How do subscription boxes make money -
Are Monthly Subscription Boxes Worth It? – Costs, Pros & Cons
These days, you can get nearly anything in a monthly subscription box. From beauty sample boxes to meal delivery services, these companies will deliver a fresh selection of products to your door, month after month, for a flat monthly fee. People love subscription boxes for their convenience and the thrill of getting a surprise package each month. And with prices as low as $10 a month, they can look like an unbeatable deal.
However, even $10 is no bargain if you’re spending it on stuff you wouldn’t normally want to buy – or stuff you could get for less at a store. So, before you jump on the subscription box bandwagon, it’s worth taking a closer look at what these services really have to offer, what they cost, and what their hidden catches are.
Types of Subscription Boxes
The subscription box was born in 2010 with the launch of Birchbox, a $10-a-month beauty sample box. Since then, this business model has spread to nearly every kind of product you can buy. In fact, there are now thousands of different types of subscriptions boxes. Here are a few of the most common types, and the most popular services for each.
Beauty and Grooming
The whole idea of the subscription box started with beauty boxes, and this is still one of the most common types. Here are some of the top choices in this category:
- Birchbox. This is the box that started it all, and it’s still one of the most popular, with over a million subscribers. For $10 per month or $110 per year, it provides an assortment of five beauty samples – all specially chosen to meet your particular tastes. Items include lipstick, mascara, skin cream, dry shampoo, and fragrance, all from high-end brands. If you like the samples in your monthly box, you can order full-size versions from the Birchbox website. Birchbox now offers a men’s grooming box as well, with products like hair gel, deodorant, and beard oil.
- GlossyBox. GlossyBox is a pricier service than Birchbox, with monthly rates ranging from $17.50 to $21 depending on the length of your contract. However, it gives you more for your money, providing both samples and full-sized products from trendy brands. Consumerist reports that when its sister publication, ShopSmart magazine, tried the box, it included a full-sized lipstick that would have cost $20 by itself. Unlike Birchbox, this service usually sends the same items to all its subscribers each month.
- Julep. The monthly Julep box has a focus on nail polish, though it includes other beauty items as well. Unlike many services, Julep gives users the option of previewing the month’s selections and picking out the specific items they want. The service has two tiers: My Maven, which provides $40 worth of products for $25 a month, and Maven Luxe, which delivers at least $60 worth of products for $40 a month. You can save $5 a month off either service by signing up for a three-month subscription.
- GoodBeing. Formerly known as Goodebox, this service focuses on organic and eco-friendly products. It offers a choice of subscriptions: an all-beauty box that contains makeup and other beauty products, and a “lifestyle” box that adds in wellness items like sunscreen, supplements, and products for the home. Both boxes are available in a $10-per-month mini size with only two items, or a $25-a-month standard size with four to five items of varying sizes. If you choose the standard size, you can personally select one or two of the items you receive each month. You can shave a few dollars off the monthly fee by signing up for six months in advance.
- Dollar Shave Club. Subscription grooming boxes aren’t just for women. The Dollar Shave Club is a monthly service that delivers high-quality razor cartridges for both men and women. Choices range from a two-blade razor for $3 per month to a six-blade model for $9. If you don’t like the blade you’re using, you can switch membership levels at any time. When you first join, you get a handle to go with your cartridge of choice and a selection of sample-sized grooming products, such as “shave butter”; if you like them, you can add on a full-sized version to your monthly delivery.
Clothing and Accessories
These days, subscription boxes can do more than groom you – they can dress you from head to toe. The best-known clothing subscription is Stitch Fix. This shopping service is a bit different from other subscription boxes. For $20 a month, you get a box with five items – clothing, shoes, and accessories – chosen just for you based on your style preferences. However, if you want to keep the items, you have to pay for those separately.
Stitch Fix offers boxes for men and women from both well-known and new brands like Joie, Citizens for Humanity, Original Penguin, and Converse. Items cost an average of $55 each, and the $20 “styling fee” is deducted from the cost. If you choose to keep all five items, you get a 25% discount on the lot. If not, you can send back the ones you don’t want in a prepaid envelope.
Another clothing subscription service, Nice Laundry, focuses specifically on socks. Every three months, it ships you six pairs of dress socks, especially chosen for you. Each quarterly shipment has sock weights and styles appropriate for the season. Socks are only available in one size, which will fit most men as well as women with larger feet. It costs $49 for one quarterly shipment, or $99 for a full year.
Subscription boxes aren’t just for humans. You can also get monthly deliveries of goodies for your furry friends. The best-known box of this type is BarkBox, which contains toys, treats, and chews for dogs.
Each BarkBox contains four or five items, which are never the same from month to month. When you sign up, you enter your dog’s weight to get items that are sized appropriately for your pooch; you can scale up or down at any time. And if there’s an item your pup doesn’t like, you can exchange it free of charge (up to one item per month). The service costs $29 per month, with a discount for 6- or 12-month subscriptions.
For cat people, there’s KitNipBox, which provides a monthly assortment of cat toys, treats, and other accessories. The basic subscription costs $19.99 a month and includes four items; the multi-cat subscription provides six items for $29.99. A portion of this monthly fee goes to shelters, rescues, and other charities that help cats in need.
A relatively new variant of the subscription box is the meal delivery service. The two best known of these are HelloFresh and Blue Apron, which ships a refrigerated box each week containing recipes and all the ingredients you need to make them. All the ingredients are pre-portioned to cut your prep time, so you can cook a complete meal in about half an hour.
Blue Apron offers subscriptions at several different levels, with two to four meals per week for either two or four people. The prices range from $48 to $140 per week, which works out to between $9 and $25 per person per meal. This is less than most restaurant meals, but more than you’d pay to cook at home if you did your own grocery shopping.
In addition to meals, there are subscription boxes for specific types of food items. For instance, UrthBox delivers healthy snack items each month, along with a few extras like supplements and personal care products. Prices range from $20 a month for a six-item mini box to $50 for a large box with 25 to 30 items. There are also subscription services for vegan and gluten-free foods, wine, beer, coffee, and even hot sauce.
Several gift boxes offer entertainment of one sort or another. For instance, Book of the Month delivers a new hardcover book each month for $14.99. You can choose your book from one of five monthly selections, or skip a month if you don’t like any of them.
Other services offer books for more specific audiences. For instance, Comic Bento ships a monthly assortment of graphic novels with a cover value of at least $50 for $25. OwlCrate is a themed monthly box containing a young adult novel and various related items like pens, bracelets, and bobbleheads for $29.99 plus shipping. OwlCrate Jr. provides the same service for tweens, with subscriptions starting at $27.99 a month plus shipping.
Speaking of kids, you can also get subscription boxes with educational toys or projects for children. KiwiCo includes a monthly magazine and an age-appropriate creative project, along with the materials needed to complete it. There are subscriptions for all age groups, from toddlers to teens, and you can choose between art-themed or science-themed boxes for older kids. All boxes are $19.95 per month, with a discount if you commit to a 6-month or 12-month subscription.
Other just-for-fun boxes cater more to adults. For instance, Loot Crate is a $16 monthly subscription box “for geeks and gamers” containing a themed assortment of t-shirts, decals, figurines, and more. And Spicy Subscriptions is strictly adults-only, providing a monthly selection of sexy products like massage oils, candles, and adult toys for $34.95.
Advantages of Subscription Boxes
For most people, the big advantage of subscription boxes is the fun factor. Experts who spoke with LearnVest about the psychology behind subscription boxes say people enjoy the suspense of looking forward to each month’s box and wondering what it will contain. As addiction expert Amanda Dorman explains, “Waiting for that box each month – not knowing what it is, but knowing it’s coming – creates an adrenaline rush.” It’s like getting a birthday gift every month.
Other perks of subscription boxes include:
- Custom Picked Items. With many subscription boxes, the items you receive each month are chosen especially for you, based on your particular needs and preferences. This can be a major boon for people who have trouble finding what they like in stores, or who just don’t enjoy shopping. And for many people, knowing the items were chosen just for them increases the thrill of opening a new box. According to Dorman, getting these “handpicked” items boosts people’s self-esteem and “makes them feel unique.”
- Convenience. Having items delivered automatically each month can save shopping time. For example, LearnVest quotes a subscriber named Lindsay Karr, who’s a teacher and also the mother of a six-month-old baby. She uses the Subscribe & Save service from Amazon to get baby food, toilet paper, and other home goods on a monthly schedule. That way, she doesn’t have to take time out of her busy schedule for “running around town from store to store.”
