A Breakdown of the Subscription Box Business Model
The subscription box business model is fascinating to me.
It starts out as a simple task of finding deals and curating. But as time goes on, it becomes about connection, opportunity, and access.
Let me explain.
If you want to launch your own subscription box, you have to choose a niche. There are subscription boxes for virtually everything: outdoor gear, makeup, video games, coffee, clothes–everything. The key here is finding an underserved niche and bringing them the benefits of a subscription box.
Let’s talk about the benefits next. I’ll break down three key benefits: curation, convenience, and value. Curation first. There are thousands of products consumers can choose from, and weeding through all of them is impossible. That’s where the subscription box company comes in. They’re the ones who can take the time to try every product, find the best ones, and put them in the box. The second main benefit is convenience, of course. Tracking down and trying a dozen different products would take time. Subscription boxes do that for consumers. The third main benefit is value. Because subscription boxes usually only send a small sample size of each product, consumers are able to try a lot of products without the risk of buying an entire package of something they won’t end up using.
Value. Value is key here, not just for the customer, but for the company. The way subscription boxes make money is by buying a lot of sample products in bulk, and then marking them up when they’re in the box. The company gets the discount, the consumer pays a little extra for the convenience, and the company keeps the profit. Boom.
That’s level one. Level two is where things get interesting.
Let’s say a subscription box company has 1000 monthly subscribers. They have earned the trust of 1000 people within a specific niche, who have identified themselves as being interested in trying new products. These are exactly the kinds of people emerging brands need to connect with. If a subscription box company can find emerging brands, they can get incredible deals on products for their boxes. Or, if the brand has a budget for it, they might even pay the subscription box company to include their products. It’s a win for everyone–especially the subscription box.
What starts as a simple markup job becomes a dance of connection, curation, trust-building, and access.
Once a subscription box has built up a big enough subscriber base, they become the powerful connecter within their niche. They become the gatekeeper into new audiences for brands. They become the tastemaker of new products for the consumer. The subscription box stands between the brands and consumers, and offers trust. Trust that the consumers can have in the products. Trust that the brands can have in the audience.
Thanks for reading!
Please share this piece with a friend.
For more posts on entrepreneurship, click here.
Download my E-Book for free, 5 Steps To Achieve Your Creative Goals.
