Dynamic Business Logo
Home Button
Bookmark Button

The pros & cons of a subscription box business

We now live in a subscription economy, where offerings are both digital (e.g. Netflix, Spotify) and physical (e.g. Birchbox plus local start-ups Bellabox and Lust Have It) . From the consumer perspective, subscription boxes are a convenient and hassle-free way to receive the products that are meaningful to them. For businesses, it’s a potentially lucrative model  – many are reaping the rewards of a 3000% increase in website visits to subscription box sites over the past three years.

I started my own subscription box business last year. In the beginning, I transformed my living room into a warehouse full of boxes and product. The walls had all been covered with white board material and my fruit bowl was full of coloured white board markers! It’s been seven months now and I haven’t looked back. For those thinking of starting a subscription box business, here are the pros and cons I’ve encountered:

The Pros

Surprise & delight

It’s incredible what impact real-life snail mail can have on customer experience. There’s so much potential to ‘surprise and delight’ customers with hidden gifts, notes and unexpected bonuses. Building a great customer experience around your brand is so important, it’s what spurs word-of-mouth marketing and user generated content on social media, so it’s lucky that we have this built into our business model.

Recurring revenue

In no way is revenue earned from subscription boxes 100% relied upon, however having a recurring, automatic monthly payment system means that we can plan ahead. My tip here is to track your ‘churn rate’ so that you can predict growth trends as much as possible. There are also so many great, affordable tools to support subscription businesses, for example Braintree Gateway (which is owned by PayPal) and Shopify.

The Cons

Loyalty takes time

It takes a longtime to build brand credibility loyalty but one false move can undo all your hard work . Consumers are more savvy and untrusting than ever, so it’s important to put a heavy emphasis on customer support and communications. To establish and maintain trust, you need to educate, relate to and otherwise connect with consumers while offering them proof and maintaining energy.  We absolutely love the value of social media for this, it opens up the channels of communication in a light, engaging way.

Not all costs are obvious

Packaging, postage, products and marketing expenses are to be expected but subscription box businesses should be mindful of less obvious costs including those associated with fielding customer inquiries and software costs involved in billing customers. Overall, however, it is incredible what can be achieved at extremely low cost from your kitchen bench, but aim to play big from the get go.

About the author

Nicole Monteforte is the Founder of NUBODY, a weightloss and wellness subscription box service delivering smoothie boosters, meal & exercise plans each month.

What do you think?

    Be the first to comment

Add a new comment

Nicole Monteforte

Nicole Monteforte

View all posts