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How to start a subscription box business

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedFeb 20202 min read

The subscription box economy is booming, with the industry having grown an astonishing 890% between April 2014 and April 2018. There are subscription boxes for a wide range of products, including snacks, sweets, socks, and shaving equipment, with more subscription box companies popping up every day. And it’s easy to see why – subscription-based business models offer stable, recurring income that can grow rapidly if you’ve identified the right gap in the market. Trying to work out how to start a subscription box business? Find out everything you need to know about starting a subscription box business, right here.

1. Define your subscription box idea

Every subscription box business starts with a great idea. Conduct market research to work out where you fit in the market, who your competitors are, and the profile of your customers. Once you have a solid understanding of the product landscape and you’re certain that there’s space and demand for your product, it’s time to move onto the next stage.

2. Establish your pricing strategy

One of the most important parts of learning how to start up a subscription box business is knowing how to price your product. If it’s priced too low, you won’t be able to stay competitive. But if it’s priced too high, you may not be able to find enough customers. Think about the cost of the product, box, packaging materials, shipping, fulfilment, transaction fees, and acquisition before settling on a price.

3. Put your prototype together

Putting together a prototype box gives you the opportunity to show off the quality of your product to potential customers. There are three important elements: the product(s), the box, and the packaging materials. When you’re first learning how to start up a subscription box business, try to make sure that the box matches your brand. For example, organic and environmentally friendly brands should consider making use of natural colours and materials to communicate their brand identity.

4. Begin the prelaunch phase

The prelaunch phase consists of setting up your website or marketplace, sourcing your products, marketing, and organising shipping. Try to make sure your prelaunch period isn’t too long, or all the hype you’ve generated for your subscription box could dissipate. Use social media for marketing and create an attractive website that’s easy for your customers to navigate.

5. Set up your payments system

When starting a subscription box business, it’s incredibly important to get your payments system right. The ability to take recurring payments via Direct Debit could be the difference between success and failure, helping you to reduce churn and avoid failed payments due to cancelled or expired cards. GoCardless offers a simple, recurring payments system that’s ideal for the subscription economy.

6. Start taking orders and shipping your boxes

After the prelaunch period, it’s time to start taking orders and shipping off your first subscription boxes. When orders come in, make sure you send your customers regular tracking emails regarding their shipment and ensure that they’re aware of the first shipment date. This helps to reduce confusion and manage your customer’s expectations. As you scale, it’s important to have an orderly assembly process in place. Otherwise, your fulfilment process could end up becoming inefficient and time-consuming.

7. Grow your subscriber base

Once you’ve learned how to start a subscription box business, try to increase your exposure and continue to scale your business. Consider using customer referral programs to boost your subscriber base, while social media marketing on Facebook, Instagram, and Pinterest can also be effective. You could also diversify your subscription box business by offering new boxes or seasonal, one-time products.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.