corporation might be the best choice for a larger subscription box company, like Blue Apron. Ultimately, think about what works best for you and your new business and connect with a business consultant if you're not sure how to proceed.
You'll also need to determine the name of your subscription box. Think of something fun and catchy - a name that grabs the attention of customers - but one that also meets your state's legal naming conventions. Most states require that your name be unique compared to other businesses already registered in the state. Some also prohibit specific words and phrases so check your local business laws regarding potential names.
Now that you have your business structure and name figured out, you're ready to get your business registered. Check your state, county, and city laws to figure out which paperwork you need to submit - and how to submit it - as well as any licenses or permits you might need.
It's also never too soon to start thinking about taxes. It's important to understand your local tax laws. Many states, cities, and counties will require that you file an annual business tax, often a set amount.
How you'll file your taxes each year depends largely on the way your business is structured and which legal entity you selected. Most businesses, including LLCs, use an employer identification number (EIN), which you should apply for as soon as your business is registered. If you have any questions about taxes, consult a local tax expert. Banks may also request this number when you set up a business bank account.
Reaching the Right Audience
You've figured out all the legal stuff that goes into launching a business and filled out all the paperwork, but your work is far from over. Now, you need to create a marketing plan that reaches the target audience for your niche subscription so that you can build your customer base.
As you establish a marketing strategy, digital outreach will be a big part of it. Still, don't be afraid to lean on traditional promotional methods when it makes sense. Here are a few easy ways to promote your company:
- Create a website. It goes without saying but your website will be your biggest marketing tool, especially since it will also serve as an e-commerce platform for your subscription box. You'll need a professional-looking site, so it's important to hire a professional to achieve a design that will catapult your business to success. Check out sites like Upwork for connecting with and hiring talented freelancers.
- Build your social media presence. Social media platforms like Facebook, Twitter, and Instagram are inexpensive tools for building your audience. They're easy ways to engage with potential customers and share what your brand is all about. Use these sites to drive followers to your website and, hopefully, to a new subscription. Also, as you engage with new customers, ask them to submit user-generated content related to your boxes.
- Use branded media. No matter what industry you're in, having a uniform brand is important. You can achieve this by using branded media: logos, social media banners and ads, flyers, color schemes, and other content. This is another area where if you don't have the skills to create this content yourself, you can hire a skilled professional through sites like Upwork.
- Start a blog. Since your subscription box is in a niche area, start a blog that focuses on your subscription business idea. Starting a meal service subscription? Create a blog publishing your favorite recipes. Starting a book club? Write weekly book reviews. It's a fun way to engage an audience without the hard sell.
- Join online spaces dedicated to subscription boxes. There are sites out there, such as Cratejoy Marketplace, that showcase thousands of subscription boxes and help connect customers with subscriptions tailored to their interests. Even Amazon has space for subscription boxes, so look into being listed there, as well.
- Hire an influencer. Finding the right social media influencer to promote your subscription box can do wonders for your business. Hire an influencer in your niche to share a video documenting the unboxing experience, showing how fun it is and the quality of the unique products they received.
- Design a prototype box. Your prototype box is a way to show potential partners, customers, vendors, media outlets, and bloggers what your box design looks like and the types of products you'll be including.
Operating Your Subscription Box Business
There's a lot of work that goes into launching a subscription box and it's easy to be overwhelmed by the behind-the-scenes work and administrative tasks that need to get done. Skynova's small business platform makes it easy to handle all of your bookkeeping using one central hub - lightening your load so that you can spend more time on your business.
If you're looking for a little office assistance, Skynova's products can help in these areas:
- Billing: Produce customizable invoices for each customer using our free invoice template. Our software can also help you with monthly invoicing for regular subscribers.
- Track payments and costs: Skynova's accounting software module helps any business accurately track its finances. Create and organize documentation needed to track your startup's finances.
- Purchase orders: Our free purchase order template makes it easy to track all sales orders.
- Receipts: Easily generate receipts for your subscribers using our free receipt template.
- Packing slip: Shipping is integral to your business, and our free packing slip template will help you get your orders organized.
Don't Get Boxed In
It isn't easy starting any business, but subscription boxes are a unique market that takes a significant amount of research, industry knowledge, and vendor relationships to make them work.
By using Skynova's accounting platform, we'll lighten your load a bit so that you can focus on building your brand. We're here for you every step of the way - from initial orders to billing to shipping.
Whatever your business accounting needs happen to be, you can rely on our software to help you get the job done.