- Potential Savings. Having goodies shipped to you in a subscription box is often cheaper than buying each of those items separately. Karr says her subscription service gives her a 5% discount on all the items she has shipped from Amazon. Others subscription services offer even bigger savings. For instance, GlossyBox says its October 2017 box contained $69 worth of beauty items for about $20, and Loot Crate promises at least $45 worth of nerd-culture joy for $16.
Disadvantages of Subscription Boxes
Subscription shopping also has some big drawbacks. The most obvious one is that, with most services, you don’t get to choose the items you receive. You get the thrill of looking forward to a surprise package, but when you open it, the surprise isn’t always a pleasant one. You could find yourself stuck with a bunch of stuff you don’t actually want, and not enough of the stuff you need.
This, in turn, can cancel out the convenience of monthly shipments. For instance, if your monthly grooming box sends you sunscreen, but what you really need is deodorant, you have to go to the store for it. You don’t save any shopping time, and you have to pay for the deodorant on top of what you’ve already paid for your subscription.
Other problems with subscription services include:
- Overbuying. While a subscription box usually costs less than buying all the items in it separately, there’s a good chance you wouldn’t buy all those items if they didn’t come in your box. For instance, a $29-a-month BarkBox subscription works out to $350 each year. Chances are, that’s a lot more than you’d normally spend just for toys and treats. Over the long term, it could add significantly to the cost of owning a dog.
- Unclear Value. Normally, when you shop for any product, you can look at all the choices and compare their prices to see which is the best deal. But with a subscription box service, you get a different assortment of products every month, and you don’t even know what they’re going to be. That makes it much harder to figure out whether your box is really worth what you’re paying for it.
- Problems With Returns. Some subscription services, such as Stitch Fix, let you return or exchange items you don’t want. However, it’s not always easy to do, and so many people just don’t bother. Consumer expert Mitchell McCall, speaking with LearnVest, says people are much more likely to leave something on the shelf in the store than they are to return an item they’ve already received – even if they know they won’t use it.
- Difficulty of Quitting. In theory, you can cancel a subscription box at any time. However, it’s not always easy to do. McCall says the hassle of canceling is often enough to make people hold on to a service, even after they’ve lost interest in it. He compares it to a gym membership you’re no longer using: As long as the fee is low enough to make it seem like a good deal, it won’t seem worthwhile to cancel the service.
How to Determine If a Subscription Box Is a Good Deal
With such a huge variety of subscription boxes out there, it’s impossible to say that they’re always a good deal, or that they never are. You have to look at a specific box – its contents, rules, and cost – to decide whether it’s a good value for you personally.
Here are some questions you can ask to help you make the decision:
- Are These Items You Can Use? The most important thing to know before you sign up for a monthly box is whether you’ll use everything in it. With some services, such as Dollar Shave Club, it’s easy to tell, because you know exactly what you’ll be getting every month. But with others, you can’t be sure what to expect. However, you can get a pretty good idea by checking reviews online to find out what items the box has held for the past few months before you take the plunge.
- How Does the Cost Compare to Retail? Once you know what’s in a typical box, you can check the prices of those items on retail sites like Amazon. By adding them all up, you can figure out what the contents of the box are worth and compare that to the subscription price. Don’t forget to factor in the cost of shipping, if there is any.
- Is It More Than You Need? A box isn’t a good value if it’s going to tempt you into buying more of any one item than you would normally want. Even if the cost per item is good, it’s likely to be more than you’d spend buying just one item each month. Plus, you’ll be cluttering up your house with more socks, cat toys, or bottles of nail polish than you can use.
- How Much Control Do You Have? Some subscription services send the same monthly box to every subscriber. Others, such as Stitch Fix, tailor the contents to your personal tastes based on a questionnaire you fill out when you sign up. A few, such as Julep, allow you to preview each month’s box before it’s shipped and skip that month if you don’t want it, or even personally choose some or all of the items you receive. This means you’ll never have to waste money on an item you don’t want – but on the downside, your monthly box won’t be a special surprise.
- What’s the Return Policy? With many services, you’re stuck with whatever you get in your monthly box. Others let you return items you don’t want – but it isn’t always easy. Before you sign a contract, check it for details about how long you have to return items, how many items you’re allowed to return, and whether you have to pay return shipping costs.
- How Hard Is It to Cancel? If you’re not sure whether a box is a good deal for you, you could plan to try it for a month and then decide. Liz Corry of My Subscription Addiction, speaking with RetailMeNot, says nearly all subscription boxes offer a month-to-month subscription plan. However, canceling your subscription can be tricky. Some services, such as Birchbox, allow you to cancel your subscription online; others, such as Julep, require a phone call to customer service. Also, many sites are set up to automatically renew your contract whenever it expires, unless you call in time to cancel it.
- Can You Really Afford It? Although subscription boxes can contain useful items, most of them are clearly wants rather than needs. Even if a box is a good value, it’s not worth buying if you don’t have room in your budget. Financial planner Katie Colman, speaking with LearnVest, says it’s okay to splurge on a monthly crate of goodies only “as long as you’re meeting all your other financial obligations and it’s not impacting your ability to meet your goals.”
There are ways to get some of the perks of subscription boxes without having to commit to a monthly service. For instance, if what you like about them is having products specially chosen to fit your style, you could join a loyalty program like Sephora’s Beauty Insider. This program rewards you for shopping at the store with bonus products tailored to your tastes.
On the other hand, if your favorite thing about your subscription box is getting a special treat each month, you can give yourself the same experience by creating a category in your personal budget for “mad money.” This is a sum of cash – which doesn’t have to be large – that you can spend on anything you want. It allows you to treat yourself to something special each month – and since you pick it yourself, you can be sure it’s something you’ll really use.
Pro tip: If you don’t have a budget for yourself yet, make sure you sign up for Personal Capital today. This will allow you to track where your money is going each month, helping you become more aware of your personal finances.
Have you ever subscribed to a monthly subscription box? Did you think it was worth the money?
For two years we worked day and night, living above our desks in bunk beds, bootstrapping the business to success. We made a few early mistakes common to all businesses, but we also made some notable successes, like our near overnight launch of SubscriptionBoxes.com and getting to 3,000 recurring customers with little marketing spend.
For two years we worked day and night, living above our desks in bunk beds, bootstrapping the business to success.
At the end of our second year we began raising venture capital. At first it was like a dream come true. My two business partners and I finally had the “rocket fuel” to propel our business.
In what seemed like an instant, we had raised $1.5 million, moved the business to Portland, Oregon, and made a few key hires, one of which was a new CEO (Replacing myself, naively thinking it would allow me to focus on growing the business rather than dealing with investors and finances).
Business was good. We were obsessed with our product, authenticity, and customer happiness. Each day we would come in and hear from the customers who were loving Conscious Box and appreciative of what we were doing. We had great revenue and we were re-investing in our growth. Things were looking great, at first.
Regretfully, though, relationships deteriorated when the business didn’t scale as quickly, smoothly, or sustainably as hoped. We had built sophisticated sample tracking/variation building software and a new platform that attempted to ‘complete the circle’ of the customer life cycle we were trying to create — subscribe, try, and buy — but it wasn’t performing as well as we hoped. And because software solutions for subscription boxes didn’t exist yet (now there are good options like Cratejoy, etc.) we were forced to continue spending large amounts of our money on technology development.
Then, at the end of 2013, things completely broke down. I was insistent on pivoting the company away from our ‘free sample’ model and into a model that had built in margin to purchase product, thus increasing product quality and retention. One thing led to another and the other two founders and I were pushed out of the company.
In the aftermath the three of us had the chance to flex our new hard-won subscription business skills. Quickly, we launched Escape Monthly — a ‘Vacation in a Box’ (inspired by our lack of much needed vacations). This time we built a very healthy budget in for buying product, allowing us to hire just one buyer and eliminating the need for an ever scaling sales team.
We also went with a higher price point to draw in more affluent, ‘stickier’ customers. Through an aggressive early pre-launch strategy and marketing push we kicked off the business with a few hundred customers. (The business is now successfully chiming away.)
If you can’t keep customers consistently happy, the business will eventually be crushed by unsustainable churn.
A few months later, we launched Furball Box, a box built for cat lovers. This project was just for fun but we got a great response with a few hundred signups for our first month. With little passion in the room for cats and a customer base that was aggressively specific about their cats’ needs, we decided to close the business before shipping a single box. That was a great lesson about what doesn’t work in Subscription Commerce. If you can’t keep customers consistently happy, the business will eventually be crushed by unsustainable churn and we saw it coming.
