Last updated: July 7, 2022 eCommerce
Convenient. Reliable. Recurring. Subscription boxes are a win for both customers and businesses.
And with 15% of Americans having signed up for a subscription box, the market is big, and booming. The subscription ecommerce market is estimated to reach a whopping $473 billion by 2025, a huge leap from the $15 billion market in 2019.
Are you a Shopify seller scratching your head and wondering how you get in on this growing market? Read on and learn about how subscription boxes work, items you’ll need to consider, and some tips and tricks to optimize your Shopify subscription service (psst, keep an eye out for information about Upscribe, an industry leader in subscription ecommerce).
What is a Shopify Subscription Box?
A subscription box is a collection of products that are sent directly to the consumer. The subscription operates on a schedule, and when the time comes, a new box arrives without the customer having to do a thing! Each subscription box has its own schedule, ranging from weekly, to monthly, to quarterly fulfillment schedules.
There are hundreds of different kinds of subscription boxes that cover dozens of different markets, lifestyles, and price ranges. Whether you’re looking for a subscription box for clothing, dog treats, or craft supplies, you’ll be sure to find one. Many boxes focus on beauty and consumables, as customers will need to regularly replenish their items.
Subscriptions can be broken down into three categories: Curation, Replenishment, and Access.
Curation: Tailored products or experiences often based on questionnaires completed by the customer.
- Pro: High-profit potential
- Con: High churn
Example: Wantable takes your style and sizing preferences to create a curated package of 7 items from a variety of clothing brands.
Replenishment: Items that are frequently used up and need to be restocked.
- Pro: High conversion rate of 65% compared to 50% for other categories
- Con: Thin margins
Example: Eco-friendly brand Blueland sends a regular replenishment box of cleaning products for several of their starter kits.
Access: Membership-based subscription that gives access to deals and exclusive items.
- Pro: Bundling opportunity
- Con: Greater time investment
Example: NatureBox is a membership-required subscription box that offers discounted healthy snacks.
Should You Start a Subscription Box?
With subscription ecommerce market growth projected to skyrocket, it’s tempting to jump into the Shopify subscription box game without a second thought. Yes, it is an opportunity to gain recurring customers, but you have to make sure that you have a product that will have customers clambering to return.
Some of the many benefits of operating a Shopify subscription box are:
- Customer Retention: Did you know that attracting a new customer can cost five times more than keeping a current one? Quality products and services make customers want to come back, keeping customer acquisition costs low.
- Predictable Revenue: With orders set to be filled on a regular basis, you aren’t playing the guessing game with how many orders will come in each month. This helps with procurement, sales forecasting, and operational planning.
- Consistent Cash Flow: Most subscription boxes require full payment at the time of order, which means no more chasing down overdue invoices. You’ll be able to gauge what your guaranteed cash flow will be and let you plan accordingly.
Potential challenges of running a Shopify subscription box:
- Product Viability: With a focus on consumables and collectibles, not all products will generate recurring purchases when in a subscription box. Customers will want to keep your product consistently stocked, and not see it as a one-off item.
- Staying Relevant: Products in the box must either be consistently required, otherwise you will be required to provide updated products to keep customers’ interest.
- Competitive Market: Trying to break into an oversaturated market is challenging, and sometimes impossible, particularly when dominated by market leaders.
What Should You Consider When Starting a Shopify Subscription Box?
You’re psyched, you think that a Shopify subscription box might be just what the doctor ordered for your business… but how to start? After all, you don’t know what you don’t know! Thankfully Shopify gives some great tips on how to get started, what to consider as you first start out, and how to reduce the dreaded churn (aka when customers choose to consciously uncouple from your business).
Keep Pricing Conservative
With customers quick to churn, there needs to be a demonstrated pay back prior to the offering of free trials or deep discounts. There are other ways to entice customers without taking a dive on a reduced selling point.
Win Personalization Points
Up to 28% of curation subscribers valued a personalized experience as the primary reason to continue their subscription. They expect a more detailed level of personalization the longer they subscribe and their preferences are known.
