Selling a food subscription box can make your online store boom with sales!
We’ve officially entered the era of subscriptions. That’s a fact.
People looking for more time in the day are often drawn to subscriptions for their sheer convenience.
As per a survey conducted in 2020, nearly 70% of Americans were found to rely on some kind of subscription service.
But let’s talk about Food Subscription Box services as they tend to top the charts.
Food Subscription Box Categories
There are so many types of food subscription boxes, so let’s go over a couple you could do for your store.
Curated Food Subscription Boxes
Another subscription format gaining traction these days is the Curated Subscription Boxes.
A curated food subscription box is usually hand-picked food products intended for the customer to explore and discover.
There is usually a particular theme in mind when creating a food subscription box. We’ve seen everything from Japanese snacks to retro 80s candy boxes.
For example, there are sweet tooth boxes that offer your favorite desserts and cheat day foods shipped directly to your door. If you own a bakery, you might want to consider selling your very own subscription box.
Having a food subscription box where you hand pick the items and the selection changes on a monthly basis, is a great way to create that element of surprise in your customers.
A surprise element, can be a huge factor in keeping customers sticking around to see what is the next box!
Ever want refills of your favorite food items? Yup, it’s pretty common.
With a subscription, your customers will never have to worry about running out of their favorite food products.
Take for example, coffee. It’s something everyone drinks and consumes on a regular basis. You always need more of it in your pantry or backup beans.
If you sell any type of food product on your online store, and your customers tend to re-order it, this is the perfect time to offer it as a subscription!
Replenishment means once your customers are getting low on a certain product, they don’t have to stress because they know a subscription box containing that product will be arriving shortly.
The beauty of creating multiple subscription plans is you can let your customers choose their delivery frequency (like weekly, monthly, or quarterly for example.)
This would be the opposite of a curated subscription box because instead of a surprise element, there is the familiarity element. Customers stay subscribed to your box because they know what to expect, they like the product, and want to have it re-ordered for them automatically by being on a subscription plan.
Meal Kits are more popular with companies that have deep pockets because they require lots of capital.
For that reason, I’ll just mention them briefly because we are all familiar with them and how they are lucrative… but most merchants won’t be creating this type of food subscription box.
There are meal kits that come with easy-to-follow recipes and pre-portioned ingredients that can help people become a chef (well, almost!) with a far lesser experience and without buying an otherwise rarely used ingredient in a large quantity (why burn a hole in your pocket buying 100gms saffron, when you need just 5gms of it for your dinner).
They get people on a subscription plan that renews monthly, which helps the company earn recurring revenue.
Let’s have a closer look at why more and more companies kick-start their food subscription service.
Food Subscription Boxes are in Demand
Experts have estimated that by 2024, the market revenue for the meal kit service will hit a whopping 7.6 billion (was around 2.5 billion in 2017).
People love the convenience and saving money at the same time!
Usually, these food subscription boxes offer a discounted price if you commit to a longer period like a prepaid yearly subscription plan. If your customers are guaranteeing they’ll re-order your product for an entire year, this helps the merchant keep the lights on.
Even for products that don’t offer a discount, convenience is a huge factor in why people sign up for subscription products.
In this fast-moving present-day world, saving big on your time while keeping things convenient and getting variety is too perfect a blend for customers to say no to.
Lucrative enough? Let’s check out some of the benefits you gain with launching your very own food subscription business.
Food Subscription Box Benefits
It’s all digital.
You don’t need a brick and motor shop these days.
People are busier than ever these days, from household responsibilities to balancing multiple jobs and taking care of kids.
They want to get more done in less time, and having a food subscription box can oftentimes outsource some of their everyday chores, like skipping a drive to the grocery store for that one item.
Folks also care more than before about self-care time. So having a food subscription box that is a splurge (and not essential) is A-OKAY!
Subscribing to a fun food subscription box that makes your day when you see it sitting in your mailbox is worth the money because it’s like giving yourself a gift every month.
Now that we have covered how your customers will be happy let’s cover a few ways Food Subscription Boxes are benefiting the merchant.
Gets Automated after a Point
Think reliable and automated services are hard to build?
Not when it comes to delivering ready-to-eat subscription boxes.
Once you get the food quality, taste, and combination of items down, your food subscription business enters a flywheel that can be automated and replicated for more customers.