More recently, I’ve launched Yogi Surprise (A Yoga Retreat in a Box). This time, though, I wanted to exercise a fully lean business, only bringing on one partner and a writer for hire when needed. Already, we’ve surpassed 1000 customers in our second month, and the customers couldn’t be happier. For me, these types of businesses are lifestyle businesses, your passion and authenticity will show through and it’s important to pick niches you feel strongly about rather than chasing “what hasn’t been done yet”.
Subscription Box businesses often seem simple on the surface, but can easily become very challenging.
Subscription Box businesses often seem simple on the surface, but can easily become very challenging. Logistically, there’s a lot more stuff going on behind the scenes than just simply putting products in a box and shipping them. I’ve seen many try and fail and I’ve seen some huge successes.
With that in mind, I’ve compiled the most need-to-know lessons of subscription commerce. These apply to any box, any niche, and at any stage. Apply these principles to your business and save yourself from the stress, wasted time, and headaches I experienced for the better half of my 20s:
1. Build a sustainable pricing model and profit margin.
The number one reason I’ve seen subscription box businesses fail is because they didn’t take the time to map out their COGS (Cost of Goods Sold) and build in enough profit margin. Many of the early failures simply copied competitor’s pricing without doing theath themselves, assuming the competitor did the work (when it turns out they didn’t either). This created a domino effect of failing businesses for awhile. Here’s a great budgeting tool that helps with this part.
2. Product quality matters. Don’t skimp on the details.
Your customers will respond to a great product. The quality of the experience you create for them and the selection of products you include each month will be the major influence on customer retention. Seems like a no brainer, right? Wrong. Too often, you’ll be faced with the tough decision of adding that extra product to your box or walking away with a liveable paycheck. Be strong, though. Skimping on product to increase net profit in the short term is not worth the long term ding in retention.
3. The most successful subscriptions fulfill real needs. Gimmicks aren’t sustainable.
Fortunately, I didn’t have to learn this the hard way, but from my relationships with dozens of other subscription box entrepreneurs, I know it to be true. Fulfill a real need in an established niche with a large built in community.
4. Don’t rely on “free samples.” It’s not sustainable at scale (and it’s hard to pivot your pricing model without serious churn).
Fundamentally, the problem with the free sample model is this: Once you begin to scale (past 3,000 or so customers) it gets harder and harder to not only procure enough product to fulfill your boxes (at least without 100 variations), but also to provide enough value back to your vendors that they continue to sample with you. Even worse, it’s extremely difficult to pivot your pricing model without serious churn.
If you’re insistent on building a sample marketing business, choose a niche where the products have massive margins and cost cents on the dollar to make (like the beauty industry) and come up with a strong strategy that keeps your sample vendors coming back every quarter.
5. Customer satisfaction is the best indicator of your business’ health (be obsessive about it).
I’ve been lucky to have had a business partner who is insanely customer-centric. Jesse, who managed most community relations for each business, would literally send emails on a Sunday night to keep ticket response times under 2 hours. You don’t have to go that extreme, but the idea is there: take care of your customers. Go that extra length to send replacements, apply a coupon, and apologize. They will appreciate you for it, and you’ll see customer lifetime value increase as a result. I also recommend using a customer service application to create a finely tuned workflow for your customer service efforts (Zendesk is a great option).
6. Most subscription businesses can thrive with extremely low overhead. Don’t raise Venture Capital.
Perhaps my biggest regret is that I thought raising capital was necessary. Most of our money went to building technology and these days there are some great options for subscription commerce businesses. Cratejoy for example, is a platform built just for Subscription Boxes.
If you’ve got a great idea for a new subscription, apply these lessons and you can grow your business to a sustainable few thousand customers, operate at extremely low overhead, and build a great monthly income for yourself.
For more insights on subscription commerce, and to learn how to start your own subscription box, check out Jameson’s blog.
Jameson Morris is an entrepreneur and a pioneer of Subscription Commerce. He has founded multiple successful subscription businesses, such as Conscious Box, Escape Monthly and Yogi Surprise.
7 Surprising Industries Turning To Subscription Business Models
You've heard of subscriptions to meal kits and wine-of-the-month clubs — but what about to your annual physical, or access to overhead bins? From gaming to education, we look at service-focused industries that are embracing subscription business models.
Over the last few decades, industries everywhere have begun to adopt subscription business models.
Netflix subscriptions have replaced DVD collections, and Spotify has taken the place of CD shelves. Meanwhile, companies like Blue Apron, Dollar Shave Club, and Stitch Fix deliver everything from dinner to dresses straight to customers’ doors on a “set and forget” recurring schedule.
This is the subscription economy — and the sector is growing fast. Revenue among subscription businesses grew roughly 5x faster than both the retail sector and the S&P 500 from January 2012 through June 2019, according to data from Zuora.
There are several factors driving this growth, including advances in the tech infrastructure that supports it. Perhaps more importantly, the subscription model aligns incentives on both sides of the equation, offering stability for businesses and affordability and convenience for consumers.
Increasingly, subscription models have grown to include companies where the “product” being offered isn’t a product at all — it’s a service, and the value being provided isn’t ownership, but access. For example, car subscription companies are letting drivers rent cars for occasional trips rather than owning one, while fitness brands are turning customers’ basements and living rooms into membership gyms.
In this report, we dive into 7 surprising industries where subscription models are cropping up for service-based offerings from education to travel to home improvement.
Table of Contents
The rise of subscription business models
Surprising industries adopting subscription business models
Lessons from the expanding subscription economy
What’s next in service subscriptions
The rise of the subscription economy
Well before the internet, people paid for subscriptions to services like newspaper and milk delivery. But adopting and implementing new subscription business models has historically been difficult for companies. For decades, one of the biggest challenges of subscription models was simply collecting payments. Businesses lacked sufficient infrastructure to collect recurring payments from thousands — or even millions — of customers.
Today, digital payments platforms such as PayPal, Stripe, and WePay have made it possible to set up and process recurring payments without the massive investment of manpower that was once required.
Meanwhile, analytics platforms like Zuora, ProfitWell, and Recurly have given businesses better insight into consumer behavior, which companies can use to hone their subscription models over time.
On the physical product side, advances in logistics — best exemplified by Amazon — have made it more efficient and cost-effective to ship products reliably and at scale.
These infrastructural developments have made subscription business models increasingly feasible, but feasibility alone can’t account for the growth numbers that the subscription economy has seen. To understand that, it’s important to examine the appeal that the subscription model holds for businesses and the customers they serve.
Appeal for businesses: predictability, recurring revenue, and customer insight
Once a company has started acquiring subscribers and has a solid view into metrics like customer lifetime value and churn rate, subscription businesses become easy to track and predict. Because they’re based on recurring payments, subscription models offer a surer source of revenue that business leaders can count on for strategic planning and investment purposes.
Subscription models can also offer deeper customer insights. When interactions with customers are restricted to one-off purchases, it’s difficult to develop a nuanced understanding of consumer behaviors and preferences. But when businesses have ongoing relationships with their customers, they can maintain contact and gain deeper insights into how customers interact with products. Those insights can be used to inform a wide range of business choices, from product alterations and new products to marketing decisions.
Consumers also tend to stick with a subscription service once they’ve signed up. As angel investor Eric Stromberg notes:
“Subscription is a powerful business model because it creates an environment where the default customer behavior is retention, as opposed to one where the default behavior is churn.”
There’s some controversy about this idea: churn is mentioned as a risk of subscriptions as often as retention is identified as a benefit. But for subscription businesses that nail product/market fit and successfully spark customer obsession, being able to count on subscribers to stick around for the long haul is a huge benefit.
Appeal for customers: cost, convenience, and customization
For consumers, subscription business models address practical needs and promise added simplicity.
First, there’s cost. Consumers today have more demands on their budgets than ever before, as big-ticket expenses such as housing, health care, and education continue to climb faster than wage growth. For many types of goods, a monthly subscription fee is more accessible than a higher one-time expense.
Next, there’s convenience. As consumers seek out ways to simplify their lives, the “set and forget” nature of subscription services can help them do so.
The slogan on Audi’s subscription service website captures this appeal: “All of the power. None of the responsibility.” Subscription business models offer consumers the promise of one less thing to worry about.
Source: Audi select
Subscription models can also offer variety. Rather than watching the same movies repeatedly, Netflix users have a library of thousands of films. Instead of deciding which car to purchase, people with car rental subscriptions can drive all kinds of different vehicles. Subscription models give customers the feeling of owning many different products without the cost, responsibility, and clutter of actually buying them.
Finally, subscription models can provide greater customization. Over the past few years, personalization and curation have emerged as major consumer trends. With tiered pricing structures and tailored recommendations, subscription models can let consumers choose the level of service that meets their personal needs — no more, no less.
