16 Tips for Subscription Box Owners to Help Save Money & Optimize Their Business

Don’t worry and have no fear; these are the tips you want! This is not me spinning an i-Pad around and asking you to tip me because I did my job and got you a coffee. Instead of tips that are costing you money, how about some that save you money? This time of year is the perfect time to be trying and minimize expenses for your business by year’s end. In this piece, we will list out 16 Tips for Subscription Box Owners to Help Save Money & Optimize Their Business

Tip #1 – Order Form Fitting Corrugated Boxes for Your Subscription Box

There are multiple benefits of a form fitting box:

Less need for dunnage (crinkle, tissue paper, peanuts, etc.). Cost savings
Less opportunity for damage. When things can shift in transit that is where the damage occurs. All of the shipping carriers use conveyor belt induction systems. They can go up to 15 mph and commonly have 2-3 foot drops during sortation.
Save on potential DIM freight charges. The carriers always take the greater of the actual weight or dim weight and they always round up. Those sweethearts.

Example: 12x12x12 box that weighs 2lbs

Some people think they are paying a 2lb rate regardless. In actuality, you are paying a 11lb rate which is way more expensive!

(12x12x12)/166 (dim factor) = dim weight of 10.4lbs. Carrier rounds up to 11lbs.

That is a difference in several dollars per package. Size matters in shipping

Tip #2 – Take Advantage of Cheaper International Shipping

If you are doing self fulfillment and are shipping international packages, you should consider using PirateShip’s Simple Export Rate. These are specially discounted rates exclusively through them. These packages actually get a domestic label to ship to consolidation centers in the U.S. From there, they are further labeled before being sent to destination countries.

These rates are 70-200% cheaper than UPS, FedEx & DHL international services and 20-40% cheaper than First Class International Package rates. This service does take longer to deliver, but that is why it is so cheap!

To enable the service you just need to write in to PirateShip’s chat and ask them to add it to your account. The rates and service will then auto-populate when you do your international shipments in the rate shopping feature provided. PirateShip is wonderful for small business owners.

Tip #3 – Bulk Kitting vs. Small Wave Kitting

When possible, and if space allows, always kit as many boxes at once. The economies of scale you get when you are kitting 200, 500, or 1000 boxes at once vs. doing 1, 3, or 5 at a time are quite substantial.

The efficiencies you will gain by bulk kitting are enormous. You will save time as you are saving extra body movements by doing all the boxes at once. You will also generally see increased accuracy as you are doing one item at a time across all the boxes so you can focus and ensure every box gets that item before going to the next item. We like to use check sheets at Lessgistics to ensure accuracy before moving on to the next item.

Tip #4 – Win Back Campaigns

You should consistently be re-marketing to your former customers. These customers are much more likely to come back and purchase again vs. finding (and often paying) for that first-time customer. Some ideas to win back these previous customers:

You have all the data of subscription date and cancellation date so segmenting this group should be straightforward. Throw out a large promo, 50% off on their first box back even. Anything to get them back in the flow of the renewal schedule. If you are paying ads then your customer acquisition cost is usually going to far exceed a 50% discount on your MSRP price. If you can get some customers to come back and lose margin on one month to get them to potentially renew for additional months it is worth it. This is especially effective if you are running heavy on inventory and need to move through it.
Poll your previous subscribers and ask them why they left. You can collect their email addresses on a simple Google form where you can ascertain important information. You can do a box giveaway to entice participation and the requirement of providing their email addresses. Then, you can sort customers into buckets for reasons they churned out. Finally, you could specifically address the concerns with these individuals showing you care about their comments. For example, maybe 7 out of 50 respondents claimed they left due to “lack of products.” If you have extra inventory, let them know if they re-subscribe they will receive 2-3 extra items for their first welcome back box.
Do a smaller discount but for a long period of time. Instead of 50% off your first box to come back, you can try 20% off any 3, 6, or 12 month subscription plans. When the economy is tough customers are looking for a bargain and to lock in deals for extended periods of time. You have to ask yourself the question as a business owner — would I take back a customer if I am sacrificing 20% of my margin and maybe only making a net of 10 to 15% on them. As long as new customers are coming in at a higher margin this is usually a winning strategy as the blended margin will equal the bottom line.

Tip #5 – Incentivize Loyalty

Obviously, there are a lot of Loyalty Programs out there that are used to reward your customers and ultimately drive them back for repurchases. These programs generally work well and are recommended. However, today I want to talk to you about directly incentivizing your customer with the box they receive each month. Loyalty to me is defined as retention in the subscription box industry. And retention is the most important foundational piece of any subscription-based business.

