Top Six Challenges Facing Subscription Box Entrepreneurs
Subscription boxes are growing faster than any other sector of the subscription economy. However, not everything comes easy for subscription box companies.
Fast growth comes with its share of challenges. From meeting customer demands and offering diverse varieties of products to operating a booming business with minimal staff members, balancing cash flow while growing membership numbers can be a struggle. So, what are some of the biggest challenges companies face while trying to increase subscribers? We had the opportunity to speak with several within the subscription box world to find out.
Innovating to Meet Member Needs
Even when you create a niche product, you often discover many sub-niches within. Being able to meet increasing demands for products is a challenge for some businesses, including Mystery Tackle Box. When asked about this particular challenge, Eli Rosenberg, the director of PR and media partnerships for Mystery Tackle Box, said:
“Right now, our biggest challenge is trying to meet the large demand we have from customers at scale, while also being able to bake into our process enough agility to cater to different customer wants/needs. We have customer segments who are very different while still being in the same target market. People who fish from boats versus from shore, fishing in small ponds versus large lakes, or fishermen who are dealing with clear water conditions versus stained water conditions. We do our best to ensure each box is right for the customer, so developing these segments and being able to deliver on our brand experience is always top of mind. With this in mind, we are constantly refining our processes to ensure that flexibility as we grow.”
Leslie Emmons Burthey, the VP of marketing for FabFitFun, agrees that meeting customer demands can be a balancing act, especially when it comes to keeping everyone happy. “Because we have such a large number of subscribers across a broad demographic, we’re constantly balancing the right mix and variety of products to keep everybody happy. Additionally, since our products span many different verticals, the more we grow, the harder we have to work continue to offer our member a tailored experience that is unique.”
Juggling Priorities with a Small Team
For small businesses, having a small staff can pose challenges when it comes to growing subscription numbers. This is a particular challenge that Matt Dukes, the co-founder and CEO of VINEBOX, knows all too well. “We're a small, hyper-lean team and managing strong yet sustainable growth with working capital and quality assurance on a product just takes time. We believe this cements a stronger foundation to grow, though, and allows us to offer something that's truly of value to our membership.”
Growing the Market for Subscription Boxes
Because there are so many subscription box services out there, it can be challenging to find new customers who aren’t already committed to their share of boxes.
Related to this topic, Lisa Sugar, the co-founder and president of PopSugar said: “For us, the biggest challenge is finding people who are not in the box world yet. We have a lot of loyal box subscribers who love all types of subscription boxes. We also have a lot of people who just love the PopSugar brand, so getting them to convert into the idea of a monthly box is a challenge.”
The president of Brick Loot, Erin Krex, also chimed in on this topic, saying, “Getting our brand in front of new customers for a reasonable price” is challenging.
Cost Effective Brand Awareness
For some subscription box businesses, their challenge is raising awareness about their products. Dustin McAdams, the founder and CEO of PupJoy, agrees. “We’ve worked diligently at creating the best, most customer-tailored service in our space (artisan quality goods, customized for dog and their parents). It is highly customized, very high quality and backed by unmatched customer service - all of which has helped us compile glowing customer reviews and social proof. Now one of our primary challenges is how to get the word out at scale, in a cost-effective way. There are still millions and millions of dog parents who have never heard of PupJoy and we need to reach them.”
Keeping Advertisements Fresh
For the co-founder of KitNipBox, Deena Bronz, one of the biggest challenges to growing subscription numbers is to continue to create innovative marketing. Concerning this, she said: “I would say the biggest challenge is constantly having to refresh ad creative, the means through which we deliver the ads, so it is a continuous process of experimentation and testing. And then, going with what works. But, knowing that it’s only going to work for a limited amount of time, and we constantly have to replenish and tap new things. It terms of marketing, a new acquisition is not something that we can kind of build out upfront, and then have running. It’s just a constant treadmill of refreshing content and advertising.”
Member Retention Is Key
Some business owners, like Rick Patri, the founder and COO of Lucky Tackle Box, feel that it can be challenging to keep customers interested. Patri realizes that subscription box services come and go. The key to keeping existing customers and appealing to new subscribers is to keep the product interesting.
When asked about this particular challenge, Patri said: “I think the biggest challenge for any subscription company including ours is attrition, because showing our value props and picking up a new customer hasn’t really been the biggest challenge. Once you overcome that hurdle in terms of gaining their confidence that this is a good solution, then I think it’s showing continued value so that you don’t see subscriber exhaustion. And then obviously attrition, because that’s what kills every subscription company. It’s a lot easier to maintain your existing base than start second ones. For us it all comes down to showing increased value because there are competing solutions out there.”
While the monthly subscription box industry has been in existence for decades in various forms, the growth over the last three years has been unprecedented. However, although the industry has explosive growth, the industry’s challenges mirror those of every other fast growth start-up subscription company.
The good news here is these problems can be overcome with creativity, leadership and old fashioned hard work. Subscription box companies are well poised to continue their explosive growth.