Challenges of subscription models
While subscription businesses are enjoying unprecedented popularity, the model is far from bulletproof. High-profile struggles like MoviePass and Blue Apron serve as reminders that plenty can go wrong with a subscription business model if product, pricing, positioning, and incentives are not aligned.
Repetitive purchasing is one of the key benefits of adopting a subscription business model. But as the struggles of subscription meal kit service Blue Apron illustrate, that’s not always guaranteed.
Blue Apron was an early success story of the subscription economy, but it began to publicly falter after its 2017 IPO due to customer attrition. Blue Apron found itself on what a Harvard Business Review article called a “customer acquisition treadmill,” churning through customers in great numbers and constantly spending more money to replace them.
Churn rates vary from segment to segment within the subscription economy, ranging from 4.79% to 10.54%, depending on the industry, according to data from Recurly. But with month-to-month subscription plans that are easy to cancel, it’s a risk that businesses considering the model must address.
“Consumers are quick to cancel services that don’t deliver a superior experience — for example, because of poor product quality, dissatisfaction with the assortment or a lack of perceived value.” — McKinsey
Another challenge facing businesses in the subscription economy is the sheer volume of subscription options out there. In a 2019 survey by Fetch, 75% of respondents reported that the variety of options made it harder to choose a subscription, while 40% stated that they planned to reduce the number of subscription services they subscribed to.
In the earliest days of subscription video, Netflix was a mostly unchallenged giant in the space with Hulu in a comfortably distant second place.
But as major media brands and networks, including Disney, Apple, Facebook, CBS, NBC, and even Amazon Prime have thrown their hats into the streaming ring, the space is quickly growing more crowded — leading to frustration for consumers who feel overwhelmed by choice and intense competition among platforms vying to host the most in-demand content.
Some industry observers are even starting to warn of subscription fatigue, speculating that there may simply not be enough consumer dollars to go around and that consumers will start to drop one service in favor of another.
The phenomenon may already be underway: one research company estimated that as many as 1M Netflix subscribers canceled their subscription following the Q4’19 launch of Disney’s streaming service, Disney+.
Balancing profitability & accessibility
Companies operating under subscription models must strike the right balance between accessibility and appeal for consumers on one hand and profitability on the other.
A marquee failure on this front is subscription movie ticket service MoviePass. The company grew its customer base to over 3M subscribers by promising unlimited movie tickets for a flat monthly fee. But it struggled to deliver on that promise profitably, ultimately shuttering in September 2019.
MoviePass’ struggles are a case study in what happens when a subscription service’s success is contingent on customers not using it. As Rafat Ali, founder and CEO of Skift, explains:
“The subscription economy works because they’re betting on people not using it that much. If the utilization is very high, that will affect their margins.”
Surprising industries using a subscription business model
Potential perils aside, a growing number of businesses are adopting subscription business models — in many cases, in industries that you might not expect.
Cars: OEMs turn to subscriptions to adapt to the realities of shifting consumer habits
In March 2019, prominent tech journalist Kara Swisher published an op-ed in the New York Times proclaiming that “Owning a Car Will Soon Be as Quaint as Owning a Horse.”
The evidence to support that claim is growing: private car ownership declined globally for the first time in 2018. For more and more people, car ownership is not a daily necessity in the same way that it was for previous generations.
Faced with this paradigm shift, car companies are embracing the ethos of “usership instead of ownership” to offer subscribers all-in-one subscriptions that include insurance, roadside assistance, maintenance, and the car itself for a monthly fee.
The rise of subscription car services comes at an inflection point for the automotive industry. Cost is one likely factor in the decline: the average price of a new car in the United States hit a record high of $37,401 in 2019. Increased urbanization also plays a role, as more consumers — particularly younger ones — opt to live in metropolitan areas with plentiful alternatives to car ownership.
However, car access continues to have its appeal, and a growing number of car companies are harnessing subscription models to meet that demand.
One of the earliest companies to do this was Zipcar. Founded in 2000, Zipcar allows members to reserve vehicles on demand for $7 per month, plus an hourly rate for each individual drive. Legacy car-rental companies Hertz and Enterprise have also introduced subscription car services as a way to expand beyond their core use case of short-term travel rentals.
Automotive OEMs are also testing out subscription models. Audi, BMW, Cadillac, Jaguar Land Rover, Mercedes-Benz, and Volvo have all introduced subscription-based models. These programs can offer companies a way to get unsold merchandise off their floors while generating some revenue. Piloting a subscription product can help OEMs fine-tune their business models in anticipation of the arrival of autonomous vehicles, which many in the industry expect to be used in proprietary fleets before they’re used as vehicles for personal ownership.
The takeaway: The shift toward subscriptions in the car industry highlights how a subscription business model can help legacy businesses adapt to the changing habits and preferences of their target market. Consumers aren’t buying cars as frequently, so OEMs are evolving to engage with consumers in a way that works for them.
The automotive industry’s approach to subscriptions also illustrates the power of all-in-one pricing. Virtually all car companies pursuing subscription models offer all-inclusive subscriptions, bundling roadside assistance, maintenance, insurance, and access to the car itself into one monthly payment, and eliminating the need for consumers to manage those components individually through additional vendors.
Airlines: Subscriptions reward loyalty with convenience
Travel companies turning to subscription models can offer a couple different value propositions: subscription models can make travel cheaper for frequent travelers, but the more attractive benefit may be saving time.
For example, for frequent business travelers who put a premium on their time, the promise of less time spent in airports can justify a costly subscription.
Surf Air bills itself as California’s “private air travel membership,” offering members unlimited flights on its private planes for $1,950/month — and claims to be a more efficient service than commercial flying.
Another company looking to take the annoyance out of air travel with a subscription service is FlyLine, which focuses on saving subscribers money on tickets. For a $49.99 per year Basic subscription or $79.99 per year Premium subscription, FlyLine promises “extraordinary flight deals you can’t find anywhere else.” The company reports that its customers save an average of 10-15% on domestic multi-carrier bookings, and anywhere from 20-60% internationally.
Surf Air and Flyline can also aim to simplify choice, saving loyal customers from having to hunt for deals on multiple websites or airlines.
Major commercial airlines are also introducing subscription services, often in a bid to boost customer retention and loyalty.
In October 2019, Delta introduced SkyMiles Select, a $59-per-year “travel benefits bundle” that offers subscribers perks, including drink vouchers and priority boarding, with the promise of guaranteed overhead bin space. As one travel industry expert notes, the offer appears to be geared toward “Average Joes and Average Janes” who fly a few times a year, with the goal of incentivizing these travelers to keep choosing Delta for their flights.
United, JetBlue, and Southwest also offer subscriptions, with perks such as priority boarding and overhead-bin access.
The takeaway: The expansion of airline subscription services shows that subscriptions models don’t have to just offer cost savings to be attractive. Comfort and convenience — like saving time in airports, or making flying a little more comfortable in the case of commercial airline offerings — can carry as much or even greater weight with customers if the overall improvement to their experience is significant enough.
In-home fitness: Personalization in every way
Subscriptions aren’t exactly new to the world of fitness: gyms have run on monthly and annual membership plans for decades.
But in the digital era, subscription fitness programs that let customers sweat it out in their own homes are becoming more popular.
Fitness is emerging as a top priority in a culture that emphasizes the importance of wellness and self-care, but as personal and professional obligations continue to mount, people are looking to streamline their lifestyle. At-home workout programs offer a solution that lets consumers work out when they want, how they want — going beyond an at-home treadmill or exercise video with offerings like interactive digital classes or one-on-one remote coaching.
Subscription models also enable brands to reach consumers in smaller cities and less-populated regions, where high-end brick-and-mortars gym like SoulCycle or Equinox might not be accessible.
Peloton is the most prominent player in the emerging subscription-fitness space. The company combines one-off product sales of its bikes and treadmills with a $39/month subscription for ongoing access to a library of workout-related content.
According to public offering documents filed in 2019, Peloton had sold 577,000 of its “Connected Fitness Products” as of June 2019 — but it sold 1.4M members to its subscription services.
Several other brands in the fitness space are following in Peloton’s footsteps, combining high-end, single-purchase hardware with ongoing subscriptions for access to content.
For example, Mirror combines its $1,500 smart mirror with an ongoing subscription. Like Peloton, Mirror puts a lot of emphasis on convenience and personalization, offering the ability to customize workouts based on personal preferences and goals. The company, which started selling its product in September 2018, has raised $72M at a $300M valuation, and counts Lululemon among its backers.
