People love to get presents in the mail. That’s the appeal of the subscription box business model. Photo (CC) by Charlie CEONYC on Flickr.
Subscription boxes have become firmly-established as a business model over the past five or more years. I think they are a perfect fit for small town retail stores.
What are subscription boxes?
Subscription box customers sign up for regular deliveries. Some boxes send the same product each month, like shaving supplies. (Dollar Shave Club is arguably the best-known subscription service.) But most boxes include new and different items each month. It’s like a surprise package, with a chance to sample and enjoy all kinds of interesting items along a theme. People are signing up for monthly shipments of healthy snack foods, books, kid’s items, beauty products, clothing, jewelry, cookies, pet treats, nail polish, arts and crafts, wine, vitamins, and tea.
The best box services have a specific theme within their niche. One service sends a “vacation in a box” with international products themed around a specific destination. One sends activities and items to help you keep your kids more physically active.
Local stores can absolutely adapt this model. Instead of waiting for me to notice what’s new, my local stores could send me samples.
- I’d love to have Dee at LaDEEda Boutique send me clothing and accessories to keep me closer to being in fashion.
- Alva’s Market and Grocery could send me samples of new food items, or the freshest local produce that just arrived.
- My liquor store isn’t allowed to deliver or accept advance payment, but we could still select items, assemble boxes, and notify customers that they are ready for payment and pick-up.
What advantages do small town stores have in the subscription business?
- You already have customers. This is the biggest hurdle for new subscription businesses: finding customers. You get to start with the people who already buy from you. You carefully select items you know they’ll love, based on what you know about them.
- You already have suppliers. This is a big advantage over someone starting a subscription business from scratch. You know where to find interesting things. Because you’re an established business, it’s easier to do business with new suppliers. And if you know you’ll automatically sell 25 of an item because you have 25 subscribers, you know how many to purchase.
- You have a feel for the business. You know what people like and don’t like. You know what sells now, and what’s coming up. Leverage that to make boxes people will love. It’s all based on your personal knowledge of your customers, a definite small town advantage.
- You know how to do presentation. You’re used to making things attractive for customers, including little touches that people long remember. You know how to present your merchandise, not just throw it in a box. Be sure to include a letter from you telling the story of every single item in the box. Also tell whether you keep these in stock, whether you have coordinating items or more from the same line or brand.
- You have a store to promote in. Set a sample subscription box on the counter, and take signups right in your store.
- You already understand business. You know the difference between retail price and wholesale cost. You know about margins, covering overhead and making payroll.
Bonuses for small town retailers adding subscription boxes:
- Regular predictable revenue. If you have 25 subscribers at $25 each, that’s $625 of predictable sales, and a predictable (smaller) amount of profit.
- You can take advantage of slack times. OK, I know you always have more to do than hours in the day, but you also know how to schedule your time. You can build and ship boxes during the least-busy portions of your days or weeks.
- Your customers hear from you every month. You don’t wait to hear from them, or let them slowly forget how amazing your store is. You’re touching them every single month.
- You can reach new customers. As you gain experience, you can expand this to reach customers outside your local area. If you do a terrific job with your selections and presentations, you can bet your customers will spread the word for you.
- You can partner with other local stores. What if six stores got together for a Best of OurTown Box? Each contributes one product per month, everyone helps with assembly, and you introduce all the customers to each of your stores. You could each promote it in store and online. Regular visitors and tourists would love it to keep in touch all year.
- You don’t need instant riches. Your goal doesn’t have to be national market dominance. You just want to be that cool niche service, one that your customers appreciate and love. It’s not about the profit on each box. It’s about building relationships.
Learn more:
- Get ideas of what successful boxes look like from The 10 best subscription boxes to give in 2013 (a little dated, but great ideas)
- Search online for “subscription boxes” to get more ideas and current examples
- Read an in-depth Q&A with a successful subscription box founder in Starting A Subscription Box Company
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Becky started Small Biz Survival in 2006 to share rural business and community building stories and ideas with other small town business people. She and her husband have a small cattle ranch and are lifelong entrepreneurs. Becky is an international speaker on small business and rural topics.
It is good to know that I can always count on you for brilliant ideas and inspiration. I shared this with my network on LinkedIn and will be using a variation of the idea on a current project. How do you build a following for food startups? Subscription box!
Michael, this is a terrific model for food startups. I think I’d include pass-along coupons so new fans could help spread the word and share the edible goodies.