Include something in your customer’s first box that can be linked with future boxes. This can be something little like a hidden message or promo code for a free box after the puzzle is solved. The key thing is you are calling this out clearly on the printed material so they know to save and stay subscribed. This can create some excitement for subsequent boxes if done correctly.
Include limited edition items and make it where the individual needs to stay subscribed to collect the whole set. Once they have the entire set they can get an additional reward. A lot of individuals love collecting things, especially if they need it is reward-based at the end. Again, just be very clear here with your language so the value prop is understood in that first box. In general, you always want to reward your customers with the highest LTV (life-time value).
Put a base item in your box that requires additional items to be purchased (refills). You can send these “refill items” in subsequent boxes. This is not a one-size-fits-all model as it doesn’t work for each business. Some good examples where this would work would be Health Care (electric toothbrush heads and toothpaste), Beauty Products (skin care products), Common Household Items (cleaner pods or tablets). If you have an e-commerce shop you can also sell there to increase sales.

Tip #6 – Ensure the Shipping Method Matches the Customer’s Expectations

Oftentimes when speaking to subscription box owners I uncover they are using a premium shipping method for their renewals.

I’m a strong believer that as long as you tell your subscribers when you ship and how long delivery will take (a range is fine) then you are okay using a cheaper (and slower) service.

If you want to differentiate new vs. recurring customers then you can send the first box with a quicker method, but renewals are totally fine to get a cheaper and slower shipping method. Margins are tight in the sub industry. Every dollar matters and you can save A LOT of dollars with your shipping expenses.

Tip #7 – Obtain Cheaper Branded Packaging

It is important that your customers can easily identify your brand when they receive their monthly subscription order. This can be done through a branded box, polybag, branded tape, stickers, inserts, etc.

I have been shocked to see how much branded packaging costs some companies, with some paying $3-6 per box! This is entirely too much and not worth the expense. Obviously, box size is going to drive most of your expense when it comes to branded corrugate. However, you should not be paying more than a couple of dollars (all-in) for your branded boxes (given the size of your box is normal).

You really just need to stay away from the bigger name producers in the U.S. that can charge more due to their size. If you can find boutique box producers locally in the U.S. they should be cheaper. Otherwise, you can always have your boxes produced cheaper overseas if that is something appealing. We have several client that get their branded corrugate from China. You just need to bake in the extra lead time that it will take to get here from overseas. Typically, the overall process from placing the order to China until boxes arrive at your door is about 50-60 days.

Like anything in business, the more you buy the cheaper it gets when it comes to branded corrugated boxes.

Tip #8 – Box Sponsorship

Now, this is not a one-size-fits-all model, but…

You have a subscription box that needs filled every month. Most of the time you just plan your COGs (cost of goods) budget monthly. You know you have ‘X’ dollars to spend to get the products to you or your fulfillment partner. What if you could change the equation and get some of your products free and thus bring down your COGs?

You can do just this by instituting a Box Sponsorship program. Essentially, you offer brands benefits to being featured in your box and then you get the products for free (or deeply discounted). This is truly a WIN-WIN as the brand is getting exposure they would not have received and your margin starts to improve.

Some benefits of box sponsorship for brands could include:

Allowance of a marketing insert with a promotional QR code. Drives traffic to their website
Backlink on your website. You can feature a “Recently Partnered with…” section on your site. This backlink helps them with SEO if you have a following yourself
Product Feedback. This one is so valuable to brands. You can survey your subscribers and ask 1-3 questions about the products they received and share feedback with your partners.
An email blast and social share. Let your brand partners provide you a blurb and some high-resolution pics for you to use. Count up your followers and let them know how many individuals will see your messages (note: it is much higher than your actual subscribership so there is additional value here).
A verbal agreement to purchase future products if customer feedback if positive. Not required but can certainly entice the opportunity.

I do suggest putting together a Box Sponsorship slide deck that highlights more about your brand and the benefits of the program. This will make the conversation easier with vendors. Again, this program is not for everyone — may not be a fit for your box or may not be a fit for many vendors. However, I have scaled two subscription boxes and this certainly helped to play a role in the success of those businesses.

Tip #9 – Automate Customer Flows

Use Klaviyo or another CDP (Customer Data Platform) to set up automated flows for customers: new, potential, lost, recurring

It is important you are hitting your potential subscribers in the right ways with the right message. Your messaging to a customer that just signed up for your email list should be wildly different vs a message trying to recover an abandoned cart.

The good thing is you can set up these messages to be automatically sent at certain milestone dates and times. You can create a multi-email flow for each type of customer that may engage with your brand. This can help to create brand recognition and trust, if done correctly.

