- Dollar Shave Club
- Vape Club
It's no secret that a lot of Direct-to-Consumer (DTC) startups are flocking towards the subscription model. And who can blame them. That sweet recurring revenue is pretty compelling if you ask me. But the million-dollar question is: is it too late to launch a subscription box business?
The Psychology of Subscription Boxes
- Subscription boxes play on some of our most innate human needs, the desire for convenience, novelty and simplicity
- Convenience: As our income grows, so does our laziness to deal with mundane tasks such as doing groceries. Having everyday goods - razors or toilet paper - delivered to your doorstep each month really plays well into our laziness
- Novelty: The wow factor of opening a box to an unexpected product should not be underestimated. The dopamine hit is crucial for early-stage conversion as well as retention later on
- Simplicity: Subscription boxes take care of all the decision fatigue by providing us with a "personalized experience"
These 3 desires translate into 3 key types of boxes. That's why if you want to start a subscription box business, you should decide which one of these three categories are you going for:
- Subscription for replenishment: Commodity items like coffee beans, toothpaste, razors. You help save time and money for consumers (eg. Dollar Shave Club)
- Subscription for curation: A curated selection of personalized items like apparel and snacks. Consumers get separated from the paradox of choices and also the wow factor from product variety (eg. Blue Apron)
- Subscription for access: Access to members' only perks like special discounts. Consumers gain exclusive access (eg. Thrive Market)
But with large corporations entering the space, popular categories like food, apparel and beauty products are getting even more saturated. So if you're planning on launching a subscription box, your best bet is to niche down and find categories that haven't been exploited yet. One Malaysian did just that with vape juices and is now doing RM250 in revenue per month.
Another tip is to build an audience first. You can only go so far with paid channels. With limited ad spend ammo, the best way to do it is still with organic acquisition.