Tonal applies this model to weight training, combining a digital weight system and interactive display with a library of personalized workouts available for a $49/month subscription. Tonal closed a $45M Series C funding round in April 2019.
While the sticker price of products like Peloton and Mirror might seem prohibitive, their costs can end up being lower than that of boutique classes in the long term — for example, one SoulCycle class costs while Peloton’s stationary bike and streaming membership is $97 per month.
And not all subscription-based fitness brands require hefty initial purchases. Daily Burn offers subscribers a library of video fitness content for $15-$27 per month, depending on the program. Apps like Glo and CorePower apply the subscription model to yoga and pilates. Aaptiv takes an audio-only approach, offering more than 2,500 classes for $14.99/month.
The takeaway: The explosion of subscription businesses in the fitness space underscores how important experience is to a successful subscription brand. Companies like Peloton and Mirror place a lot of emphasis on personalization because they recognize that this that will keep customers engaged and help combat churn.
Gaming: The power of variety
Last year, GameSpot dubbed 2019 the “Year of Subscriptions” for the video game industry. As broadband connectivity and streaming technology have improved, millions of gamers have started playing through subscription services, paying a monthly fee for access to a variety of games rather than buying individual ones outright.
In a digital ecosystem, the concept of owning a video game makes less and less sense: when games are purchased and streamed over the internet, there isn’t a physical product to own in the first place. Subscriptions can offer players variety and novelty while still allowing platforms and publishers to maintain control of their products.
As Dr. Daniel Joseph, an academic specializing in the economics of digital app stores, notes:
“Subscriptions give platform owners a lot of power. It lets them curate and gain control of distribution.”
Early concerns that switching to a subscription model would hurt the play time of individual games have proved to be unfounded. In fact, subscribers spend 4x the amount of time, 3x the amount of money, and play 2.5x the number of games compared to non-subscription-based gamers, according to The Gamer.
The model has particularly benefited smaller publishers and independent game creators, as subscribers are more likely to take a chance on a new game that they would not have bought themselves.
Most of the major video game console creators have launched subscription services in the past 3 years:
- Xbox Game Pass gives subscribers access to over 100 games for $10 per month. Microsoft has not disclosed total subscriber counts since launching the service in 2017, but some reports place monthly players as high as 9.5M, and 30% of total Xbox revenue.
- PlayStation Now has a library of 650 games available for $9.99 per month or $59.99 per year. Sony placed PlayStation Now’s subscriber count at 1M at the end of October 2019 — a 40% increase from 700,000 subscribers 6 months earlier.
- EA Access offers subscribers early trials and 10% off purchases. Estimates put the total subscriber count for EA access at 5M across PC, Xbox One, and PS4.
Even major tech companies that aren’t primarily known for gaming are following suit. In September 2019, Apple introduced its own gaming subscription, Apple Arcade, which is playable only on Apple hardware and has a selection almost entirely made up of exclusive games.
The same month, Google introduced Google Play Pass, which grants subscribers access to 350+ games for $4.99 per month.
The takeaway: Subscription business models’ success in gaming highlights what powerful value propositions selection and variety are for consumers. The appeal of the ability to discover and try out a variety of games without the financial burden of having to buy them all individually is exactly where the subscription business model thrives.
Health & wellness: Subscriptions building mutually beneficial relationships
The idea of access rather than ownership has particular relevance in the health and wellness space. Healthcare providers are exploring how subscription services might offer a solution that lowers point-of-service cost and reduces the load on individual providers.
One example of a subscription-based approach to healthcare is MDVIP. Rather than covering visits through a combination of insurance and out-of-pocket expenses, MDVIP members pay a flat yearly fee (ranging from $1,650 to $2,200) that covers preventive care and diagnostic tests, as well as a variety of value-added services like meal plans, fitness plans, and 24/7 physician availability.
MDVIP illustrates how a subscription model solves problems on both sides of the interaction.
Under a subscription model, a physician can earn the same amount as they would by working under a traditional model — and sees only about one-sixth the number of patients. For doctors, this means lessening case loads without losing money. For patients, this means more personalized care and reduced up-front costs, because they pay gradually throughout the year rather than all at once at the point of service.
Subscription business models in the health and wellness space are not limited to in-person medical care. A growing collection of software and services are emerging, with the goal of improving users’ physical and mental health.
In 2019, wearable tech company Fitbit launched its first paid subscription service, Fitbit Premium. The program provides “advanced insights” that go beyond those offered to all device owners; coaching tailored to address common health concerns, such as diabetes and weight management; and health and wellness reports that subscribers can share with their doctor.
Meanwhile, sleep-tracking app Sleep Cycle follows a freemium model, offering core features like intelligent wake-up and sleep analysis free of charge, while reserving certain advanced features — like sleep aid, snore detection, and heart-rate tracking — for paying subscribers.
Meditation app Headspace offers subscribers a full library of themed courses, as well as new daily meditations and sleep assistance, for $12.99/month or $69.99/year, down from its early pricing of $99.99. Headspace has been gaining traction with employers, as well: Starbucks announced in January 2020 that it was adding Headspace subscriptions to its list of employee benefits.
Another subscription service aiming to improve users’ wellness is Happify, which provides personalized programs aimed at improving users’ emotional health and happiness. Like Headspace, Happify is seeking greater market penetration through employers with its Happify Health program.
Happify and Headspace’s moves into the workplace are part of a larger trend of health and wellness businesses seeking access to large groups of customers through employers. Benefits of employee wellness programs include reduced healthcare costs, higher engagement and productivity, greater job satisfaction, and higher retention — all things likely to appeal to employers looking to optimize their workforce.
However, the transition to subscription-based health care hasn’t always been smooth. Online medical booking service Zocdoc discontinued its subscription offering in early 2019, opting to switch to a per-patient fee. In a letter to New York doctors explaining the decision, Zocdoc wrote:
“As we have grown, we have realized that our flat subscription fee is a financial barrier that excludes too many providers from participating in Zocdoc. Importantly, it also limits patients seeking care from finding providers. On Zocdoc, the total number of patient bookings a provider receives varies widely, but a flat subscription fee does not account for that.”
The takeaway: Subscription healthcare services highlight how a subscription business model can provide value to stakeholders on both sides of an equation. In the case of subscription healthcare like MDVIP, patients get more personalized, attentive care, and providers get less hectic case loads. In the case of services like Headspace and Happify, employees gain access to wellness services while employers get the benefit of a calmer and more focused workforce.
Education & professional development: Meeting continuous customer needs
With the economy evolving at an accelerating pace, workers are facing more pressure to update their skills to stay in an increasingly global job market.
In one survey by West Monroe Partners, 55% of respondents agreed with the statement, “I need to learn new technologies to remain competitive in my skillset.” Twenty-four percent of respondents in the same survey said, “The skillset needed in my role is becoming more complex.”
For decades, that meant going back to school for a continuing education course or an advanced degree. But with the costs of higher education continuing to climb and student debt already at an all-time high, professionals and employers are seeking alternative models for education and training — and businesses are looking to subscriptions as a way forward.
Codecademy, a virtual platform that teaches computer programming skills, offers many of its courses free of charge; however, a subscription to the platform’s Pro service gives learners a more focused learning experience that includes exclusive content.
Perhaps the biggest player in subscriptions for professional development is LinkedIn. The social network for professionals acquired e-learning startup Lynda in 2015 for $1.5B and rebranded it as LinkedIn Learning. For $19.99–$29.99 per month, LinkedIn Learning subscribers can choose from more than 15,000 expert-led “business, tech, and creative” courses.
LinkedIn also partners directly with businesses to offer LinkedIn Learning courses to employees. The company website reports that 78% of Fortune 100 companies offer LinkedIn Learning.
Other companies offering learning-as-a-service include employee coaching platform Bravely, online educational platform Coursera (which now offers bachelor degrees), and language learning apps like unicorn company Duolingo, which offers a premium version of its app for a monthly charge.
Not all subscription businesses in the e-learning space are focused solely on professional development. For $15/month, MasterClass offers subscribers the opportunity to learn a variety of skills from top practitioners in their field. In addition to career and business courses, classes include TV writing with Shonda Rhimes, cooking with Gordon Ramsay, and tennis with Serena Williams.
The takeaway: The subscription model’s expansion into the professional development space shows how subscriptions work well for industries where customers need a continuing service. Businesses need to be able to train new employees continually, and offering professional development opportunities for employees has been shown to be essential to employee retention. With a subscription model, that service is “always on.”