Customer segmentation is important so having a dynamic system that specializes in this area is critical.

Tip #10 – Use a Postal Consolidator for Shipping

We talked previously that renewal shipping speed should not be a determinant factor when planning your monthly shipping plan. As long as you get the first box out in 24-48 business hours, the following boxes can ship at slower speeds.

The best way to use a slower shipping method AND save you money on each package is to use a postal consolidator. There are many postal consolidators out there (SurePost, Mail Innovations, DHL ECommerce, Pitney Bowes, Newgistics, OSM, etc.). The typical transit time for these companies is 2-7 days.

So how does it work?

The companies above do all the pick-ups and the line-haul across the United States. USPS is actually not an effective national carrier (they fly a lot of their cargo with FedEx and broker out their in-house LTL/TL volume). Eventually, the carriers will drop off the packages at USPS DDU’s (Destination Delivery Units) across the country.

Then, USPS, who is contractually obligated to go to your address six days a week with mail, just adds the packages to the route. They do the final-mile delivery. The tracking number to the customer is always USPS so it is very seamless from a user standpoint.

If you have larger volumes you may have luck going direct to these consolidators. If you have smaller volumes you may want to partner with a 3PL partner that has the established relationships and volume that drives bigger discounts.

Tip #11 – Maximize Leftover Inventory

In a perfect world, you would know exactly how many subscribers you would have for the renewal period, order those items to that exact number, and fulfill your boxes without any leftover inventory. However, any sub owner knows the subscription game doesn’t work that way. This is why it is important to quickly have a plan to re-purpose those extra units that are leftover.

Some ideas:

Create mystery boxes. This can be a combination of leftover items from previous months. You can sell at the same price or a discounted price if you are just wanting/needing to turn that inventory into cash.
Create a starter box. This idea isn’t for every business, but I do think it is applicable to most. If your items are generally in the same family month-to-month, then it is fine to have items set aside as starter boxes. These boxes can go out quickly (24-48 business hours) for new subscribers. That way they don’t have to wait until the monthly renewal shipping for their first box. First impressions matter so much.
Sell items in your store or as pop-up add-ons when a customer goes to subscribe on your website.
Giveaways — Although it feels like the giveaway hype has cooled down in the past couple of years, if you can still be clever with giveaways and make it feel exclusive, then this is a good way to work through excess inventory.
Donate. Do you have products that could benefit individuals who may not otherwise afford them? If you can find a donor route this is a wonderful cause. Plus, you can write off the inventory for tax purposes.

Tip #12 – Get to Know Your Core Audience Quickly

Product fit is a real challenge that almost every brand starts out with when coming to market.

The problem: You have a great subscription box idea you want to bring to the market, but you don’t know your target audience or, at minimum, your “perfect customer.” This often leads to a long period of time testing ads to find the best fit. This can be an expensive endeavor for a start-up business.

Wouldn’t it be great to target the right customers out of the gate vs. the common try-everything-with-ads and see what sticks approach? There are a few things you can do to help yourself be more educated when you launch.

– Research everything you can about your idea, competitors, and the marketplace. No one should be more educated about your product/market than you! This obviously should be done as early as possible so you are not backing into your audience.

– Do a survey about your brand and products to help narrow in on the correct audience and approach. You can do this either organically or pay an agency. Entice your audience with a chance to win a 3-month subscription or something similar.

– Do a soft-launch and garner feedback from every single friend/family/customer. You may have to offer discounted or free boxes in exchange for the feedback but it is with it. Feedback is a valuable gift.

These ideas will get you on the path to finding your “perfect customer.”

Tip #13 – Multi-Channel Selling

Once you have established your brand identity and have your main website up and running, you can look to diversify your revenue by having your box available on multiple marketplaces. This is not for every business as some want ultimate control by just selling on his/her website.

If you are looking to get your name out there across other platforms here are some suggestions:

Cratejoy – They are definitely a platform that has had their problems in the last couple of years (increased fees for merchants and customers, communication issues, turnover etc.). However, they are still the largest subscription box marketplace in the U.S. and get a lot of traffic.
Amazon – You can sell your box with their subscriptions program (limited demand from what I’ve seen) or you can sell past boxes as ‘one-offs’ by creating individual listings.
Gifting marketplaces. Again, this depends on your niche. However, as an example, Platterful has been able to list on Loop & Tie, Snack Magic, Postal IO and Gifts for Good. These platforms help to bring in 10-25% of our volume dependent on the time of the year.
Etsy – Are the products in your box hand made? Do they have origins from small businesses? If so, you can list and sell your box on Etsy. Cater the language on the listing around small businesses and play up the hand made angle.
List on subscription box review aggregate sites like My Subscription Addiction and A Year of Boxes. This will require you to have an affiliate management software to pay these sites (and other affiliates) their commission. I suggest just looking at the commission as finder fees.

