How Do Subscription Boxes Make Money

I started my first subscription club back in 2010/11, if I remember correctly and even back then, I knew that subscription boxes were a hot trend among my competitors in the craft industry. Since that time the subscription box market has grown to a whopping 2.6 billion US dollars (according to www.mckinsey.com)! In such a sizable industry is there still room to offer subscription-based product services and make some money?

Can you still make money selling subscription boxes?

Today on the podcast we will explore the idea of subscription-based offers in the craft industry, to seek an answer to understanding if this product service is an idea we could consider for our handmade and craft-based product businesses.

What is so great about subscription boxes?

Whilst subscription boxes aren't new as a product concept, they have been gathering quiet a lot of interest in the last few years. From Harry's Razors to Try the World there is a lot of choice out there for consumers in all areas of shopping interest and what seems to delight consumers above all else is the ease of the experience in shopping that subscription clubs offer.

So, for consumers subscription boxes are easy and exciting.

For businesses the biggest benefits are; brand and product awareness, a chance at growth by referrals and of course a recurring monthly revenue. They are also a great way to avoid using discount codes to bring in business, which we talked about last time here on the podcast.

Want to know how to start a subscription box?

In the latest issue of My Craft Biz Magazine , issue 6 – 'Running Subscription Boxes' I am going to take you much deeper into this topic.

If you have been thinking about starting a subscription box, or club for a while, then this is the place to start to get everything you need to understand what you are diving into!

Are subscription boxes right for your business?

Depending on your craft business model, subscription boxes may or may not be something that you should consider delving into. For example, if you are very hands-on with your product sales, in that you handmake each order in intricate detail and cannot scale production easily (which we talked about here), then offering a service like this might not be best for you. This is because as box sales grow you will have little time for new design work, or other weekly orders and show prep. Of course, that's not to say that you couldn't switch focus in your business to make it work for you, or to allow your business to go from a general shop offer to subscription boxes only. These are perfectly viable ideas if they serve your target customer well.

If, however, you have a business where production capacity can always be increased, or you have a mixture of handmade and commercial craft products (or even all commercial products) then the subscription model might be much more appealing to you, as a way to generate recurring monthly income from your customers.

Firstly, consider how much time you have for;

Design
Development
Production
Customer service
Shipping
And of course, marketing!

The next key things to consider about running a product-based service like this are;

Does it serve my customer?
How can I make it unique?
Will it raise my monthly income, rather than detract from what I make currently?
Can I deliver on time every time?

Once you have an idea for how to answer these questions, then you are much better placed to consider offering a subscription service to your customers and knowing; firstly that you have an idea that will sell and secondly you can deliver quality and consistency.

How real is the competition out there?

In truth every market is different and certainly every niche of the craft industry will probably already have someone working this angle, but that doesn't mean there isn't room for one more!

My best advice as always is to do a bit of poking around online and outline your competitor and market research. This will give you a clear idea of who is already selling products like this and what the market looks like. Here are 15 mistakes to avoid in your market research, just in case you need them!

Next time here on the podcast I'm going to create a list of craft industry competitors that might be of interest for you to look at, so make sure you subscribe to keep up to date!

Takeaway

I sold subscription boxes for about six, or seven years in my craft business and I can honestly say that whilst I had to learn a heck of a lot in order to get my numbers growing, I really enjoyed the process and of course the recurring income it brought. It was very much like earning on autopilot and felt far less difficult to the constant push for sales I had to make on my singular products. In fact, I now recommend that craft business owners consider this model as part of their process of expansion to increase income from multiple revenue streams in a bid to create financial stability from selling what they love to make.

Tell me; Have you been running subscriptions? If so, how have you found them?

I'd love to hear from you – comment below 👇 or email me!