Sign up Process & Subscription Box Journey for Customer
The customer subscribes to a monthly plan → The customer receives the first box → Quality & convenience keep them subscribed → Customer happy & merchant gets paid → Subscription plan automatically renews → The customer receives a second box → Automated recurring billing avoids churn (i.e., customers aren’t leaving) → Customer happy & merchant gets paid → Subscription plan automatically renews → The customer receives the third box → And so on and so forth.
Retention is King
The above flywheel example helps you figure out the key strategies of the process, from signing up to keeping your customer your customer.
The wheel starts to spin on its own after a point, and all you need to worry about is constant creative efforts to retain these customers.
Deliver on time. Create great products and wow your customers.
Through some basic organizational skills and outstanding support, you can have a fully automated food subscription box service in no time.
Offers Higher Margins Than Expected
Do you know the difference between buying a couple of bottles of wine at the local grocery store and buying a wine subscription box? The latter probably costs 2x.
People are willing to pay more for a food subscription box because it offers them a chance to explore new products. These products might be small-batch, artisanal, or just simply hand-picked.
Whatever the case, you are able to achieve higher margins by selling a subscription box.
It’s all about being creative and offering products people can’t get enough of.
Once you figure out the production cost or where to source products, you should sell your subscription box with a 50% profit margin.
A food subscription service is highly scalable. You can expect higher margins once you start selling more of the same items.
Also, how much profit one ends up reaping depends directly on the overall price a user pays for the box. You can always increase/decrease that to match your profit expectations.
No Inventory Surprises
You always know how much stock you’ll need if you have subscription orders coming in regularly. It takes the guesswork out of inventory.
If one hundred snack subscription boxes require 100 bags of Gummy Bears, two hundred subscription boxes would need 100 more.
Also, since users have already paid for the subscription box, there will be less headache sourcing the food product because you know they have already been accounted for.
It’s much harder to buy inventory for possible future, one-off sales. It’s much easier to buy inventory for recurring orders.
Your stock and the inventory can be planned with fair ease, and nothing should go to waste.
Earn Recurring Revenue
When was the last time your business promised you a three-month (or even more) return?
Creating your food subscription box service can help you achieve a recurring revenue model by charging customers in advance.
All you need to do is start turning your existing products into a subscription product.
You can do this is easily by using Ongoing which is the best subscription management software.
Now every time you want a user to renew their subscription, it happens automatically with Ongoing.
With your recurring billing handled 100% streamlined for you, that means more time for you to take care of other things like running your shop.
Doesn’t Burn a Hole in Your Pocket
Assemble lines are the true definition of efficiency.
Creating one for your subscription business might make it difficult for the initial run, but once you get the hang of it, you can save heavily on the production.
You don’t need a fleet of sales ninjas. Nor do you have to pay for the stock before you have received the subscriptions. You can start out with a prototype that you promote on your website, and if enough people order, that means you’ve got something people want.
The success curve with subscription boxes is a pretty straightforward journey. Your first couple of orders might be the hardest to get, but once you start selling more and more, you can bring costs down.
Turn your kitchen table into your office, and get started. Be scrappy. You can set things up with whatever minimal resources you have.
Read More – Have a business delivering products to customers’ doorsteps? Check out this definitive guide on Replenishment Subscriptions here.
Food Subscription Box Challenges
Now that we’ve gone over all the amazing advantages and benefits of running your own food subscription box, let’s cover some of the common pitfalls.
From making sure your customers are happy, to responding to bad reviews, it all matters when you’re running your own store all on your own.
For medium to large businesses who have staff, other challenges arise like organization and delegation to making sure food products aren’t expiring.
Below we’ll cover some of the top challenges merchants face when selling food subscription boxes.
Keeping your Subscribers Subscribed
The biggest cause of concern for food subscriptions is an early customer churn.
Some customers might come around to enjoy the lucrative discounts that a brand has to offer and then cancel.
If you offer large discounts for subscribers only, you might want to consider creating prepaid subscription plans. Pre-paid means more cash upfront.
Quick adoption in a market is an essential key metric that SaaS (subscription-as-a-service) businesses are keen to scale.
Onboarding is super important, and first impressions are golden! Make sure you’re creating an amazing, remarkable product with a red-carpet experience.
Focusing on the customer retention strategies can help struggling companies deal with these fly-by subscribers and help convert them into long-term subscribers.
Dealing with the Bad Reviews
If you’re just starting, remember that it takes one bad review to significantly distort the brand’s image online.
Good reviews help build confidence because when someone places an order with you for the first time, they are essentially risking their money and time trusting your brand.
