Cratejoy Roundtable: What a Subscription Business Has Done for Me
Cratejoy is the primary software platform for subscription commerce the world over. One of the most exciting aspects of being an industry leader in an emerging industry, especially one that gives such freedom and power to small businesses, is being able to use the data, experiences, and insights we’ve collected over the last two years.
The Cratejoy Case Study series is one example we’re proud of rolling out. The second way we’d like to put our sellers’ experience to work for you is through a series of roundtable discussions on what we’ve identified as the primary questions, pain points, and areas for improvement for modern online businesses.
Speaking from experience, I can say a lot of us can take a while to fully grasp the implications of subscriptions: how they turn a lot of business paradigms and common sense upside down or backward, showing us what is possible and unique about the particular time we find ourselves in business. That’s why one of my favorite topics to ask box founders — especially those adding subscriptions to a particularly thriving business — has to do with that very thing.
Not just what appealed to them about the subscription model before they came to Cratejoy, in other words, but how those expectations have worked out. I know the numbers support the most obvious answers: that recurring revenue puts the customer first, for example, since both customer acquisition and keeping churn low are about ongoing customer excitement and satisfaction. That while subscriptions are profitable at even the low, low scale of handmade and one-of-a-kind Etsy art, they eliminate the feast-and-famine aspect of even boisterous one-time ecommerce sales. Obvious stuff, but still intriguing — both by bare facts, and even moreso by the implications.
But I didn’t want to set my interviewees up with a bunch of sales-y answers, or lead the conversation, because their unique experiences are worth more than any amount of theoreticals. I want the story, not the score – and that meant keeping this session as simple as possible.
Cratejoy Roundtable: What has the subscription model done for you?
“I started the company with a very minimal budget… I knew excess inventory would be the death of us early, if we didn’t manage it. The idea of limiting inventory and building a solid business is what attracted me to the subscription business…”
The Initial Attraction
Nick goes on, looking at the key point for a lot of savvy business owners when they’re just getting into the possibilities:
“…When you are in a position like Game Day Box where we can literally place a $2000 order and pick it up that day, we can limit a major issue smaller companies have: Too much inventory, not enough shoppers.”
Nick at Game Day Box
In other words, the flipside to the financial rollercoaster issue. Plenty of subscription boxes never go into the red, because they have a plan in mind for financing the box with a heavy prelaunch, and when it comes time to find storage and fulfillment – when your business outgrows your living room, in other words – the recurring income comes in handy for that, too. But finding room for a shipment’s stock for a few days a month is not the same thing as maintaining stock, as we do in ecommerce and brick and mortar sales. For that kind of business, in volume, space is overhead – and the subscription model solves all that as it scales up.
Tangle Troves provides you everything you need for a regular Zentangle cool-down.
“I think my favorite feedback was from a subscriber who joined on the very first day I launched… she said ‘It’s like it’s my birthday every month.’ I think people need that birthday feeling more often! The idea of getting a package in the mail, addressed to you, that you know is going to be filled with things you want to play with, well who wouldn’t want that?
“Makeup was my first experience with subscription boxes. I knew that I’d enjoy art supplies more than lipstick — because that’s my splurge, my joy — and I knew that I was busy, didn’t always have time to shop, didn’t always want to buy a lot of something to just try. I began polling friends, they felt the same way, and Tangle Troves was born.”
Kelly at Tangle Troves
Of course, for many of us — subscribers and curators alike — that’s the main draw: Imagine getting a surprise gift from yourself every month. A lot of the power in the subscription relationship comes from that particular intimacy: The way we trust another person to shop on our behalf, to create an experience across the miles that only the two of us will share, and ultimately the way we both continue to get that special something out of it, month after month. That’s a birthday feeling, sure.
But listen carefully and it tells you why people with successful businesses are jumping onto the bandwagon and adding subscriptions to their offerings: Because it gives you an ongoing relationship and connection you couldn’t get with your buyers any other way.
And, as we talk about even less, it gives subscribers a chance to continue their relationship with a brand they’ve come to love. Of course, we know we are not the things we buy. But we can describe ourselves with the things we love and not be too far off. A subscriber is a person who loves something — every bit as much as you do! — and wants a monthly reminder that they are a part of that something.
Depending on how much you think in these terms, it’s like sending a 24/7 brand advocate to the home of every customer, reminding them of the pleasurable experience of uncrating their last shipment, getting use out of those items throughout the month, and looking forward to next month’s surprise. For the subscriber, it’s a chance to say, “This is what I love, and this is who I am.” And to be reminded of those facts, regularly enough that the habit itself becomes a part of their routine. Imagine that: A loving pen-pal letter, arriving so regularly that one day, you find yourself just counting on it.
