Subscription based models

TinkyWinky · Feb 25, 2021

Hi

Not sure if anyone here is able to help (or rather willing to, when you read below).

We are looking to find out more about a subscription service (both intellectual and possibly a physical offering) for one of our businesses. Nothing major in terms of ground breaking, but it can't be as easy as it looks and we'd like to discuss this with an existing business owner who has a such a model.

In order to get it right we were thinking about finding out about :

Logistics for getting boxes out there
Typical margins on each box/monthly sub
Annual vs monthly payments
Payment pitfalls
Fixed or variable box content issues

Happy to sort an NDA out to discuss in confidence.

Any help gratefully received - especially if you run Graze or Hoppily !!

Cheers
TW

donton · Feb 25, 2021

I have owned a monthly box which had a few thousand subs before we had to kill it.

One of my current e-commerce sites has thousands of monthly subscribers (not boxes though, just recurring product subs.) on that site we’ll be launching a sub box in Q2, too.

Logistics can be tricky even with a decent warehouse setup like we have. But the more you do it, the better you and your team get. We have always done it in-house so no idea how much easier it is to outsource to a 3PL. I prefer the flexibility and nimbleness of in-house.

Platform wise, we’ve used Cratejoy and Shopify, prefer Shopify though (using ReCharge to manage subs, which can now be integrated with the native Shopify checkout too.)

Delivery wise, Royal Mail tracked 48 probably your best bet on a business account. Savings to be made if you can keep it within the dimensions of a large letter. If you have volume, Hermes do great rates. Also worth exploring APC and DPD if you’re happy to spend a bit more on delivery.

Margins vary by industry. But by the time we killed our first box most of the items in there were being gifted by brands. Our only outlay was for the box itself, assembly labour and postage.

We offered a range of payment options and discounts for paying in advance for 6 or 12 months. Nice little cash flow boost. Stripe has always been our go to for sub payments, and they will negotiate on rates when you get some volume going.

Payment pitfalls: chargebacks, people claiming they didn’t know it was a subscription etc. These are few and far between and can usually be fought if you have tracking info. Can also get confusing with cut off and renewal dates if you’re doing it monthly so a good faq is a must.

Fixed or variable contents... well that’s for you to decide I guess!

If you have any more specific questions I’ll do my best to answer.

figleaf007 · Feb 26, 2021

Your weekend reading....

https://www.amazon.co.uk/dp/1260458709/?tag=acorn06-21

TinkyWinky · Feb 26, 2021

figleaf007 said:
Your weekend reading....

https://www.amazon.co.uk/dp/1260458709/?tag=acorn06-21

Ha ha - thanks a lot.

Instead I have 20 - 30 tons of type 1 to move by hand... I know which i'd rather do but the pub isn't open to sit in the beer garden with the ebook! :|

peacock · Mar 4, 2021

Thanks for sharing.
Now I'm just being nosey but why did you kill the first box when you had a few thousand subs, and manufacturers gifting you the products. Sounds perfect!

donton said:
I have owned a monthly box which had a few thousand subs before we had to kill it.

One of my current e-commerce sites has thousands of monthly subscribers (not boxes though, just recurring product subs.) on that site we’ll be launching a sub box in Q2, too.

Logistics can be tricky even with a decent warehouse setup like we have. But the more you do it, the better you and your team get. We have always done it in-house so no idea how much easier it is to outsource to a 3PL. I prefer the flexibility and nimbleness of in-house.

Platform wise, we’ve used Cratejoy and Shopify, prefer Shopify though (using ReCharge to manage subs, which can now be integrated with the native Shopify checkout too.)

Delivery wise, Royal Mail tracked 48 probably your best bet on a business account. Savings to be made if you can keep it within the dimensions of a large letter. If you have volume, Hermes do great rates. Also worth exploring APC and DPD if you’re happy to spend a bit more on delivery.

Margins vary by industry. But by the time we killed our first box most of the items in there were being gifted by brands. Our only outlay was for the box itself, assembly labour and postage.

We offered a range of payment options and discounts for paying in advance for 6 or 12 months. Nice little cash flow boost. Stripe has always been our go to for sub payments, and they will negotiate on rates when you get some volume going.

Payment pitfalls: chargebacks, people claiming they didn’t know it was a subscription etc. These are few and far between and can usually be fought if you have tracking info. Can also get confusing with cut off and renewal dates if you’re doing it monthly so a good faq is a must.

Fixed or variable contents... well that’s for you to decide I guess!

If you have any more specific questions I’ll do my best to answer.

donton · Mar 4, 2021

peacock said:
Thanks for sharing.
Now I'm just being nosey but why did you kill the first box when you had a few thousand subs, and manufacturers gifting you the products. Sounds perfect!

Two reasons:

1. It became quite hard to keep up with the logistics of populating, curating and creating a theme and box each month. Then coordinating the stock from 5, 6 or 7 different suppliers to arrive on time, in full and intact so the boxes could be assembled and shipped on time, etc. Even if the stock was free, it was just a nightmare to do. I never really understood quite how much work goes into these sub boxes and with a relatively small team compared to say, Glossybox, it was a challenge. It became a never-ending treadmill that truthfully, none of us really enjoyed

2. We were already fed up with it, and we then had an IP complaint over the name of the box (someone regd a tm on what I think everyone would consider a generic term well after we'd started trading and advertising under the name, including being on TV, on the radio, all over the press etc). Coupled with #1 above, we decided to learn our lessons, be thankful for the experience and move on, so we killed it. With the lingering IP doubt we decided it was unsellable, although we did have a couple of decent offers after we took the site offline

I don't regret killing it for one minute, but the experience and lessons we learned have been very useful since - and as we launch some new subscription services on a larger site we own, we already know exactly what pitfalls there are, and what to steer well clear of.