Big Things Do Come in Small Packages

By March 25, 2015 October 10th, 2019 Articles of Interest

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Subscription Boxes Continue to Grow in Popularity

Everyone loves presents and just about everyone loves surprises; so what could be better than presents and surprises?  How about something that achieves both?  The subscription box industry is booming and the opportunities are endless.  A subscription box is a monthly (or seasonal) box that a person can subscribe to based on their likes and preferences.  Most providers request a new client profile to be completed to determine personal styles and tastes.  Once your profile is complete, you receive a box full of goodies around the same time each month.  Consumers currently have the option of subscribing to any type of box from food and beauty, to pet items, travel, fitness and even toilet paper.  There is a subscription box for just about everything.

History

The idea of a gift box delivered to customers on a regular basis first started in the food industry.  Chocolate, fruit baskets and cheese-of-the-month clubs were the early adopters of the subscription box concept.  However, these pioneers lacked the technology, fulfillment and delivery methods of today’s providers.  The modern day subscription box concept was first used by Birchbox in 2010, and explosive growth of the subscription box industry quickly followed.  By 2012, subscription boxes had evolved from a handful of food-related items to products for nearly every market demographic, from vegetarians, moms, athletes, babies, smokers, drinkers, fisherman to dog, cat and even bird owners!

Beauty Boxes

Beauty subscription boxes are a great way to try out new or trending brands without committing to a full-size product for the full price. The amount of subscription boxes in this category is increasing at an aggressive rate, and there are many varieties that can be assembled at affordable prices. Some focus on one particular area, such as The Lipstick Crate, which sends you 4-6 full-size lip products monthly. Others have taken the route of combining an array of items for a complete beauty package. The first subscription box that became a major success, opening the door for hundreds of entrepreneurs, was Birchbox.  The founders, who met while attending Harvard Business School, both had a love for the Internet and saw a need for women to shop and test beauty products on-line.  For $10 a month for women ($20 for men), Birchbox sends you sample-sized skincare, makeup and non-beauty extras allowing you to sample well-known products that you may not be willing to spend on the full-size without testing the product first. Each box is delivered in a simple but chic box, with different colors and patterns and external branding.  On the inside, you will find neatly-folded tissue paper and a card that details each item included with tips on how to use them.

Ipsy is a newer subscription-based “glam bag” entering its third year of business.  At a price point similar to Birchbox, Ipsy creates a bag customized to your individal preferences that include 4-5 products each month to help you create a complete beauty look.  One way Ipsy distinguishes themselves from other beauty subscriptions is that their monthly goods are sent in a different makeup bag each month.  Some brands are more well-known than others, but the combination of sample and full-sized products all inside a stylish makeup bag make Ipsy a very successful provider. Both Birchbox and Ipsy offer a loyalty program to their members as an additional incentive.  As a member, you earn rewards when you shop, refer friends or give feedback on your samples.  Then once you acquire a certain amount of reward points, you can cash those in for full-sized products.  This is an excellent strategy in retaining members by rewarding them with simple opportunities to acquire more products from the site.

Pet Boxes

Whether you have a dog, cat, bird or horse there is a subscription box for you – and your pet.  Many of these tend to be more expensive than the beauty boxes described above, but that has not stopped them from growing in popularity.  Meowbox is a monthly cat subscription filled with toys, healthy treats and grooming products for your feline friend that costs $32.95 per month. For the equestrian-minded consumers, there is a box called Whinnying Horse that sends you supplies for horses and riders from grooming and care to treats and tack for $35 per month. Although there are many successful, pet-savvy subscription boxes available, none have come close to competing with the “big dog,” Barkbox.

Barkbox, also known as the Birchbox for dog lovers, sends dog owners a box of products, including all-natural treats and high-quality toys on a monthly basis at a variety of prices and styles. They allow you to purchase just 1 box for $35, $24 a month for 3 months, $21 a month for 6 months or $18 a month for a 1-year subscription.  Many boxes contain 6 items, and you are also allowed to add an additional toy for that extra playful pup of yours for $9 extra.  These are all items that you cannot find at a typical pet store, and they have implemented an innovative reorder process where all you do is text the product codes of the favored items to a company number and they bill the credit card on file. Barkbox also has a referral program for existing members who earn 1 free box for every new subscriber.  Further, Barkbox, like many other subscription box providers, works with related charities to create a sense of community amongst subscribers.  10% of all proceeds benefit various animal shelters, and subscribers are also allowed to give suggestions for new charity causes to be taken up by the Barkbox community.

Fitness Boxes

In addition to bright red lipstick or the dog’s new chew toy, there is an emerging category of subscription boxes that deliver wellness straight to your door.  Often these are designed for a specific fitness category.  For example, RunnerBox has everything from gels and chews to protein shakes and running accessories for $19.95 per month. Other fitness boxes send monthly supplements to your door, enhancing muscle growth and fat burning, while others send you fresh ingredients to blend your own green juices.

