Over a decade or so ago, the subscription model for eCommerce didn’t exist. There weren’t companies like Birchbox, Dollar Shave Club, or Blue Apron. In the last few years though, subscription box companies have taken off.
Just from April 2014 to April 2018, the subscription industry grew 890%.
Learn more about why the subscription model works and how you can start selling your own subscription box services on a top marketplace like Amazon.
What are Subscription Box Services?
A subscription service is when a company puts together a curated and personalized collection of products that are sent to their subscribers on a regular basis (usually monthly).
Today, there’s thousands of subscription offerings that range from beauty and food to crafts and pet supplies. You can find a curated subscription service for just about anything.
Some of the most popular subscription services are:
- Dollar Shave Club — Men’s shaving care
- Birchbox — Beauty
- Blue Apron and HelloFresh — Healthy meal kit service
- BarkBox — Pets
- Ipsy — Beauty
- FabFitFun — Self-care
Rise of the Subscription Model in eCommerce (and Why It Works)
More than half of online shoppers (54%) say they use a subscription service.
Consumers enjoy subscription boxes for a few simple reasons — they’re exciting, convenient, personalized, and cost-effective.
For example, HelloFresh and Dollar Shave Club offer convenience. You can get healthy meals delivered weekly right to your doorstep. Dollar Shave Club allows you to replenish items like razors on a regular basis without thinking about it.
Other brands like FabFitFun and BarkBox are exciting and fun. It might not include items that you need, but there’s an element of surprise of not knowing what you’ll get to enjoy.
Many consumers also subscribe to a box like Birchbox to try new products at a discount. If you find a new product you like, then you can go out and buy more of it. If there’s one you don’t care for, then you didn’t waste money on it.
And, the subscription model is an advantage for sellers too.
You can create a subscription service for a wide variety of products. You can focus on practical needs and offer the convenience of auto-replenishing them. Or, you can sell niche and novelty products that focus on fun and exciting experiences like a monthly beer subscription. There’s lots of different ways to market and pull in subscribers.
Subscription businesses are also appealing financially. Unlike traditional online selling, you can count on recurring revenue from each subscription. Most subscriptions require you to sign up for a minimum amount of time like 3 months. Not only can you cover customer acquisition costs quicker, but it might change your whole marketing mindset. After they sign up, you know you have multiple tries to impress them.
What is Amazon Subscription Boxes?
With Amazon Subscription Boxes, qualified sellers can now list, sell, and manage their subscription products on Amazon.com.
They offer over 300 subscription boxes from beauty, grocery, lifestyle to toys and more to their shoppers. Shoppers can sign up and manage their subscription with you all within Amazon.
What Sellers are Best for Amazon Subscription Boxes?
As a newer service for Amazon, their subscription service comes with a few caveats. All eligible sellers must meet these requirements:
- Be an active Professional Seller on Amazon
- Offer a fully-assembled curated subscription box
- Support free shipping directly to customers in all 50 states, Guam, and Puerto Rico (You can’t use Amazon FBA to ship your subscription either)
- Only available to sell on Amazon.com (no Amazon.ca, Amazon.co.uk, etc)
What if I don’t have a subscription service yet? You can still apply to offer it on Amazon, but you will need to include your business plans in your application.
How to Sell Subscription Boxes on Amazon
To get started on Amazon Subscription, you take these few steps:
1. Apply for Amazon Subscription Program
All interested sellers must first apply to be part of their program. You can submit a seller application here.
You’ll answer questions about your product types, company information, and contact details.
2. Create a Professional Seller Account and Complete Registration
Once approved, you’ll complete your registration within your professional seller account. (You’ll also create your new account if needed.)
3. List Your Subscription Boxes
Next, you’re ready to list your subscription box on Amazon.com. At this step, you’ll work directly with the Amazon Subscription Boxes team to ensure your listings are correct.
4. Market Your Subscription Box
And, remember that you can use other marketing tactics to drive customers to your Amazon listings like your own social media account, email marketing, and Google Adwords. To help manage and track your marketing performance, read more about Amazon Attribution.
5. Ship Your Subscription Box
At this time, subscription sellers can NOT ship their boxes with Amazon FBA. Instead, you’ll have to ship items yourself, whether that’s from your own warehouse or a 3PL partner.
Need an alternative to Amazon FBA? Here’s our top list of shipping and 3PL providers.
Keep in mind that your subscription box won’t be labeled as fulfilled through Amazon Prime. But Amazon still expects you to ship for free. You should watch your margins carefully, otherwise you could drain your profits. Read more about why shipping is so expensive, and how you can lower your overall costs to protect your profits.
6. Get Paid by Amazon
The last step is making sure you receive your funds for your sales. For Amazon sellers, it’s normal to wait at least 14 days for your sales to hit your bank account. In some cases, Amazon can even hold your money back even longer.
