A growing community of eager shoppers, seeking both convenience and surprises, are flocking to the subscription-box concept, paving the way for ever-more-eclectic and specialized offerings.
Need a monthly delivery of doomsday prepping supplies? How about treats for your pet rabbit, or only-available-in-Japan snacks like Umashi Oasi Cheetos?
Then you might be a candidate for the latest consumer craze: the subscription box. A growing community of eager shoppers seeking both the convenience and surprise that every regular delivery brings are flocking to the concept, paving the way for ever-more-eclectic and specialized offerings.
Generally priced at $10 to $30 a shipment, the boxes are stuffed with goodies built around a theme, but usually filled with a surprise mix of products picked out by a curator.
“I get close to 100 boxes a month, and I still get excited when I see them at the front door,” said Liz Cadman, the founder of the My Subscription Addiction, a website of reviews.
Most Read Business Stories
- Microsoft CEO Satya Nadella sells half his shares in the company
- Gates, French Gates offer post-divorce philanthropic plans
- Apple iOS privacy settings to change now
- Canada excludes Boeing from fighter jet competition
- A Hertz customer's Thanksgiving reservation gone awry took a viral Twitter thread to fix
Investors are making big bets on subscription-box startups like Blue Apron, which mails its subscribers weekly deliveries of recipes and the ingredients to make them. The 3-year-old company, based in New York, recently raised $135 million in a deal that values it at $2 billion. Blue Apron says it is delivering more than 3 million meals a month, three times the number it shipped nine months ago.
Companies like NatureBox (snacks), Club W (wine), Citrus Lane (children’s products), BarkBox (treats for dogs), Faithbox (socially responsible goods) and Birchbox, the beauty-products retailer widely credited with accelerating the subscription craze, have also taken in money from venture capitalists.
Trailing those well-funded ventures are a growing number of mom-and-pop operators.
Korrina Ede, 26, and Robert Madden, 32, had long fantasized about leaving their retail jobs and starting their own business. In November, they took a week off to brainstorm and sketch out ideas. From that emerged OwlCrate, a monthly subscription box for young adult books. Each shipment includes a recently released novel and an assortment of themed literary knickknacks like jewelry, bookmarks, stickers and art.
Trying to guess how many customers they might attract, the couple prepared 150 boxes for their first shipment in March, featuring V.E. Schwab’s fantasy novel “A Darker Shade of Magic.” It sold out almost instantly. They scrambled to assemble supplies for an additional 100 boxes, priced at $30 plus shipping — and quickly blew through those. A waiting list formed.
Ede and Madden will not disclose exactly how many subscribers OwlCrate now has, but they say it is in the thousands. The business they started in their apartment in Vancouver, B.C., is already overflowing the storage locker they rented for their swelling inventory.
“The main limitation on our growth is that we can only put together so many boxes ourselves,” Madden said. “We’re still sort of in a state of shock about how this took off.”
OwlCrate’s success was fueled by a community of bloggers and subscription fans eager to promote their latest finds. My Subscription Addiction has 1,200 companies listed in its subscription directory, up from around 800 a year ago.
“We found that the typical person who creates an account on our site subscribes to seven boxes and has 12 more on her wish list,” Cadman said.
New service providers are making it easier for those with ideas to get started. Cadman and others say that one catalyst for the market’s recent growth is Cratejoy, a company in Austin, Texas, that sells turnkey software — website templates, customer-account management and billing tools — for running a subscription business.
Cratejoy’s services cost $39 a month, plus 1.25 percent of each client’s subscription revenue and 10 cents for each billing transaction. After beta testing with a limited pool of customers, it opened to the public in October. Within a month, it had 100 paying merchants. It now has 8,000.
Around half of those vendors are first-time business owners, according to Amir Elaguizy, Cratejoy’s co-founder and chief executive.
How many will stick with it is an open question. Starting a subscription business can be inexpensive — OwlCrate’s founders say they spent just a few thousand dollars on their initial supplies and inventory — but maintaining one is a punishing logistical grind. Sourcing suppliers, fielding customer questions and complaints, marketing, managing inventory, packing boxes and transporting shipments can be a heavy workload for what is typically a low-margin operation.
Cadman says that 13 percent of the merchants My Subscription Addiction tracks have disappeared. Market research on the industry is scarce, but anecdotal evidence suggests that many subscription businesses have trouble sustaining the elements — like heavy product discounting and the novelty of discovery — that draw customers to them.
Cadman sees three especially hot areas right now. Boxes filled with comics and toys are taking off, as are home décor subscription boxes.
The third category Cadman named is book boxes. OwlCrate opened at exactly the right moment to capitalize on a surge of interest in young-adult literature, and it has drawn praise for its thoughtful selections, its clever packaging and the custom items it hires Etsy artists to create.
Now, the challenge Ede and Madden face is to keep their thousands of newfound customers feeling as if they’re getting $30 worth of value — about twice what the featured books alone would cost — from OwlCrate’s packages, month after month after month.