by Stefan Pretty, founder of Subbly
Subscription business models have been around for a pretty long time, but thanks to modern technology, this model has evolved from milk or newspapers delivery to a versatile eCommerce experience.
One characteristic remains: the products subscription businesses can provide, ranging from magazine subscriptions to literally anything, can appear on a customer’s doorstep every day, week, month or year.
As a starting entrepreneur, you might wonder: why on earth would I want to start a subscription (box) business? The term itself sounds confusing, so should I even bother?
Subscription business brings recurring revenue.
There are not many business models that provide such freedom and steady growth as a sub-segment of eCommerce – subscription business. As an example, my personal favorite and the most popular subscription box model, is a true example of the lifestyle business. The secret is hidden in the subscription fee your customers will be paying for the recurring delivery of, well, anything imaginable really.
It is all about turning a single purchase decision into a repetitive (daily, weekly or monthly) purchase behaviour to increase that critical lifetime value (LTV). This allows you to enjoy a constant source of incoming revenue, as long as you’re keeping the subscribers satisfied (that is of course essential). More importantly, a subscription business model enables you to manage the cash flow, upgrade your business planning and optimize metrics such as churn rates, the lifetime value of a customer, expansion, and more.
It is a bootstrappable model.
In most cases, urgency and overwhelm can create a lot of stress. This is not the case with subscriptions, because your customers are actually expecting to wait for days, even weeks until their package arrives! A time gap like this one, in a combination with the positive cash flow, helps you manage the ordering, packaging, and paying without stress. Plus, starting an online business of course has it’s costs, but with a multitude of solutions out there (with Subbly being one of them) you don’t need to spend thousands on software development or marketing to validate your business idea. Through customer acquisition, you’ll work to grow the revenue and then, use that revenue to cover operational costs. It’s clear why positive cash flow is a holy grail of lifestyle businesses, but is there more to it?
SubCom offers ultimate flexibility.
Often, you can see a subscription business owner at a beach, enjoying a cocktail on a workday. Listen, the true power of SubCom, especially subscription box business, lies in flexibility. There is more to positive cash flow created by subscriptions, than large time margins and solved operational costs.
Meaning, if you want, you can pick a month and reinvest all your profits to just grow the business during that period of time. The next month, you’re free to hit the brakes on marketing efforts and focus on logistics or (and this is the best part) just take the money home to unwind a bit. Of course I advocate and recommend you reinvest and let the pay day happen later when the yield is even greater!
What we’re all yearning for as entrepreneurs is flexibility and decision-making freedom. This is why the subscription business model has lately been experiencing dramatic growth. And rest assured that any young entrepreneur with a vision will not miss that opportunity.
Subscription eCommerce, or SubCom for short, is simple and can be easily used as a lifestyle business. As a rising entrepreneur yourself, you’re probably aware that just about anything can be sold on Internet, so why couldn’t it be a subscription? Of course it should have demand and the business idea be validated, but there is plenty of opportunity with this model still.
In my humble opinion, the beauty of subscription (box) business is that you do not need regular office hours, nor an office at all. Simply, pick amazing products, package and advertise them nicely, send them out and you’re done for a month. Most of these operations are perfectly doable in the coziness of your own home.
Now, if you’re thinking about where to start, some the most popular niches for subscription boxes you could explore are:
- Organic food
- Kids, Crafts and Activities
- Eco products
With all the tools available, including our own subscription website software platform, it’s straightforward easy to start a subscription based business – all you need is a little cash and a creative, service-focused mindset. And a cocktail, of course.
Stefan Pretty is the founder of Subbly, an ecommerce (management) platform for subscription based businesses. Subbly’s mission is to make running a Subbox business as easy as possible, providing tools and resources for rising subscription entrepreneurs all across the world. Stefan is focused on bootstrapping and sustainability through profitability, and devoted to sharing lean business principles with future founders through webinars and interviews.