Ensure the bad reviews are properly dealt with.
Reach out to the customer and apologize. Always remember, the customer is your best source of constructive criticism.
Instead of getting defensive, have an open mind and see where your company can improve.
Try to analyze what might have gone wrong and ensure the customer that there won’t be a second time.
Drive down resolution times, and perhaps offer a refund.
Make sure you have enough positive reviews coming it. The idea is to make potential customers feel confident in placing an order with your customer, and so managing bad reviews is as important as garnering new positive reviews.
Expiration Dates on Perishables
Food is a perishable item.
Whether it’s cookies or wine, they all have a finite amount of time that they are good for.
When creating your own food subscription box, expiration dates should not be something you fear but something you pay attention to.
It’s unlikely you’ll have to deal with inventory going bad if you are dealing with pre-packaged goods made elsewhere, but it is smart to make sure checking the expiration dates on products you source is part of your checklist.
If you are creating your own food items such as baked goods, shipping these products out quickly is key so your customers will receive a fresh product.
If you’re selling a product that is highly sensitive like ice cream or chocolate, make sure to perfect your packaging for shipping.
A good idea is to offer these items in cold packs to safeguard the products from extreme temperatures.
For items that spoil easily like raw meat, or items that melt like chocolate chip cookies, you might also want spend a good amount of time selecting the best carrier for the fasting shipping possible.
Managing your own Customer Support
I speak with newly launched subscription businesses almost every day, and there’s one conversation I come across quite often – people not realizing the sheer importance of Service and Support for businesses selling goods online.
Remember this little formula.
Cost of Selling Goods = Cost of Goods + Service & Support
Not paying enough attention to delivering quality customer service? This might land you in hot waters as early as your first month.
In the beginning, you can offer your own customer support, and as you begin to get more orders, you can always hire out for this position once you know what it entails.
Respond to emails quickly and deal with issues as they arise, so you can build a strong relationship with customers that lasts forever.
Daymond John, from the Shark Tank, says “Don’t be your company, build your company.”
This means don’t make it so the company can’t run without you. Get it to a certain point where you can start delegating tasks and outsourcing jobs so you can free up your time to actually build up your company.
Delivering an Outstanding Product
This one’s a fundamental requirement.
If your product sucks, people will unsubscribe.
Make sure your product is 10x better than your competitor.
Your on-boarding experience should be remarkable; your customers should want to tell their friends about how awesome your brand is.
Make sure you are honest with yourself and are constantly trying to make improvements to your food subscription box.
While it might seem like a good idea to get started with asking friends and family their opinions, it’s not always the most productive approach.
Your customers are your best source of feedback. It’s not good enough to just mail out a product and hope for the best.
Talk to your customers. See what they think of your product. Ask for feedback. And create a community like a Facebook page where your customers can engage with you and your company.
Best Food Subscription Box App
Nothing beats a simple-to-use tool when it comes to managing a good 1000+ orders every hour.
Whether you’re just starting out or a Shopify Plus merchant, Ongoing has you covered.
Ongoing is a trusted subscription app on Shopify that lets businesses manage huge chunks of orders, automate recurring and secure billing, and deliver seamless customer support throughout the buyers’ journey.
Ongoing helps you scale your month-over-month revenue through exciting discounts and by encouraging customers to place repeat orders.
No matter the industry or category, you can turn any product into a subscription business using Ongoing.
You know what, don’t take my word for it. They have incredible 5-star reviews you can read here.
Ongoing offers lots of affordable pricing plans, including a Starter Plan which is $0 a month, and if you happen to sell a subscription product, you only pay 2% transaction fees.
It’s a win-win situation for everyone.
We think you’ll definitely find the value you’re looking for.
Sign Up for Ongoing Subscriptions today, and get started with recurring billing for your products.
Creating A Food Subscription Box In a Post-Covid Era
Food subscription boxes have seen rapid growth in the last two years, especially after the pandemic hit.
The industry has witnessed a massive surge in snack boxes, as well as luxury food boxes with artisanal products like cheese, wine, and baked goods.
Plant-based food boxes are also experiencing a sales bloom like never before.
This consumer behavior indicates subscription boxes for every type of niche out there can thrive and are much needed!
You can get started with subscriptions today with the Ongoing Subscription App.
Ongoing offers the best subscription tools and for up-selling and cross-selling strategies like upgrading to a longer subscription plan or one with premium discount offers.
Try Ongoing today and get early-adopter pricing.