FabFitFun is a category leader and curated by TV personality Giuliana Rancic.  This box contains full-size products with a mix of beauty and fashion, and mainly focuses on fitness tools, such as fitness class passes, healthy snacks or workout videos.  The idea is to help women feel better about themselves and teaching them new ways to achieve this, whether that be a new skin care cream or a pass to a yoga studio.  This box differs from your standard beauty box in that it is delivered seasonally.  One of the more expensive boxes at $49.99, the value is advertised to be one of the best in the market.  For example, the 2014 Winter Box contained approximately $270 worth of items, including $40 headphones, $45 eye cream and a necklace worth $55.  FabFitFun also has a referral program in which members receive $10 in credit toward the next season’s box and one free box for referring 3 friends.  FabFitFun has combined every woman’s daily needs into one ‘fabulous’ fit box.

Success Drivers

The best subscription boxes are ones that offer well-curated, high quality products that provide consumers with fresh ideas on upcoming trends and/or offer products that consumers may not be able to find at their local store.  Some of the significant success drivers are as follows:

  • Value:  This is by far the leading factor in a subscription box’s success rate. The subscription price must be less than or equal to the value of the products.  Most boxes provide you with double or triple the value of items than what your monthly price is.  The importance here is that even if you do not use every item in the box, the value makes up for the risk.
  • Surprise Factor:  A subscription box is the only way to buy yourself a gift and be surprised when you open it.  The anticipation of the box and the surprise and satisfaction of what is in the box is a major success driver.
  • Curation/Customization:  The best boxes come with a card detailing each item in the box, why it was selected and how to use it (if necessary).  This is particularly helpful for the ones that are customized according to a consumer’s profile.
  • Loyalty Programs:  The subscription boxes which continue to grow and retain consumers offer member loyalty or referral programs.  Members acquire points by having new members sign up, reviewing the items from their monthly box, and becoming involved with the company on social media.  These points can be exchanged for full-size items on the website.
  • Convenience and Customer Service:  Subscriptions that can be signed up and cancelled online, the ability to order items conveniently online and simply get a hold of customer service easily will continue to grow.
  • Community:  Buying a subscription box is like joining a club.  Building a sense of community amongst subscribers is a key success driver.  Charity causes, educational material and social media are all used to achieve loyalty and interest.

Fulfillment Considerations

Behind the arrival of every subscription box is a well-orchestrated chain of events that delivers the customer experience while managing costs.  The fulfillment process starts with receiving components, sourcing packaging and assembling everything together in a box that represents the brand appropriately, with final consideration given to the shipping method used to deliver the box to a customer’s doorstep.   There are several key drivers in the back-end fulfillment of subscription boxes that are all interrelated and affect the fulfillment process.

  • Brand Your Package:  You have heard the saying ‘Deliver your brand.’  This is especially true when considering how to package a subscription box.  The box itself often is printed with messaging and artwork consistent with the brand.  Companies will invest in a box to distinguish the delivery from a typical brown shipping box, approaching the subscription box as a delivery of a ‘gift-wrapped’ present – after all, ‘box’ is in the name!  Further, many subscription boxes use creative inner packaging and void fill to heighten the presentation.  There are a variety of effective and in-expensive packaging materials available, including branded tape, custom color/printed tissue-paper and custom color crinkle paper.
  • Consider the Kitting and Assembly Process:  Besides branding, one of the largest influences on packaging is the various components of the subscription box and how they will be kitted.  The number of different products (or stock keeping units ‘SKUs’), product size and fragility all contribute to packaging considerations and also affect the kitting and assembly process.  A typical subscription box will contain 4 – 6 SKUs.  To control cost and speed time-to-market, box variation is kept to a minimum, with the most simplistic approach being every subscriber receives the same box every month.  This provides the lowest assembly cost and quickest turn-around.  However, as the market becomes more sophisticated and competitive, providers are adding variation.   The fulfillment process must adapt with a flexible assembly process and IT systems in place to process, sort and ship growing monthly variety.
  • Which Shipping Method to Choose:  When considering the contents and fulfillment of a subscription box, never lose track of shipping!  One of the largest mistakes that subscription box providers make is to plan contents and packaging and after getting it all assembled and ready to go, think about shipping.  In fact, shipping is the single largest driver of fulfillment costs and needs to be thought of at the beginning of the process, end of the process and every step in between.  For example, Marketing Parcels is a shipping class from the USPS that is often used in the subscription box industry.  It is a very inexpensive and effective method of delivering a box.  However, in order to use this method, that box needs to be under 1 pound and have a dimension not exceeding 9 x 2 x 12 inches.  Therefore, when planning the contents and packaging of the box, constant consideration has to be given to weight and size.  As boxes exceed 1 pound, there are a variety of other methods that can be used.  Subscription box providers need be keenly aware of the shipping options at different weights and the impact box dimensions have on shipping costs.

Conclusion

Subscription boxes are another example of the innovative ways companies are getting products to consumers.  They are affordable, convenient and consistent; your gift box arrives at your door every month. Whether you are a beauty junkie, foodie or fitness fanatic, there’s a subscription box for you. What box will you be subscribing to this month?

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