How to Start a Subscription Service Business (Part 1)

Let’s Learn About Starting a Subscription Service Business

What Is a Subscription Service?

A subscription box is a product delivered to a subscriber’s home or office over a set period of time. Like traditional subscription-based media such as monthly magazines or fashion magazines, it usually ships one box per month. Typical examples include beauty products, ready-to-cook meals, pet treats and supplies, and even various business models such as underwear subscriptions.

Source: Papersource / Source: Parasol, a diaper subscription service

Types of Subscription Services

Most well-known subscription service businesses got their start in the beauty industry.

Birchbox, widely recognized as the first beauty subscription service, was founded in 2010. The founders, who met in business school and developed an interest in the beauty industry, realized it wasn’t easy to explore beauty products online. They launched a box that let customers try beauty products in advance through curation by beauty editors.

Source: ipsy / Source: ipsy

Glossybox later launched, making it possible to subscribe to newly released samples and full-size products for $21 per month. Following the success of these brands, Michelle Phan, one of the first beauty YouTubers, also created the Ipsy brand and reached a broader audience.

Source: Glossybox, a beauty subscription service

Today, subscription services compete across many fields beyond beauty, including razors for men, snacks and toys for pets, baby essentials, and prepared cooking ingredients.

Get packaging design inspiration: Top 7 Subscription Boxes in Korea

Why Should You Start a Subscription Service?

If you find the right market and offer a curated service, a subscription service can reach consumers at a lower cost than other retail businesses. Look for high-quality products from emerging brands that want to get their name out there. If it meets your customers’ needs, they’ll be happy to subscribe to your box every month.

Source: sips by, a subscription service where you can enjoy teas from around the world

If you’re considering package production, this is a must-read: The Importance of Shopping Mall Packaging Boxes

What You Shouldn’t Forget

The most important thing is to focus on curation and build product assortments that benefit the customer. If you send products that consumers feel don’t offer value, subscription rates can drop. To keep customers over time, maintain trust.

Advantages of Starting a Subscription Business

Building Brand Identity

Today, personalized brands are becoming the new standard in marketing. Customers are always willing to pay more for services tailored to them, and subscription services are a great opportunity to meet that need.

Recurring Periodic Revenue

One of the challenges in running an online store is that there are seasons or periods when sales are slow. Subscription boxes may not generate strong one-time sales, but they provide stable monthly revenue.

If you’re interested in package production, read this first! 3 Reasons Why You Should Invest in Product Packaging and Packaging Boxes

Source: glassful, a wine subscription service / Source: MOCO, where you can receive three pairs of socks by subscription

Increased Customer Lifetime Value

Customer lifetime value (CLTV) is defined as the amount of money a single customer pays your business. Loyal customers who buy over the long term contribute more to business stability than one-time buyers. Maintain product quality so customers keep coming back.

Disadvantages of Starting a Subscription Business

Sustained Value

Maintaining the special appeal of the product and packaging is essential for a subscription service business model. You need to keep delivering an interesting and attractive experience, but that is not easy because printed boxes have durability limits.

Source: Nosy, a wine subscription service / Source: Dollar Shave Club, a men’s razor subscription service

Competition

Too many companies are entering this business model. In a rapidly saturating market, it’s becoming harder to maintain your uniqueness and beat competitors. To solve this, you need to secure a niche that can excite consumers.

Difficulty Keeping Things Fresh

Even if you get attention with a novel curation, subscribers will leave quickly if you can’t maintain product quality and differentiation. Even your most loyal customers will cancel immediately if they’re not satisfied with the curation. Keeping all of this in mind, we’ll slowly go over how to sustain a subscription model. Subscribe to our blog to receive more helpful articles about subscription services.

Next Part: How to Start a Subscription Service (Part 2)