A few years ago, everyone wanted to learn how to start a subscription box with no money. It was like the gold rush. Today, while that gold rush is over, there is still a ton of opportunity in the subscription box space.
You just have to know where to look.
Heck, one of the top 3 fastest growing companies in the U.S is Loot Crate, which is a subscription box for geeks. That alone means there is still plenty of demand for a monthly shipment of goodies.
With that said, it is not easy.
If you really want to learn how to start a subscription box with no money, you need to understand the unique challenges behind the business model.
The first challenge? Cost.
How Much Does It Cost To Start A Subscription Box Business?
The most important part of any ecommerce business is the economics behind it. Not only do you need to know the costs, but the margins behind it so that you can actually be profitable.
This is even more important in subscription boxes because there are so many moving parts.
There are 3 primary main ways to look at it…
The brand model
The paid model
The sample model
In the brand model, you are creating the product and the subscription box. The most famous version of the brand model is Dollar Shave Club. They created their own brand of products, then ship it to you every month. It’s the ideal model for categories that require replenishment, such as how razors need to be replaced every month. The downside is that you’re spending a lot more money since you have to deal with both sides of the equation from scratch.
In the paid model, you are paying for other people’s products and the subscription box. The most common form of the paid model is the “product of the month club”, such as “peanut butter of the month club” or “book of the month club”. Because you’re purchasing other brands’ products at wholesale prices, you can control the value of every box. The downside is it requires more money than the sample model.
In the sample model, you are asking for product samples and putting it into your subscription box. This is how the subscription boom actually started, with Birchbox leading the way. All you have to pay is for the box, fill it up with free inventory, and sell it at a profit? Sign me up! The downsides is that samples are harder to get and they can vary, which means some months you’ll have great products to deliver and in other months, you won’t.
So which is best?
Personally, I believe the brand model is best. Followed by paid, then sample models.
With that said, if you want to learn how to start a subscription box with no money, then your best bet is the sample model. You’ll need money for the packaging, but that’s a minor inconvenience relative to the price of the products you would normally have to pay for.
Subscription Box Business Ideas
There are a ton of subscription boxes out there. In fact, the reason why the subscription box category had a gold rush was because thousands of brands were being started every other day. Almost every category was “taken” overnight.
However, that doesn’t mean there are no available subscription box business ideas.
It just means you have to focus on differentiation.
The best place to start is to first figure out the categories you do want to be in or at least want to explore while you’re in the ideation phase. So if you like fitness, socks, and peanut butter, then write those down as “seed ideas” to play with.
Don’t have any? Here are some to get you started.
Once you do that, it’s now time for the research.
First, you want to jot down the top 5-10 competitors of every category you picked. For example, if you decided personal care, then Birchbox would be on that list. Repeat the same process if you picked multiple categories.
Second, if any of the categories you picked have billion dollar brands or even 9 figure brands, then you either must eliminate the idea entirely or niche down even further. You will not be able to compete against any big players directly. So if you’re doing personal care, either skip it and do something else or niche down to something like hygiene for sensitive skin.
Third, if you haven’t nailed down your final idea yet, then pick the one that you’re most excited about and that you feel has the greatest chance of success. By doing this, you’ve successfully chosen a business idea that is differentiated and exciting enough for you to try.
Subscription Box Business Plan
There are many routes you can take, but now, let’s focus on how to start a subscription box with no money. So rather than give you a bunch of ideas, I’m just going to tell you straight up what to do.
1/ Before starting everything, I would want to triple check that the brand is truly differentiated. It doesn’t have to be crazy unique, but I would want to make sure there is a strong USP that I can point to and make it clear why someone should subscribe to my subscription box over others.
2/ Now, it’s time to validate the idea. I would make a fake brand name and set up a Shopify store just like a real launch. Then I would use Facebook ads to sell the product. The idea is to see if anyone buys, as well as the cost to acquire a customer. If I can make a few sales and breakeven after spending a few hundred bucks, it’s time to move on to the next step. As for your customers, just refund them and tell them they’ll be on the pre-launch list.
3/ At this point, the idea is validated. That means now it’s time to go all in. This means creating your real brand website, ordering your real packages, talking to whoever is supplying the products, triple checking your margins are realistic, and more.
4/ Next, it’s figuring out your marketing strategy. Basically, it comes down to paid, earned, and owned media. Paid media is another way to say advertising. Earned media is anything related to PR, influencers, and social media shared. Owned media is anything you own like an email newsletter and SEO through your website.
5/ I would start with an earned media strategy because at the beginning, you need quick, organic traction that also generates credibility. This means finding news outlets that have covered subscription boxes before and giving free subscription boxes to influencers in exchange for shoutouts or even just review videos. At the same time this is happening, I’m also creating organic content to build an audience on Instagram, TikTok or Youtube.
6/ Next, is the paid media strategy. Once I’m making organic sales and things are looking good, it’s time to start paid ads. I’m going to take my best performing content and turn them into ads. Use the conversion objection. And pay for FB ads to my product pages at a slow pace. The idea is to acquire customers. So this means breaking even as I start with a small budget.
7/ While all the above is happening, I’m working on my owned media strategy. This primarily means sending out at least 1 email per week, preferably with Klaviyo rather than Mailchimp, promoting the subscription box, as well having a complete flow setup to automate half of my email marketing operation.
8/ Keep growing through paid, earned, and owned media. However, it’s time to get nerdy and triple down on all of the numbers. I want to know how much it’s costing me to acquire a customer. How much it’s costing me to acquire a newsletter subscriber. I want to know conversion rates, AOV, LTV, margins, and other numbers. Basically, collect all of the data I have and start making decisions based off of them rather than guessing my way through.
9/ After a few months, I’m also going to need to pay attention to how long the average customer stays subscribed and how many people drop off every month. Considering this is the core of the business model, it’s absolutely critical you get this right. Hence why it’s important to move slow since it’s naturally going to take time to get a real understanding of how many people actually like what you’re sending them.