What do you need to start a subscription box company?

Recent years have brought explosive growth for organizations specializing in delivering subscription boxes. A report from McKinsey & Company found that the top businesses in this space generated sales worth a total of $2.6 billion in 2016, which was an increase from $57 million five years earlier. It's no wonder that more companies are getting involved all the time.

Many factors go into making subscription companies successful, and it's vital to start with a clear strategy in mind and plenty of resources on hand. With the combination of clear objectives, reliable systems and solid partnerships, an ecommerce subscription business can get off the ground and on the path toward sustainable growth.

Offer products that people want

It's a basic idea, but a fundamental one: A subscription company will only be profitable if it's built on items that are in demand. An introductory offer, such as one free box, might capture people's interest, but keeping customers over the long term and encouraging positive word of mouth requires an assortment of high-quality products. Leaders need to do the research to understand their likely customers and consistently provide the items that suit their needs and interests.

Surveying consumers and creating test boxes are effective methods to gain a sense of the marketplace. From there, you can make decisions about the precise products to include in each shipment, the right price point to maintain a strong base of subscribers and how much customization to allow. Companies must have a steady supply of the items they plan to sell and the ability to scale up as sales require.

Create a complete package

You're not just selling the products inside the box. Presentation is important as well, so choose packaging materials that protect the items while also creating a fun, satisfying experience for subscribers. Find a look that fits the personality of your brand and catches the attention of potential customers when photos go up on social media.

Have the technology to manage orders and payments

Subscription ecommerce is a fast-paced, demanding business, and organizations need the tools to get ahead of the game. A powerful order management system is a must, making it simple to accept credit card payments and give leaders visibility into their inventory and long-term relationships with customers. With the capability to select options like a recurring payment plan, ordering packages month after month becomes even more convenient.

Team with a warehousing and fulfillment partner

At the very beginning of establishing a subscription company, it's often possible to send out a small number of orders with relative ease. However, businesses aiming for growth should enlist a resourceful partner for warehousing and fulfillment services soon. By integrating shipping processes and inventory management with an OMS, organizations are positioned to meet rising demand and customer expectations for speedy service.

A partner that already has relationships with the biggest carriers can obtain low shipping rates for subscription businesses. Plus, you can get help with complex processes like handling reverse logistics for returns. SFG offers a full slate of services and tools that will help you start your subscription-based company and continue expanding for years to come.