Keep Your Marketing Fresh
With each subscription category having different benefits, the marketing associated with each one will vary. Affiliate marketing is effective with curation subscriptions while access subscriptions will have success with influencer marketing. All will benefit from email marketing to generate consistent customer engagement.
Keep Your Eye on Churn
As annoying, painful and frustrating as churn is, it will help you identify opportunity gaps in your service, and how to improve it. Involuntary churn can make up to 20-40% of total churn, so an understanding of its cause will give you a better understanding of your customer retention practices. Curious about the best way to stay on top of churn? Upscribe’s easy-to-read dashboard updates Subscriber Churn on the front page and goes into more depth in Analytics.
How to Take Your First Steps Towards Launching a Shopify Subscription Box
You’ve thought about it. You’ve assessed your products. You’re going for it. Shopify subscription box, here you come. Let’s save you some Googling, know now that there will be logistical and technical items to consider.
How exactly are you going to get items to sell to your customers? Vendors come in a variety of sizes and styles. Wholesale suppliers, Amazon, crowdfunding sites and trade shows are all popular venues to find products that will meet your procurement needs.
Ah, the almighty pricing component. Replenishment and access subscriptions offer discounts on the total retail price of the box’s contents. Replenishment box customers typically enjoy a 5-15% discount that is sufficient to keep them as subscribers. Curated boxes differ, primarily due to varying costs of goods sold, operating expenses, and fulfillment costs. Roy Morejon, President and Co-Founder of Enventys Partners, explains that you should aim to have a 30% profit margin on your box.
The people are buying, win! Now it’s time to get those boxes to their front door. It’s time to choose either a DIY approach, or sourcing a third-party fulfillment partner. Taking care of packaging and shipping yourself can cut down on costs, but it does bring up other challenges like warehouse management, the frequency of shipments, and packaging supplies. A third-party option can take care of everything, from kitting to shipping, but will cut into your bottom line. Regardless of how your products get out the door, make sure to have a quality inventory management program to keep track of all of your items.
Set Up a Subscription Box App
Designed to support the unique intricacies of a subscription box, your app will help you scale as your subscription business grows. Upscribe’s offerings include seamless onboarding, leveraging the Shopify checkout process and powerful customer and merchant portals.
Add Your Products, Set Up the Subscription Box, and Create Rulesets
You managed to procure your items, now make sure they can get to your customers! Once the products are uploaded, finalize the settings of your subscription box. Rulesets will break down the functionality of your subscription like cut-off windows, how often the product will be shipped, and how often a customer is charged.
Onboarding processes can be sluggish and complicated. Get your subscription box ready to launch with Upscribe’s Seamless Onboarding without having to create products and plans from scratch.
Maximize Your Subscription Page
Make your subscription page as alluring and enticing as possible. After all, subscription boxes are often luxuries; customers need to know what they’re getting, and why they should get it from you. Quality images, engaging CTAs and strategic upsell items are all must-haves on a subscription page. Upscribe lets you easily customize your customer portal branding and style to emulate your company’s brand.
Are Shopify subscription boxes a great way to consistently grow your revenue? Yes. Are they for every type of product? No. Will Upscribe help you scale your ecommerce subscription offering? Again, yes.
With the projected explosive growth of the ecommerce subscription market, businesses of all kinds need to evaluate if a subscription box is a viable option for their growth strategy. With easy integration of Upscribe and Shopify, businesses can be confident that their LTV will increase, while reducing churn.
Take your business to the next level with a Shopify subscription box service, and let Upscribe help you scale as you shift into a fast-growing ecommerce brand. Schedule a demo today and see how we can help your subscription revenue grow!
Interested in more posts like this one?
Sign up to get our latest articles sent directly to your inbox.
What you should do now
- Schedule a Demo and see how Upscribe can provide a superior subscription experience for your customers.
- Read more free material about subscription ecommerce topics in our blog.
- If you know someone who’d enjoy this page, share it with them via email, Linkedin, Twitter, or Facebook.