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Unboxing the retail subscription box phenomenon

Laura Gayle, Business Woman Guide, offers retailers insight on how to get a subscription box service up and running and avoid potential pitfalls.

Photo by iStock.com

November 16, 2018

By Laura Gayle, Business Woman Guide

Every month can feel like a birthday when a customer is signed up for a subscription box. Even though the consumers are their own gift givers there is still that child-like thrill when they rip open a personalized package.

It's sentiments like that that have made subscription boxes a booming business trend. According to Forbes, this business model is now a 2.9 billion dollar industry and quickly growing. So retailers, looking to expand revenue channels and grow consumer base may just want to investigate providing such a consumer channel.

Why shoppers love subscription boxes

All across the country, people are marking the date (or several dates) on their calendar for Unboxing Day. Curated subscription boxes can bear a spectrum of items. Depending on the company or customized package, they receive anything from makeup and beauty products to coffee and workout gear. There are even subscription boxes exclusively for children, cats, and even Harry Potter fans. These packages are arriving on more doorsteps every day as consumers flock to companies selling these products. As the e-commerce subscription box market grows, it may be time for more retailers to get in on the phenomenon.

Retailers can use subscription boxes, and similar membership clubs, as a great way to increase revenue and build customer loyalty. According to research by the Shorr group, there are over 2,000 subscription box options, with makeup and beauty boxes making up the lion's share. Consider this: 15 percent of online shoppers are signed up for one or more subscription boxes.

Here are some tips for retailers to jump on this consumer trend:

Position wisely

The best way to design asubscription box service is to open a lot of other businesses boxes. Especially if they are a competitor or sell products in a similar. This way you'll be able to get ideas, see what's working, and figure out ways to do it better. This sort of product research will enable you to differentiate your products from the rest of the market. My Subscription Addiction is a great place to start since the site lists boxes available in every industry, from plus size clothes to art supplies. For example, a quick look shows that Ipsy and Birchbox have pretty much cornered the market on $10 beauty boxes.

Packaging is everything

The unboxing experience is a huge part of why most subscribers continue to be loyal customers. When the box arrives, it's like receiving a gift, so the appearance of the box and packaging is paramount. Also keep in mind that subscription boxes are often given as a gift, making the presentation that much more important. A quick google search for "unboxing" will reveal dozens of YouTube channels, review sites, and social media pages that are dedicated to opening packages. They almost always begin with evaluating the product packaging long before they even get to critiquing the contents inside.

This is one of the most important steps in your customer's journey with your brand. Put yourself in your customer's shoes. What's the reaction you want them to have when they see the mail carrier dropping off the package? Remember to make sure your branding is clear on the box itself. This adds to the customer journey. When people post pictures, you want the brand logo to be unique and obvious. conscious of your branding.

Utilize local resources
Shipping boxes to customers quickly and over long distances will cut into your revenue. To offset these costs, try to source as many products as possible from local artists and manufacturers. Depending on your sales volume you might be able to strike exclusive deals with local businesses that want in the action. Smaller businesses might be interested too, especially the ones that can't accommodate the demands of a stocking their products in a big box store.

When you begin making these deals and reaching out to businesses don't forget to inquire about their dead stock. Some companies have high inventory levels and they might just give you and your customers a really great deal on items that they can't get rid of fast enough.

Capitalize on exclusivity

If you want to go big, think small in terms of locking in appealing new products before they hit the market. This can position you as an independent retailer with a wide inventory of products that shoppers can't find elsewhere online. Price point and the value proposition are still a huge factor in launching new subscription services, but exclusivity puts you in an appealing position. Try sourcing free samples from indie retailers who need exposure.

Beat Them to the punch

On rare occasions, entrepreneurs will hit upon a great idea in an untapped market. This is golden, and you should ramp up quickly to get your brand going viral before copycats enter the game. Whatever your brilliant idea is, whether it's a gardening, comic book, or niche hobby theme, if you get hold of a solid customer base you'll make it much harder for competitors to catch up. However, don't get complacent. Remember to keep updating your boxes with new and exciting items.

Offer additional perks

Sometimes the best part about Christmas or a birthday is the anticipation beforehand. How can you get your customers feeling that same sensation for your products? Try offering In-store events, discounts, and coupons that will create buzz and drive more people to try your service. Consider sending customers a surprise birthday box in addition to their usual subscription. Offer them early access to new deals and boxes that you are testing out. Keeping your customers in the loop and making them feel exclusive will boost loyalty and keep them coming back.

If you've been thinking about starting a retail subscription box service, the tips above should help you get started and stay ahead of the competition.