Unfortunately, this is a reality of selling on Amazon and it can make cash flow tight. One way to overcome it though is with Payability. Our market-leading financial solutions for Amazon sellers ensure you get your own capital faster and have access to the cash you need with financing products created around the unique needs of marketplace sellers.
We’ll cover more about our products Instant Access, accelerated daily payouts, and Instant Advance, a cash advance, below. With them, you can access the financing you need for marketing, inventory, and other ways to grow your subscription business.
How Much Does Amazon Subscription Boxes Cost?
There are no additional fees to participate in Amazon Subscription. Their standard selling and referral fees apply.
The Pros and Cons of Selling Subscription Boxes on Amazon Versus Your Own Site
Amazon is just one channel where you can now sell your subscription boxes. If you look at top subscription brands, you’ll find that many of them leverage their own site or other marketplaces like Cratejoy to expand their audience reach.
“I believe having your subscription box on Amazon is a great opportunity for exposure, Amazon has such a huge customer base that you will gain exposure to customers that you may have not found on your own. The 15% fee you pay to Amazon will be far cheaper than any other acquisition cost you have from other platforms,” said Chris George, Founder of Gentleman’s Box and Co-Founder & Chairman of SUBTA (Subscription Trade Association).
Let’s look at the advantages and disadvantages of selling your subscription box on Amazon versus your own website.
Pros of Selling on Amazon:
- Expand audience reach — Amazon has over 100 million shoppers
- Amazon Support — Take advantage of Amazon’s support team
- Lower Customer Acquisition Cost — Focus on converting a captivated audience instead of driving new leads through other paid channels.
Cons of Selling on Amazon:
- You don’t own the entire brand experience — Customers will manage their subscription within their Amazon account, giving you limited access to them for marketing and engagement.
- Higher product pricing — You may need to list your box at a higher price on Amazon to cover selling fees, shipping, and other costs.
- Competition — Your box will be listed with other subscription services and other related products.
Funding Your Subscription Box Company
As we mentioned above, cash flow is always a challenge of growing an online business. When marketplaces like Amazon hold your funds for weeks at a time, you might not always have enough funds when you need it most.
Most often subscription businesses need access to capital for the basics of running their business like investing in marketing, inventory purchases, covering unexpected shipping costs, and even making payroll for a growing staff.
With Payability, you can get access to capital when you need it. Our funding approval is fast (24-hours) and based on the health of your online business, and not your personal credit history that traditional banks use. So there are never any credit checks.
Built with Amazon sellers in mind, Payability’s market-leading solutions are:
Instant Access: When Amazon takes weeks to pay you out for your sales, you can access your cash next day, every day with Instant Access. Once approved, you’ll receive up to 80% of whatever is currently in your Amazon payout the same day or the next day depending on the time of day your application is approved. You will continue to receive 80% of yesterday’s scanned and shipped sales each day. The remaining 20% stays in a reserve to cover returns and chargebacks and is released to you when Amazon releases a payment (usually every 14 days).
Instant Access is not a loan. Payability is paying you your own money faster, making it a great way to self-fund your business. Apply here to see if you qualify. There are no credit checks, and you can be approved in just 24-hours. Instant Access works especially well for subscription box businesses who tend to buy various products at different times. With Instant Access you’ll always have cash on hand to buy more products, shipping materials, etc. right when you need them.
Instant Advance: If you need access to a lump sum of cash for bigger costs like that next round of inventory, then Instant Advance provides a capital advance based on your future sales on Amazon AND any other marketplace. Sellers usually receive around 75% – 150% of their monthly sales and they go from $1,000 to $250,000. Same as Instant Access, there are no credit checks and sellers can get approved as soon as the next business day.
How to Market and Build a Community around Your Subscription Services
Subscription services stand out in eCommerce because of their focus on creating experiences, whether they’re inspirational in helping customers discover new products or based on convenience of replenishing everyday needs. Regardless, these experiences lend to subscription services naturally building a community around their brands.
To build your own community around your subscription brand, focus on the following:
1. Brand Connectivity
In a digital world, we often forget to connect with our users on a human and emotional level. It’s paramount to understand how you connect with your customers on a deeper level, or demonstrate that your brand shares their same values. If you can tell a brand story that resonates with your users, then you can have an engaged audience.
2. Social Media
Social channels like Instagram and Facebook are great channels to interact with users and share brand experiences. And, potential customers can see social proof that your brand is worth subscribing to.
For more social media tips for your eCommerce business, discover how NYC-based shop Stay Forever used Instagram to promote their gift boxes during the COVID-19 pandemic and read our complete guide on how to boost eCommerce sales with Instagram.
Your biggest advantage is customizing your experience for each of your subscribers. Be thoughtful in surveying your customers on their needs and experiences, so you can tailor every interaction with them from your product contents, email marketing, social postings, and more.
When you create experiences like these, then others are more likely to recommend your brand to their friends and family.
Grow Your Business with Amazon Subscription Boxes
Thinking Amazon Subscription Boxes is the right program for you? Learn more about it here and apply today.