<img height="1" width="1" src="https://www.facebook.com/tr?id=896003477148137&amp;ev=PageView &amp;noscript=1">

The Rise of the Subscription Box Economy

March 7, 2017

With the advent of businesses like Dollar Shave Club and Rent The Runway, people are beginning to see the benefit of subscription box services. You typically get newer things cheaper - what's not to like?

It's not just razors or dresses, either. People are becoming more creative by the day. Things you would never have imagined as a subscription service - like coffee mugs, clothes, and even different kinds of bacon - are now becoming commonplace, delivered to your door every month.

If you're reading this, you're probably in one of two situations:

  1. You have an online store and want to create a subscription box out of things that don't make sense as subscriptions (or do they?).
  2. You have something that does make sense as a subscription and want help getting more people to sign up.

Regardless of which of these situations you're in, you've come to the right place. Whether it's weird and interesting or downright commonplace, it will all be discussed in this post. In fact, we'll talk about the pros and cons of subscription box services, how to get more people to say "yes, sign me up!" and some parting ideas for growing your business.

It's a rodeo! Let's dance.

How Subscriptions Came to Be: The Pros and Cons

Subscription-based services are nothing new. They've been around since the first magazines (probably earlier). Subscription boxes are just a new spin on an old model.

One of the first companies to take a stab at this model was BirchBox. Founded by Katia Beauchamp and Hayley Barna in 2010, the BirchBox is one of the most wanted subscription boxes on the internet.

Birchbox Subscription Box Service

But, Birchbox didn't really make everyone rave about subscription boxes... yet.

It wasn't until 2012 when Dollar Shave Club released their viral video (which has gotten nearly 24 million views) that subscription boxes became the talk of the town in the entrepreneurial world. The question is... why?

Sure, the video was hilarious. There was a guy in a bear outfit, a machete, and some perfectly-timed curse words (bleeped out, of course). It provided just enough shock to jolt everyone awake, without much offense. But, it's not the video that has retailers jumping on board - it's the stats.

A company that sells $1 razors was valued at $615 million. Everyone and their grandma was dancing over this one!

via GIPHY

OK, so now you know the history. It all sounds wonderful. But, there is a dark side... let's review the pros and cons of subscription box services.

Pros of Subscription Box Services

  • Hello, recurring revenue! This is what everyone wants. The higher your customer lifetime value, the better.
  • It's an excellent opportunity for branding. You can put your name on the box, the packaging, the freaking tissue wrapping... you name it!
  • Because customers stay with you for months at a time, you build a relationship with them. You can leverage that relationship for better word-of-mouth marketing as well as customer feedback (which is the best thing in the world).
  • Customers LOVE opening boxes. It's like Christmas... every month. Yay!

Challenges of Subscription Box Services

  • All the time and money spent in branded packaging can lower your margins.
  • Customers can be extra wary of "contracts". While you know you can cancel anytime, customers may still see it as a contract.
  • Increasing competition - but, if you follow the words of Napolean Hill (and many other smart people), competition is irrelevant!
  • You need to make sure your boxes are always relevant and interesting. But, that's the same with any business, isn't it?

Now that you understand the benefits and challenges of subscription boxes, let's talk about some weird and wacky things that are actually working. (Feel free to skip this section if you already have a subscription box and want to learn how to get more subscribers.)

Your Product Doesn't "Make Sense" As a Subscription? Read This.

 If you said this to me seven years ago, I may have agreed with you. Who wants sex toys as a subscription service? (Don't answer that...)

Now, however, you really have no excuse. Your ability to create a subscription box service is limited only by your creativity. In fact, check out some of these unique boxes:

I hope these have given you a little inspiration! To get your creative juices flowing, ask yourself:

  • What problem does my product solve? Can it be solved monthly (or weekly)?
  • Can my product do something it wasn't originally intended for? (Did you know coca-cola was originally created as a cure for morphine addiction?)
  • What can I put in a subscription box with my current product(s)?
  • What product(s) can I add to my store that would compliment my brand and work as a subscription box?