Home maintenance: Startups introduce supers-as-a-service
In the home maintenance space, companies are exploring ways to turn everything from home repairs to tree removal into a subscription service.
One company in this category is Super, which bills itself as “subscription care” for the home. Super fills the role of a superintendent for homeowners, offering on-call maintenance staff in exchange for a monthly subscription fee.
Super falls in the consumer sweet spot for subscription services on a few fronts. One way is cost: members pay a monthly or yearly fee, and Super covers the cost of home maintenance and repairs, from a broken refrigerator to a malfunctioning AC unit, that could otherwise cost homeowners hundreds or even thousands of dollars. Super also offers homeowners convenience, eliminating the need to find and vet service providers individually, which can involve a lot of time and uncertainty.
Another startup bringing the subscription approach to home maintenance is Handy. From its core service of house cleaning, Handy has expanded into a range of home maintenance services, from tree removal to furniture assembly. The startup has also partnered with retailers to sell its services, with companies such as Walmart making it possible for online shoppers to add Handy’s in-home installation services at checkout.
Handy’s move toward subscriptions comes in the wake of the failure of another high-profile startup in the space: Homejoy, which foundered after the service “pushed relentlessly for high growth numbers instead of fixing its poor retention rates,” according to Forbes. Just 15%-20% of Homejoy customers booked a second cleaning within a month — not nearly the retention rate needed to make the model work.
By adopting a subscription model, Handy sidesteps Homejoy’s customer retention problem, as customers are prompted to set up recurring appointments. With an expectation of recurring service built in from the outset, Handy has seen better retention rates than Homejoy: 35% of Handy customers book a second cleaning within a month, and the number reaches 45% in larger markets.
“Our product is almost entirely a recurring business product — the economics are all about driving repeat use. That’s so, so important in this category.” — Handy CEO Oisin Hanrahan
The takeaway: Frequency of use is commonly thought of as the key to a “sticky” subscription service, but the success of subscription models in the home maintenance space underscores the value of convenience. Sometimes, the peace of mind that comes with knowing that a problem will be taken care of with minimal time and effort on your end is worth the price — even if you’re not using the service on a constant basis.
Lessons from the expanding subscription economy
Businesses in the above industries that have found success with subscription models have tapped into principles of the subscription economy that go much deeper than price. Here are a few of the most important things they teach us:
Reclaim or re-engage customers: Several of the businesses and industries above show that adding a subscription model can help bring fleeing customers back into the fold, or increase engagement when an audience is flagging.
Car companies are using subscriptions to retain drivers, if not owners; and game publishers are using subscriptions to expand payership for their games, even if they no longer buy the games outright.
For those worried that younger consumers in particular are fleeing their industry, exploring a subscription model as a means of reducing commitment could be well worth the try.
Synergize stakeholders: In many of the industries above, businesses are finding success by using the subscription model to balance interests between multiple communities of stakeholders: employers and employees; healthcare providers and patients; and gamers and game publishers. It’s worth considering what other sectors present a similar balance to strike.
Not all value is visible: In product-based subscription businesses, as well as the traditional buy-sell paradigm, the value-for-value exchange is clear-cut: pay money, get the product. In the service-based subscription economy, that dynamic isn’t always so simple.
As the implementation of subscriptions in home repair, air travel, and video games show, sometimes just the knowledge that the service is there is worth the price of membership. Each of these businesses promises a service in addition tosome higher-order practical or psychological benefit, whether that’s saving time with air travel, eliminating the effort and responsibility of owning a car, or providing greater selection of goods.
What’s next in service subscriptions
The subscription economy is growing, and the opportunities it presents aren’t just limited to SaaS products and subscription boxes. As the logic of the subscription economy continues to expand into new industries, it’s likely we’ll see even more unexpected verticals adopting service subscription models in the years to come.
Some likely candidates include:
Elder care: As the Baby Boomer generation ages, ensuring their comfort and care is a growing problem, both personally and for the economy at large. “Grandkids on demand” service Papa already connects older adults with college students for help with transportation, chores, and technology on an on-demand basis, while Umbrella focuses on home help. These companies and others could introduce subscription models as a way of ensuring consistent service and convenience to their populations of older customers.
Camping: Revenue from camping equipment sales topped $2.5B in 2018. But in the spirit of “access, not ownership,” introducing a subscription model could help the industry expand its reach still further to those who want to enjoy the experience of camping, but are unwilling or unable to buy equipment of their own.
Camping is particularly popular among millennials, who are already a prime subscription demographic, and there are currently several product-based subscription boxes in the camping space. Meanwhile, property is already being commoditized and modularized for camping via services like Hipcamp — it’s reasonable to imagine that subscription campsites might not be far behind.
Skincare & nutrition: Skincare and nutrition are next logical steps for companies looking to offer a wellness-focused subscription service. Skincare company Atolla expands its subscription service beyond the typical replenishment model by offering subscribers personalized serums based on their individual skin measurements. In the nutrition space, Lumen pairs a hardware device that assesses the customer’s metabolic levels with personalized meal plans calibrated to subscribers’ unique needs. In a similar vein, Little Spoon provides custom baby food formulated to a baby’s individual nutritional needs.
Fashion & apparel: Rent the Runway was the first to validate that the “access instead of ownership” model best exemplified by Netflix’s original DVD rental business could be applied to fashion — with significantly less risk of obsolescence, since there’s no digital alternative to clothing. The clothing rental service became a unicorn in 2019 and has launched a number of new services, including athleisure and maternity rental services. Le Tote is following a similar model, offering members the option to either wear and return products or purchase items they love for up to 50% off the retail price.
This report was created with data from CB Insights’ emerging technology insights platform, which offers clarity into emerging tech and new business strategies through tools like: If you aren’t already a client, sign up for a free trial to learn more about our platform.
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Makeup subscription boxes are a great way to learn about and test out the best beauty products on the market. For a small fee — anywhere ranging from $7 to $60 a month — you can get skin care samples, hair care products and cosmetics sent right to your door. The best part is you can test various products from the high-end brands without making the commitment — sample fragrances from Dolce and Gabbana, Prada and other luxury designers at a fraction of the cost.
There are makeup subscription boxes for just about anyone out there, whether you're into clean beauty, constantly need new makeup brushes or enjoy surprise finds, like a really good rose-scented perfume to wear for date night. And, most of them require you to take a quick beauty questionnaire to ensure that the products you receive are things you'd actually like and use. Pro tip: these also make great gifts for the beauty fanatic in your life.
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Here are the best makeup subscription sets you can buy in 2021:
Best Overall Makeup Subscription BoxHello!—Most-Loved Beauty
The best feeling is coming home from Sephora with a bag full of goodies to experiment with. While the beauty retailer's monthly subscription box "Play" has been discontinued, the brand came out with something even better. For just $10 and up, you can test makeup, skincare and hair samples from top, coveted beauty brands. Sets also include a 15% off coupon that you can use on any future purchase of full size product that was included in the set.
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Best Amazon Beauty Subscription BoxBeauty Box
When Amazon is your one-stop shop for everything, it's exciting to see that they have their own selection of beauty subscription boxes to browse through. Plus, Prime members get special discounts on certain boxes, and the best part is you can read reviews from real users you can count on to help you decide on the makeup subscription box that's best for you.
RELATED: 20 Best Beauty Products on Amazon That Cost Under $10
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Best Makeup Subscription Box with the Most VarietyBirchBox Monthly Box
Create your Beauty Profile and BirchBox will send you a curated package of makeup, hair and skin care samples which, according to their site, come from a "mix of prestige and niche brands." Beauty Director April Franzino agrees. "I feel that Birchbox is the most reputable with the best variety of brands and quality of samples," she says.
RELATED: Good Housekeeping's 2021 Beauty Awards
- Customization: Boxes are curated according to your Beauty Profile preferences. Members can also choose one specific sample each month
- Subscription cycle: Monthly
Best Value Makeup Subscription BoxWalmart Beauty Box
At just the $7 expense of shipping and handling, Walmart delivers boxes filled with beauty goodies from best-selling drugstore makeup brands to lead you through each season. To get the most of your experience, Walmart asks you to complete a short survey detailing your style, skin concerns, hair type, hair styling techniques and beauty interests and customizes each box accordingly.
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- Subscription cycle: Seasonal
Best Customizable Makeup Subscription BoxGlam Bag
Take a beauty quiz that asks about your skin type, eye color, favorite perfumes and more and you'll receive five makeup and skincare products based on your preferences. This includes anything from face highlighter to hand cream from that month's collection of goodies. Plus, you'll receive your hand-picked goodies in a cute keepsake bag each time.
