Subscription Box FAQ: Is This Trend Profitable for Your Brand?

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Subscription Box FAQ: Is This Popular Online Trend Profitable for Your Brand?

7 min read
close-up of soap and body wash in box

At Sherpack, we work to provide businesses like yours with the services they need the most: One question that has come up repeatedly in the past several years is offering subscription boxes. These boxes offer an assortment of smaller products to customers, with the ability to easily subscribe for repeated shipments over time…a business model that has become particularly popular in a number of industries over the past decade.

Our fulfillment services can enable a number of subscription box options through advanced picking and packaging: However, growing businesses may still have a number of questions about how subscription boxes work. Let’s take a look at more common questions, and what your company should know before adopting a subscription box strategy!

Why are Subscription Boxes So Popular?

Internet shopping and (typically) free shipping combine to make subscription boxes both viable and fun for a large portion of customers. They are also an excellent entryway to a brand for new customers: People who may have trouble deciding what they want or who want to sample a variety of products rather than just choose one are drawn to subscription boxes, which typically offer an ongoing variety of products at an affordable price compared to buying them all separately.

These factors also make subscription boxes a very popular gift item. Plus, the recurring nature of the subscription gives buyers something to look forward to in the future while handling the payment in the present, a combination that many enjoy.

It’s no surprise that this approach has been particularly effective for millennials, who are highly capable online shoppers that enjoy trying new things but nevertheless have little time or patience to shop for individual smaller items. Boxes sell especially well for those between 25 and 44 years old, particularly in the middle and upper-middle classes. Women tend to keep subscriptions longer than men, but both groups like them, and the average subscription is kept for around 125 days.

Finally, subscription box packaging is popular for a wide variety of people – It’s not limited to a single industry or type of product, so many different businesses can experiment with it.

What Products Make Ideal Subscription Box Options?

That depends almost entirely on the business. Generally, products need to be small enough to fit an assortment into a manageable box (with safe packaging designs), and affordable enough to include a variety in a single shipment. Businesses that generate a variety of ongoing products are especially suitable for subscription boxes, as they will always have enough new products to include in the next subscription.

Take a look at popular subscription boxes and you’ll find brands like Barkbox, Loot Crate, FabFitFun, HelloFresh, and TechStyle Fashion Group. These include everything from clothing and cosmetics to fitness goods, kids’ toys, shaving accessories, and edible treats of all kinds. There are not really any limitations when it comes to the industry or what sort of products people are interested in: What a subscription box needs most is a little creativity!

Are There Different Types of Subscription Boxes?

Technically yes – and you should consider all types of subscription boxes when taking a look at your brand’s products and services. The three common types are:

Curation subscriptions: This is what most people picture when they think about subscription boxes. These boxes are independently curated by the brand itself, which means someone puts together the assortment of products without customer involvement. This allows the customer to be surprised by each new shipment – but it also means that the brand needs to be skilled in choosing the right products depending on the cost of the box.

Access subscriptions: This is a very traditional type of subscription that gives you access to a particular product or service – like a magazine, which offers new content with every issue. This type of subscription doesn’t really fit in a box, but it does have some similarities, especially when content like magazines are shipped with free samples.

Replenishment subscriptions: These are boxes that, instead of being curated, deliver the same products over and over again. This model can be particularly effective for unique brand supplies that run out over time. We see these boxes a lot for things like shaving blades, pet food, and cosmetics. It’s an ideal option for customers who find a particular product they like and want to keep ordering more of it.

Are Subscription Boxes Profitable?

By keeping an eye on profit margins and controlling shipping costs, businesses can see significant profits from a subscription box model. It requires a little more attention to detail than selling single products, but the strategies are otherwise similar. In fact, subscription boxes have two important advantages when it comes to profitability. First, they encourage customers to make recurring purchases, so buyers often spend more than they would on a single purchase, or are more likely to be long-term buyers as a result. Second, a subscription box saves on the packaging that would otherwise be used to manage all those products separately (or at least in smaller bundles than the box allows for).

Note that not all brands use their own products in a subscription box. Some businesses purchase products specifically for subscription boxes and then sell them at a premium (their own products may or may not be included). Others partner with companies and make subscription boxes a joint effort so multiple businesses can contribute and benefit, even if they only sell a few products individually.

How to Find Subscription Box Fulfillment Services

Small-scale subscription boxes can be managed in-house when a brand is first getting started offering boxes: This is helpful for curation, especially when all products are also being made or stored in-house as well. However, as a business continues to grow, using a fulfillment center for inventory and shipping can be a more practical solution to managing subscription boxes. Sherpack offers the detailed packaging, picking, and shipping services that are necessary to quickly create and send out large numbers of boxes under fast deadlines. If you’d like to know more about our services, contact us today and we can arrange a meeting to explain how the process works, and how your business can manage shipping costs to make subscription boxes possible.