Plowbox offers a beautiful organic gardening experience.
“We considered a subscription service for years… people buy our product every year and often tell us that they love our company.”
Sander, PlowBox
“…Instead of just creating a website, and waiting for people to magically find us… Subscription is booming right now, as more people are becoming comfortable with the idea of having an easier (and more fun) way to get items they already love delivered to their doorstep.”
Jessica + Rachel, CMYfabriK Box, which ships limited-edition fabric and a fun monthly crafting project
Even the most convenience-oriented shops, things like apparel and perishables and socks, come with an emotional wallop. You’ll find a lot of those convenience brands in the subscription space, spend the most time on branding and artfully curating their presence online and in their subscribers’ lives, precisely because they are – and should be – more than a simple, disposable service: it’s a relationship.
“Subscriptions came up when we started seeing more businesses like Dollar Shave Club and Birchbox having success. We were looking at our customer base and seeing a good number of repeat customers, so we thought, Hey, why not offer these guys something they can get every month?”
Jacki & Jeremy, Bowtie of the Month Club by Wickham House
Dungeon Crate offers a regular shipment of high-quality supplies for the roleplayer and tabletop gamer.
“I wanted to offer a product, but didn’t want to manufacture. I was always intrigued by a Box-of-the-Month-style business. I felt this let me combine many of my creative passions, and didn’t require a large upfront investment.”
Whether by spark of inspiration out of the blue, or by spotting a gap and jumping in, all subscription entrepreneurs have that in common: They know that creativity comes in many forms, and that for all the time spent procuring items and shipping them out, ultimately the power of the model lies in that intangible connection between the creator and the receiver. Sometimes that presents itself through coincidence, and other times it seems like a dream waiting to come true:
“I randomly discovered most of the people in my family all had subscriptions to boxes: Birchbox, Ipsy, Lootcrate, Dollar Shave Club. I thought, ‘This sounds interesting, what can I do one of these boxes on?’”
Planner Addict Box collects fine planning supplies (and offers fans and followers great business advice, to boot!).
What Happens Next
Once I’d gotten a few founders to spill about what drew them to subscriptions in the first place — after all, it’s learning an entirely new form of commerce, on the very ground floor — I thought I understood the foundations a little better.
So I wondered how exactly it went down: the process, or sequence of events, between noticing the trend and jumping onboard. For a lot of folks, especially in the hot niches like planner supplies and geek-girl stuff, it was for love of the form itself.
“I have personally bought into a couple of subscription services before starting mine; I love the concept. A subscription service is perfect for someone who wants to create a community and not just have customers that come and go… Being able to produce something different and unique every month for my customers is what makes the subscription model so appealing.”
Vienna, at Planner Addict Box
For old-school business owners and people familiar with the back end of wholesale, shipping, and merchandise logistics, I honestly wondered if it was a weird transition or just additional skills. I could see it going either way, and I think there’s something inherently fascinating about what some call the “road less traveled” effect: Once you’ve done something one way, you’ll never know what it was like to go the other way. Some drive manual and some learn on automatic. It seemed to me that starting a subscription could similarly go one way or the other, and I started to wonder whether advice for one situation could even necessarily be applied to the other.
“The steps should be easier for a company already in business to add to their umbrella. If they already have great vendors, solid products and a baseline of customers than they have a huge advantage over anyone starting out by themselves with nothing more than an idea.”
Nick at Game Day Box
Those are all advantages, of course, and a person starting their first business in any format would do well to emulate them. So if big business experience wasn’t a gamechanger, I wondered if online success — like with an Etsy or Big Cartel shop, or even a popular Instagram or social star — could be replicated or emulated in the same way.
“If someone owns a retail business, they are already a step ahead. They likely already have a following, a customer base they can market to. I have watched two well-established online Etsy businesses with huge Instagram followings start subscription businesses. Their followers went wild!”
Justine at the Book(ish) Box, a hugely successful subscription spinoff of her literary T-shirt line and shop, Appraising Pages, went even further in her own story, proving out what the others had shared:
“I had seen a lot of subscription boxes pop up, and they seemed to be gaining traction, getting really popular. The problem with Appraising Pages was that one day I would have a bunch of orders, and then for like five days straight, nothing. The subscription model works to solve one of the biggest issues with retail: It helps predict your sales, for at least a month out.