- Customization: Members receive five products that most match your beauty profile from that month's Glam Bag collection
- Subscription cycle: Monthly
Boxycharm deliveries include up to five full-size makeup products valued at $120 or more each month. You'll get products from affordable and prestige brands, like ColourPop, BareMinerals, Tarte and more.
- Customization: Each month, subscribers can choose one product in their box, Premium subscribers can choose up to two, and BoxyLuxe subscribers can choose up to three. Plus, by completing the Complexion Pack quiz, subscribers can receive foundations and concealers in their own skin tone
- Subscription cycle: Monthly, 3-month, 6-month, and 1-year packages available
Best Luxury Beauty Subscription BoxBeauty Box
When you really want to treat yourself, Look Fantastic promises to send six luxury products with a guaranteed value of over $65 plus an issue of our sister brand, Elle magazine, to your door each month.
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Best Seasonal Makeup Subscription BoxFabFitFun
Expect more than just hydrating foundations and moisturizers in these boxes: you can also find cooking tools, planners, water bottles and more. Every four months, you can receive up to 10 full-sized seasonal products — plus, you can choose some products and add-ons you want in your box.
- Customization: For one week at the beginning of each season, all members can customize some of the products in their box. Select members can choose more products and get early access to customization
- Subscription cycle: Seasonal
Best Fragrance Subscription BoxScentBird Box
- Customization: Members can choose the full-sized product of their choice to sample each month. Subscription schedules can also be adjusted upon request
- Subscription cycle: Monthly, but can be adjusted upon request
Each month, beauty experts choose five deluxe beauty samples for you to try based off each month's theme (for instance, Junes's theme was "Complexion Perfection"). Not only that, but you also get a voucher to receive $5 off your next beauty purchase.
- Subscription cycle: Monthly
- Customization: Not available
Best Drugstore Beauty Subscription BoxBeauty Capsule Box
Commitment-phobes, rejoice. While other beauty subscription boxes make the cancelling process difficult or charge customers for cancelling, Target's beauty boxes come without a renewal agreement. Simply add the box of your choice to your cart. Featured boxes include an At-Home Luxuries Kit, packed with hair care, moisturizers and masks; Pampered Nails Set, for strengthening and nourishing skin and nails; Black Owned/ Black Founded Box, a kit featuring hair masks body lotion and printed warp scarf and more.
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Best Skincare Subscription BoxBeautyFIX
Dermstore is known for making hard-to-find skin care products accessible, so it's no surprise that, in addition to prestige makeup samples, its BeautyFIX box comes with mostly full-size samples of skin care and hair products that exceed a $100 retail value with each delivery.
- Subscription cycle: Monthly
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Makeup Subscription Boxes
If you're completely overwhelmed and prefer to know about all your options before you buy, CrateJoy keeps all the best subscription boxes in one place so you can learn about each one. In the makeup subscription tab on their site, you can scroll through hundreds of beauty box options, from Jersey Shore lip balms, to bright and artsy NME cosmetics, to lash-specific beauty boxes for just $6 +.
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Best K-Beauty Makeup Subscription BoxJoahBox
K-beauty box JoahBox comes directly from Korea with five to seven full-sized K-beauty items like makeup, skin care, nail care and beauty tools valued at up to $100. Afraid you'll fall in love with a highlighter sold only in Korea? Don't worry — you can shop for the products you want to buy again on their site.
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The beauty team at GlossyBox makes it their goal for you to discover new beauty products every month. They work with your beauty preferences to expose you to up-and-coming makeup and hair products from around the world. If you don't wish to subscribe monthly, they also have 3-month and 6-month options.
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The Essential Box
When you're on the hunt for non-toxic and eco-friendly beauty, you can count on Love Goodly to deliver. They specifically customize their boxes with four to five full-sized products to your door every other month, which, according to the brand, are cruelty-free and vegan.
- Customization: Occasionally, customers will receive a personalization survey via email to customize boxes
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The Detox Box
If you prefer your beauty regimen to be clean for the environment and for yourself, the Detox Box sends you a minimum of $90 worth of products every month, which they claim is all green beauty. They focus on one brand each time so you can learn about every top green beauty brand on the market.
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Best Sheet Mask Subscription Box7 Lux Subscription
Flawless makeup application needs to start with a good base, a.k.a clean and clear skin. FaceTory sends you a minimum of four Korean sheet masks every month, giving you access to otherwise not-as-accessible beauty finds from halfway around the world.
- Subscription cycle: Monthly and quarterly
- Customization: Not available
Raena Loper, Good Housekeeping InstituteRaena Loper is the Product and Reviews Associate for the Good Housekeeping Institute, covering home, textiles, wellness, tech, outdoors and more.
Shanon MaglenteProduct and Reviews EditorShanon worked as the former Products & Reviews editor for the Good Housekeeping Institute covering the best deals and products across home, appliances, health, beauty and parenting.
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Start Your Own Amazon Subscription Box Business
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Shopping on Amazon and ordering subscription boxes are a match made in heaven for consumers. People can save money on just about anything under the sun by shopping on Amazon… without ever getting off the couch. Subscription box services also provide consumers with savings on items they regularly use, and they save time by subscribing once and forgetting about it, periodically receiving the items they need.
Amazon’s subscription box services are also a match made in heaven for small businesses and entrepreneurs. They can boost their sales by offering customers the chance to subscribe and save, and they can take advantage of Amazon’s massive marketplace and ever-increasing customer base.
What is a Subscription Box on Amazon?
Through Amazon subscription boxes, qualified sellers can list, sell and manage their subscription box services on Amazon.com. Amazon’s massive reach offers sellers new ways to engage their customers through a trustworthy platform.
Following the uber-success of its flagship Prime membership program – and in the tradition of a business model hailing all the way back to the 1926 Book of the Month Club – Amazon launched its Subscribe & Save shopping option in 2007. The option allows customers to save on items they use on a frequent or periodic basis by having a fresh supply automatically sold and shipped every two weeks, month or other specific durations.
Whereas Subscribe and Save can be selected for individual items, Amazon subscription boxes latch on to the decade-long trend of consumers saving money on their favorite items while also sampling new and exciting products via subscription, and early services have led a revolution in the subscription box market, with unique and innovative competitors joining the race every day. Successful subscription box companies include:
- Birchbox (beauty products)
- Dollar Shave Club (shaving and personal care items)
- Hello Fresh (groceries)
- Barkbox (dog toys, dog treats)
- Klutchclub (health and wellness)
The American Subscription Box Market
More businesses are selling subscription boxes every day – the market expanded by 100% each year from 2013 to 2018 – and for good reason. More than half of online shoppers surveyed by Clutch in 2019 said they use a subscription service… and that number only grew as consumers avoided physical shopping facilities during the covid-19 pandemic. It’s no wonder why UnivDatos Market Insights estimates that 75% of all direct-to-consumer businesses will offer subscription services by 2023. By 2025, the subscription e-commerce market is expected to surpass $478 billion, 70% of which is sold in North America.
Amazon wasted no time capturing its share of the significant subscription market and the subscription box industry statistics prove it. In 2019, the e-commerce giant’s subscription services achieved almost $20 billion in revenue – 20% of the company’s total for the year. The massive sales are thanks in part to popular subscription boxes from top sellers like Philosockphy, Barkbox, Tea Runners and the Carnivore Club. It doesn’t hurt that according to Hitwise research, 58% of e-commerce subscription buyers already shop on Amazon.
How Does a Subscription Box Model Work?
If you have ever wondered how to start a subscription business, Amazon has made it easy. The subscription box business model is simple, and Amazon subscription boxes are no exception. Subscribers make regular, usually automatic, payments to receive a box filled with goodies of a particular category, such as gourmet foods, coffee or beauty products. At set intervals, the seller packages up that month’s selections and sends them to the customer.
Sellers might send all boxes on the same day each month, or they might rotate orders based on the date the customer either requested or initially subscribed. Most subscription models ship boxes monthly, while others are weekly, biweekly or even quarterly. As a general rule, subscribers expect to receive items valued at a total dollar amount higher than what they pay for their box, thus the attraction of the service. Usually, a subscription box customer can cancel anytime.
Who is Eligible to Start a Subscription Box on Amazon?
Practically anyone has the potential to sell subscription boxes through Amazon. A qualified seller should meet the following requirements:
- The ability to offer a fully-assembled, curated subscription box to customers
- The ability to support free shipping directly to customers in all 50 U.S. states, Guam and Puerto Rico
- A professional seller account on Amazon prior to selling, however, an account does not have to be established to apply. To establish a professional seller account, businesses need an Amazon account, a chargeable credit card, a government-issued ID, tax information, phone number and a bank account to receive deposits.