Got some good ideas yet? Once you do, check out this handy dandy infographic by Entrepreneur on how to start a subscription box:

how-to-start-a-subscription-box-infographic.jpg

Click to Enlarge

Now then, moving right along...

Sign Me Up, Cowboy! Here's How to Increase Subscribers

Hey, you're here! If you skipped the last section, you missed out on some good stuff. But, at least you're learning. Let's talk growth.

It's the million dollar question: "How do I get more people to hand over their hard-earned cash for my product or service?" Well, here are a few ideas.

Partner with Influencers

I put this tip first for a reason - it works! Influencer marketing content delivers 11X higher ROI than traditional forms of digital marketing. (Source: TapInfluence)

Plus, partnering up with people is way more fun than flyin' solo. You have a chance to develop deeper relationships with movers and shakers in your industry, which can lead to alot more than increased sales! (Speaking gigs? Guest posts? Parties?)

For example, check out this post by Neil Patel featuring Dollar Shave Club:

For more great tips on influencer marketing, check out this guide by Jason Quey on the SumoMe blog.

Make the Unboxing Magical

Remember how I said opening your subscription box every month is like Christmas? Well, the only thing better than opening a Christmas gift, is opening a Christmas gift that looks great.

If you get this right, you're almost guaranteed to have a win. The more unique, memorable, and fun you can make your unboxing, the more success you'll have.

If you do it well, you'll even get customer-created videos of the unboxing! Trunk Club has tons of videos like this one, which has gotten over 150,000 views on it's own:

 
For some tips on how to get packaging right, check out this article by Shopify.

Get Social and Encourage User-Generated Content

Obviously, you know you should be on social media - that topic's been beaten to death. However, there's something deeper than simple social media: User-generated content (UGC).

UGC is content (videos, photos, social media posts, reviews) created by your customers. You want this for a plethora of reasons:

  • UGC brings word-of-mouth referrals and extra traffic.
  • 71% of consumers feel more comfortable buying a product after researching user generated reviews.
  • Sites with featured UGC saw a 20% increase in return visitors and up to a 90% increase on the time spent on the site.
  • It's free content. Free. Content.

Need I go on? Now that you're convinced, here's how to get more UGC:

  • Create a UGC campaign
  • Ask for it - and be specific! More than 50% of consumers want a brand to tell them what type of content to create and share, but only 16% of brands actually do.
  • Reward customers when they post. Sometimes, all that means is acknowledging their photo or video - people love feeling connected with the brands they buy.

I'm telling you, this stuff works. I even tweeted a photo of my new HungryRoot order I got the other day. It was delicious! (By the way, I wouldn't be telling you about them if they hadn't interacted with me on social media. You never know who your customers might be - like a writer for an eCommerce SaaS company!)

Now, I could go on all day about subscription box marketing tips, but that's not what this article is about.

The Rodeo's Over... Some Parting Words

I hope by now you see why subscription box services are becoming so popular. With money to be made and fun to be had, you'd be a fool not to take interest.

If you took nothing else away from this article, take this: Don't be afraid to think outside the box (pun totally intended) to offer new things to your customers. Innovate, get feedback, and do it all over again.

And if you're new to the Subscription Box game and want to get started, check out the best Shopify subscription service app around! (Inserts shameless Bold Apps plug here...)

For those of you who skipped to the end, wondering if the article is worth your time... I emplore you go back and read about some of the ridiculous things people sell as a subscription. It just might give you an idea.

Now it's your turn. What are some awesome subscription boxes you've seen - or would like to see? Let's start a discussion in the comments!

Topics: eCommerce News

Bill Widmer

Written by Bill Widmer

Bill is an eCommerce content marketing and SEO consultant. He's run several stores and worked with many well-known brands including A Better Lemonade Stand, SaleHoo, and Lifehack.

Search the blog!
  • Video Commerce on Shopify
  • Returns & Refunds on Shopify
  • Shopify Subscription Box
Shopify CRO