“I knew I wanted it to be a spinoff of Appraising Pages, so we decided to include shirts. My husband and I spent a lot of time discussing…
“What would the curation look like? Would I be able to make enough items, every month, to keep the box going? If the goal was to gain a lot of subscribers, there was no way I could make everything in it…”
But the most comprehensive answer, for someone building out of an existing brand or partnership, came from Greg at My Aquarium Box, a partnership of four aquarium celebrities who joined forces to fill the niche they knew better than anyone:
The My Aquarium Box team has turned their passion into internet stardom.
“We started from the ground up with the subscription model in mind. We had a modest start-up fund established privately, we kept costs down, and did things smart. We took on no debt, moved fast, and occupied a small footprint just to get us to the official launch date as soon as possible. If you own a small business already, your overhead costs and sunk costs are going to be your biggest hurdle. We communicate through email, YouTube, Facebook.
“The most practical advice I could give here is to treat it as its own entity, staff it and grow it by the people who are invested in seeing it succeed. If you have a brick and mortar store, the only things I see as valuable to carry over would be your wholesale contacts and the square footage to receive, pack, and ship boxes.”
Of course, the boys behind My Aquarium Box were able to launch faster (and bigger) than the average subscription, because they had a unique and very loyal combined fanbase. All the work they did individually, making their fan-favorite aquarium videos, has led to great Youtube success. But another way to say that might be, it was setting them up for a success they never would have seen coming.
“We were able to break even and recover our initial investment within 30 days of launching due to two giant factors: 1. We have a ready-made audience of 30,000 YouTube subscribers who want what we are offering, and 2. We were able to approach brands, close deals and negotiate favorable rates (cutting out the wholesaler), due again in large part to our pre-existing YouTube audience.”
So the lesson here is twofold: One is that you can never do too much during your prelaunch, especially by providing free useful content to the users you’ll eventually be targeting. And the second is that Team Aquarium, like any of us, needed to turn what they had to their advantage. By recognizing an opportunity to join forces and hop on a trend — and offer a subscription that combines lifestyle and convenience in one box; aquarium lovers are an intense crew! — they were able to monetize something they love. Everyone wins.
“Launch Day 1 and no one knows who you are, or why they should trust you, you’re going to have a bad time.”
…And Why
It’s a little bit concierge, a little bit personal shopper, and a little bit movie producer: We go to our favorite subscriptions month after month because we can depend on them to do something we think is awesome. It stands to reason that the most successful boxes would be put together when we really think through our understanding and attraction to them. Time and time again, the founders of these boxes have told me, the difference between a subscription that soars and one that sinks is not about numbers, or sleepless nights, or getting the best wholesale deal.
It’s a lot simpler than that, and maybe a little more complicated, too.
“I wanted to do a subscription box because I personally love them. Getting fun mail is the best thing ever. I also love the idea that someone with more knowledge than me was finding the best things for me. Life is busy. People don’t have time to do that kind of research.”
Kate at Terra Bella Box
You can tell the difference, and plenty of subscribers have said this to me too, between a box that the entrepreneur is passionate about and one that was slapped together to fill a niche. Even high-quality items in a beautifully printed box can’t always compete with a lovingly curated, personal crate. Approaching your subscribers as though all they want is a deal is a great way to underestimate them – and yourself. Justine, who’s told us before about how little the margins matter when your curation is the draw, says it best:
“The idea to include other small shops was really simple: Handmade geeky items would set my box apart from other boxes. The items on my Christmas wishlist were all from shops on Etsy, so I thought: If a subscription box is like opening a special gift every month, why not include items that are wishlist-worthy?”
Justine, at The Book(ish) Box
The one constant I have found, through every single creative person I have talked to about this project, for every single hyper-successful box or seamless transition into or addition of the subscription model, is that the ones who love what they do — that expect to spend a substantial amount of their future days doing this, who think of their boxes as “wishlist-worthy” gifts, to bring joy to strangers, as a reciprocating gift, as an intimately friendly communication — are also the ones making the most money, month over month. Every single time.
I think there’s a lesson there — and I don’t know that it’s necessarily about subscriptions, e-commerce, or anything else you can find on the internet. I just know I’ve seen the numbers, so I know that it’s true.
For more information on overcoming early problems before they start, read the 3 Questions You Must Ask at Subscription School, powered by Cratejoy — and don’t forget to come back for more Case Studies, Roundtables, and other reports from the frontlines as we bring you the most useful and valuable information we can find, from the people who know the business best.
