Do you want to learn how to start a subscription box business?

Today, I am interviewing a subscription box expert, Sarah Williams. Sarah built a seven-figure subscription box business in only three years.

I recently asked Sarah to take part in an interview to answer some of the common questions you may have about how to start a subscription box business.

Are you wondering questions such as:

If so, please continue reading the interview below to see the answers to the questions above as well as answers to other common questions.

Related content:

 

My business started as a side hustle. I was already running a brick-and-mortar retail store when I made the decision to start a subscription box for the customers that came into my store every single month. I really wanted to create something exclusive and more like a VIP experience for them. 

The box was a huge hit and also grew my brick-and-mortar store because hundreds of local subscribers would come in and pick up their boxes.

During the pandemic, I made the decision to close my store because my subscription box business was booming.

Now, five years later, I have thousands of monthly subscribers and have earned over $5 million with my subscription box business alone.

 

A subscription box is a curated experience in a box for a specific niche customer.

It’s packed and delivered to the customer on a regular schedule, and their payment comes out automatically.

A subscription box can be filled with food, clothing or accessories, candles or whatever you want.

It’s delivered once a month, once a quarter, once a week or however you want to set it up.

 

When you run an e-commerce business, your sales fluctuate up and down like a rollercoaster. We call it feast or famine.

A subscription box business is totally different.

You can count on sales coming in every month, making your goal simply to retain your subscribers. You already know how much product inventory you need each month, rather than guessing at it because it’s already sold. You don’t have to feel like you are selling every single day.

I love having a subscription box business because it has stabilized my business. I have a set amount of income I can depend on, and I’m able to make purchasing and staffing decisions without the stress.

Honestly, I don’t think there’s anything about my subscription box business that I don’t like.

 

The industry is growing rapidly, and there’s always room for new people because there are so many potential niches for subscription boxes.

My advice for newbies is to not even try to compete with the big subscription box businesses.

Instead, they should focus on finding a specific area of interest with a cult-like following. If they can find the right niche, their subscription box is going to grow like crazy.

 

I always tell people to start with an idea that you are passionate about. If you have a hobby or a special interest, that’s the industry you should create your box for. Messaging, or understanding how to attract the right person and build your audience, is so important in the subscription box industry.

If you know your niche, you’re going to be able to speak to that so much better than somebody who doesn’t. It’s going to be easy to find your people. I’ve seen this happen often, with everything from planter subscriptions to guinea pig subscriptions to candle subscriptions.

Wherever your expertise lies, that’s the business to start your subscription box in.

 

Your revenue really depends on your profit margin and how many subscribers you have. Here’s a basic way to think about it: 

If you have a $20 profit on your subscription, and you have 50 subscribers, you’re making $1,000 profit every single month. All you have to do is multiply that if you want more profit. 

Some entrepreneurs want a large subscription base of 30,000 subscribers or more. Some want to stay in the hundreds, because it’s more manageable for them to do it on a smaller scale.

As a subscription box owner, you can be profitable, no matter if you have 50 subscribers, 500 subscribers, 5,000 subscribers or 50,000 subscribers.

It’s up to you to determine how much your business makes each month.

 

I started my box as part of an existing business, so I didn’t start with X amount of money. My goal was to stick to a 30% profit margin at the beginning.

A new entrepreneur could start with $1,000, or $100,000. It really just depends on how many subscribers you are starting with and what your goals are. 

You’ll have product, packaging, advertising, payroll, fulfillment and shipping costs. The larger your subscription base, the more boxes you have and the more costs you’ll have, because you have to buy more products. But as you grow, your cost decreases per box. This is because you can buy in bulk with packaging and products. 

My main advice is to keep your box profitable, with a minimum of 30% profit margin when you start. I would also highly encourage you to increase that to 50-60% as you grow. 

 

Deciding what you’re going to put in your subscription box is one of the first things that you have to figure out when you are starting your business. You’ll have to really understand who your ideal customer is.

Ask yourself, “Who is your ideal customer? What things do they want? What are they thinking and feeling?”

Typically, what I see from new subscription box owners is that they put too much in a box. It’s a problem because if there is too much, the customer can’t consume it before the next box comes. So you think you’re providing more value, but you are actually doing the opposite by giving them too much.

Starting out, you should either do one thing of the month, or at most, include three to five items in your box.

 

For me, this was easy. I already had a business and I knew what my average order value was in my retail shop. When people came into my store, they would spend between $40 and $50, on average. I priced my subscription box at $45, right in that average order value range. I also added some upgrade options as well. 

Again, when choosing your price, you have to take into account that you want to have a 30% profit margin.

You’ll also want to be aware of thresholds. For example, I could sell something all day long for $49. But the minute I price it $50 and cross that threshold, there is a new perceived value. 

You also want to be careful that you don’t overprice your box, or you won’t get the subscribers you’d like.

Spend some time thinking about what value you’re creating and price it right for the market and for your customer base.

 

The best place to market your subscription box is via social media ads on Facebook, Instagram, TikTok or any other major platform.

Digital marketing ads are so much better than billboards, newspapers and TV. Not only are they cheaper, but digital marketing is where it’s at.

It has changed over the last several years, and it has become more expensive, but it’s still the best, cheapest and easiest place to find your customer and market your subscription box. 

 

The first thing that you’re going to need to do is to build an audience. That’s the step that everybody loves to skip, because it’s the hardest. But finding your people is important. You can’t just create an amazing box and have nobody to sell it to. It will take some time, but build your audience first.

I tell my students that it will likely take 30 to 90 days to build your audience. 

While you’re building your audience, you’ll need to start working through the logistics of the subscription box. This includes getting your tech stack together. You’ll need to decide how you are going to sell your box and what platform you will sell it on.

You’ll also need to start sourcing products, create your packaging and figure out fulfillment and shipping. 

Now, these are all things that can be worked on while you’re building an audience. But you shouldn’t build those things first and then try to build your audience later because it takes time.

Get started building an audience yesterday, and all the logistical pieces will start to fall into place. 

 

By the end of this workshop, you’ll know exactly who your box is for & what to put in it, you’ll have a plan to curate your first 6 boxes, you’ll be ready to take the next steps to launch your box, and you’ll have curated 6 months’ worth of subscription boxes! 

Do you want to learn how to start a subscription box business?

The post How I’ve Made Over $1,000,000 With A Subscription Box Business appeared first on Making Sense Of Cents.

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