How Much does it Cost to Sell a Subscription Box on Amazon?
To sell subscription boxes through Amazon, a Professional seller package costs $39.99 per month, regardless of how many units are sold. Amazon sellers also pay additional fees known as referral fees, usually between 8% and 15%, which vary based on product category. Most categories cost about 15% of the purchase price, with a minimum referral fee of 30 cents.
Pros of Selling Subscription Boxes on Amazon
Selling Amazon subscription boxes benefits businesses in a variety of ways, including:
- Sellers who offer Amazon subscription boxes open the door to a growing market of more than 197 million monthly customers around the world who frequent the nation’s top e-commerce platform.
- Subscription box sellers benefit from flexibility of conducting their version of retail during whatever times are most convenient for them.
- Subscription box businesses can be operated out of a home, and there’s no need for a physical storefront or office space.
- Amazon Professional sellers have access to all of Amazon’s selling platform and tools at a low monthly cost.
- Amazon offers even new and unknown sellers brand recognition that customers trust.
Cons of Selling Amazon Subscription Boxes
As with most anything in life, selling subscription boxes through Amazon also has its cons, including:
- In a rapidly expanding marketplace, competition among other subscription box services is stiff.
- Even with the perfect business concept, a new subscription box business must find its suppliers to make sure it can secure and ensure the inventory customers purchase.
- As with most small businesses, subscription box sellers are self-employed, so they must secure their own insurance policies and pay all necessary taxes.
- Subscription box businesses are based almost entirely on sending inventory, so their overhead costs, especially startup costs, can be exceptionally high.
- Operating a subscription box business isn’t right for everyone. A home-based business with an entirely remote customer base can create feelings of isolation and loneliness among some individuals.
How to Start Selling Subscription Boxes on Amazon
Starting a business is never simple, but establishing an Amazon subscription box business isn’t difficult with the following step-by-step instructions:
1. Create an Amazon Account for Sellers
All Amazon subscription box businesses must have an Amazon seller’s account. Obviously, those who already sell on Amazon can skip this step. If you don’t already have one, register for an Amazon profile, providing identifying information.
Then, choose a selling plan. Keep in mind, Amazon subscription box businesses must choose the Professional selling plan for $39.99 each month. To establish a selling account, provide Amazon with a business email address, a chargeable credit card, a copy of a government-issued ID, tax information, a phone number and a bank account where Amazon can deposit sales revenue.
2. Decide on Your Niche
So, you’ve decided to start an Amazon subscription box business, but what will you offer customers? Consumers don’t subscribe to a box to receive an assortment of unrelated odds and ends every month. They choose a niche based on their own lifestyle and interests. Will your subscription boxes feature beauty products? Healthy snacks? Dog toys? Children’s books? The options are endless.
Some of the more popular subscription box niches offered on Amazon include:
- Food and drink subscription boxes include everything from a healthy snack subscription, weekly groceries, organic boxes and all sorts of gourmet goodies.
- Toys and kids’ boxes feature kids’ books, activities and toys for children and families, and they often cater to specific kids’ ages.
- Pets are included in the subscription box craze. This type of box includes monthly toys and treats for dogs and cats, as well as feline and dogs’ accessories.
- Beauty boxes feature makeup, hair care and skincare products like sheet masks and moisturizers from some of the world’s most well-loved brands and newcomers to the beauty sphere.
- Lifestyle subscription boxes cater to a variety of hobbies and interests. One box might include scrapbooking supplies, while the next will appeal to camping enthusiasts or Star Wars fans.
- Fashion boxes can feature all types of clothing and accessories. There’s a subscription box that includes socks, while another offers graphic t-shirts.
- Wellness subscription boxes offer products to boost both physical and mental well-being, whether it’s health supplements or tea bags for self-care.
3. Apply to Sell Subscription Boxes
Once you’ve established an Amazon Professional seller’s account, and you’ve established what niche you’ll be offering subscriptions, it’s time to apply to sell subscription boxes on Amazon. The application will request basic information such as whether or not you already have active subscribers and what category or niche best fits your products.
4. Source Your Products
Where do you find the products to include in an Amazon Subscription Box? You want to make sure your suppliers can meet what will undoubtedly become a growing need and ensure they are reliable and affordable. The available options are surprisingly simple. In fact, a supplier might be discovered through actions as simple as a Google search. Other small businesses also might want to contribute discounted products for their own promotional purposes.
Amazon subscription box businesses can locate suppliers in a variety of sources, including:
- Local retailers
- Niche websites
- Wholesale clubs
- Online retailers
- Networking with other vendors
5. Advertise Your Subscription Boxes
It’s not enough to just list your Amazon subscription box and expect customers to find you. After all, Amazon now offers more than 400 different subscription options. As in most other industries, advertising is necessary to drive sales. On Amazon, you can concentrate on the SEO of your page and use sponsored ads to ensure customers can find your subscription box.
6. Ship Your Subscription Boxes to Your Customers
It’s no secret that shipping is one of the core operations of a subscription business. Without shipping boxes to customers, the business would cease to exist. But the cost of shipping greatly can impact overhead costs, and a poor shipping experience quickly can lead to lost customer loyalty. Sellers in the United States can choose between the United States Postal Service, UPS, FedEx and DHL.
Each offers slightly varying services, each uses different technology platforms and operates business in different ways. DHL, for example, delivers items that ship to hundreds of nations around the world, perfect for those times when you need to deliver to United Kingdom or a different country. Online tools are available to compare shipping rates between various carriers.
7. Receive Your First Payment from Amazon
Like anyone else, Amazon subscription box sellers want to get paid. Not only do they need the cash, but without a steady influx of revenue, they won’t be able to replenish their inventories for the next month’s box. Amazon typically pays its sellers every two weeks, and the amount will be based on sales minus referrals and other fees. Before any payment can be made, Amazon requires a bank account number that is capable of accepting ACH direct deposits.
8. Market Your Business and Increase Your Revenue
As with most any business, marketing is key to success. How will people learn about your Amazon subscription box, and what will motivate them to try it over the many other options?
Marketing a subscription box isn’t that different than marketing any other sale. You’ve got to pique consumers’ interest and offer them something they simply can’t refuse. Popular tactics include offering a free first box trial of the subscription or a freemium gift for new members, establishing a mailing list to keep interested consumers engaged with your brand, working with influencers to promote your brand and producing your own social media content to reach a broader audience, including product demonstrations
Tips for a Successful Amazon Subscription Box
Creating your business plan is only half the battle when establishing an Amazon subscription box service. Now, you have to create your products. The following tips and subscription box ideas will help you build a successful Amazon subscription box:
- Select the best box size and weight. Obviously, you need a box that can hold each of your included items, but it’s important to remember that smaller boxes cost less to ship. Be sure to consider capacity and shipping rates when choosing your box.
- Choose your products. Unless your subscription box is filled with your own goods, you’ll need to decide what items to include each month. Consider what is available at the sources above in the quantities you need. Look for ideas of popular items in other subscription boxes, but keep in mind how your customer base might differ from others. What would your customers want? Be original and unique… but not too unique that your items aren’t useful.
- Include fillers and inserts to decorate and market your subscription box. Some fillers are practical to protect fragile items. Others can make you box appear mor full, while some filler paper doesn’t do much more than make your contents attractive. Printed inserts can market your box for future clients and upset existing clientele.
Are subscription boxes patented?
The concept of a subscription box is not patented, and businesses are free to design their own versions. The name of the subscription box company, however, can be legally trademarked to protect the brand. Items from other manufacturers and brands usually can be purchased for resale to include in the subscription box, provided the subscription service does not relabel or package it in a way to create confusion with the original trademark holder.
Are Amazon subscription boxes profitable?
Subscription box businesses tend to be profitable companies. According to BlueCart, most subscription boxes have a profit margin between 40% and 60%, although that number can increase with one-time purchases and multiple pricing tiers. Subscription box companies also tend to enjoy high retention rates and predictable monthly income streams.
Can I sell books in my Amazon subscription box?
Amazon features its own branded subscription box featuring books. The Prime-exclusive Amazon Book Box offers children new age-appropriate books every 1-3 months. Each Prime Book Box of two hardcover books costs $19.99.
How many items should I put in a subscription box?
The appropriate number of items to include in a subscription box will vary based on the type of items, their size and the value of the items. Some companies will choose a standard number of items to send in each box, while others will let that number slightly vary from month to month. Most experts agree the best subscription boxes include between five and 10 items in a subscription box.
: How do subscription boxes make money
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