Tip #14 – Prepaying Expenses at the End of the Calendar Year

First, it is important for you (or someone trustworthy) to be managing the books for your business. A common thing I see with SMB (Small & Medium Businesses) is waiting till the end of the year to ‘find out where we landed.’ I am a fervent believer in that you should know your profitability or loss after each month’s end (within 10 days to let things post). This helps with understanding cash flow, forecasting, and provides more educated real-time decision making.

If you are a LLC all of the loss/gain is going to go to its members on a Schedule K (at least in the U.S.) during tax time. If you know at the end of the year that you are going to have net profit that you will be taxed on, try to offset it by prepaying expenses that would incur into the new year. Some examples:

Software expenses. Almost every subscription box company has recurring monthly fees. Just some examples would be Subbly, Shopify, Klayvio, Gorgias, and Recharge. A lot of these companies will let you prepay for future usage. So you can get your expense to offset your profit before year-end. This will set you up well for the next year.
Personnel or labor costs. This one is a little trickier as there are tax implications for the individual that gets prepaid, as well. You are essentially increasing their income by some factor. This will lead to additional tax being due for them.
Other various expenses to consider year-end if you have profit: Insurance, travel, membership dues, rent, PR firms

**A key thing to keep in mind here. Your COGs shipped are deductible but not your COGs on hand. So don’t stock up on inventory thinking it will be deductible if it is stored for 2024 usage.**

Tip #15 – Use a Virtual Assistant to Help You Scale Quicker

Let’s be real…running a subscription box on your own (or even with a partner) can be overwhelming at times. If you are like me you have a constantly evolving list of 10-15 things you want to work on to potentially grow your subscription business.

It is often hard to knock things off this list because you are managing all aspects of the business: sourcing/shipping/customer service/ marketing/finance/networking. There is a wonderful solution to help you scale your business quickly by getting a lot of the monotonous tasks off your desk: Hire a Virtual Assistant (VA)!

Virtual Assistants these days are far more advanced than what you could find even ten years ago. Their skill sets are diverse and they are willing to learn from my personal experiences. In addition to customer service, many VAs can help with product sourcing, social media management, reporting & analysis and much more!

These individuals can work remotely from anywhere in the world which is a huge benefit to both sides:

1) The VA has flexibility of where and often when to work. This leads to job satisfaction and a longer expected tenure.

2) The Sub Box Owner doesn’t have to pay for benefits and depending on the location of the VA, the pay rate can be lower than what one would pay in their resident country.

Tip #16 – Test & Segment Your Audience Continuously

This is one area that is grossly underutilized by the industry. Segmenting your audience ensures you are hitting your customer with the correct content/offer. If not, you are taking a one-size-fits-all approach which is essentially throwing your content against a wall to see what sticks. This is not efficient and can alienate potential customers. Hitting your customers with customized content/offer gives you the best chance of customer acquisition and higher customer LTV.

Demographic Segmentation – Population-related characteristics such as gender, age, education and income level.

Examples: You can segment and make distinct offers for female vs male. You could also tailor content for individuals 25-50 years old and another set of content for individuals that are 50+

Behavioral Segmentation – This allows you to group customers with similar behaviors in the same ways.

Examples: You could segment all of your customers that found you on a certain social media channel. Or you could segment all customers that have a LTV of >$500. Finally, you could segment any customer that has opened or clicked-through one of your past 5 emails — create an engaged group

Geographic Segmentation – This allows you to tailor your content/offer to individuals based on where they live.

Examples: Say you are shipping from the Midwest and want to offer free express shipping to West Coast customers where normally transit may be a little longer. This is easily done via segmentation. Or you could segment customers that are within your 1 day ground delivery footprint out of your facility. You could claim next day delivery for these “VIP customers.”

Play up your segmentation and make your customers feel special when you can.

The opportunities to segment really are endless. It certainly helps to have a diverse email client application that allows many forms of segmentation. I have had a lot of personal success with Klaviyo but it is worth researching and comparing applications. This type of software can be expensive but worth it if you utilize it correctly.

THE WRAP

Well, hopefully you found some value in the above tips and can implement a few to help your business save some money and/or time. I would also love to hear any tips you have.

Did you know that Lessgistics is one of the few 3PL fulfillment centers that concentrates on subscription boxes? The owners have founded three subscription model companies and know the logistics inside and out.

If we can ever be of service to you please let us know. We love connecting with fellow subscription box owners.