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.
This article, "Start Your Own Amazon Subscription Box Business" was first published on Small Business Trends