Every year, the subscription e-commerce industry generates billions of dollars in revenue. According to a McKinsey survey, nearly 60% of American consumers surveyed had multiple subscriptions. By adopting the subscription box business model, your store can get recurring revenue and a bigger customer base. 

If you would like to know all the basics about the subscription box business model, please navigate this blog What is the subscription business model?

To succeed in the subscription market, you need to apply a suitable model that best serves your customer and is compatible with your products or services. In this article, we will guide you on how to choose the right types subscription box model for your business. 

3 types of subscription business boxes

Subscriptions are commonly classified into three types: curation, replenishment, and access. Each type has its own advantages and disadvantages, so you can determine the best fit for you filtering by the types of physical and digital products you sell, your capacity, and your unique business ideas and goals.

Curated subscription box

The Curation business model is the most popular subscription model. Customers are offered a variety of products based on their preferences. Then they will receive a box of items that will surprise them while still meeting their demands. The mission of your brand is to delight customers by providing them with new items and highly personalized experiences. Most curation businesses typically sell products in the apparel, beauty, and food categories, but the model works well across a wide range of products and is expanding into new industries every year.

Let’s take the Allure Beauty Box as an example. This brand offers its customers an amazing subscription box of skincare and makeup items on a recurring basis. Customers can experience new high-quality products at reasonable prices. 

cutrated subscription box types

Advantages

  • Great upsell, cross-sell method

With a curated business model, your brand can make it easy to introduce various products to customers, which is an effective way to cross-sell and grow your sales. Besides, you can sell more full-size products than any other channel. 

  • High profit 

Many customers enjoy the personalized experience and easy budgeting, offered by a curated subscription box. This is the reason why it attracts a large amount of customer base and thereby increases the profitability and potential of the curation business model. 

Disadvantages

  • High churn rate

Because uniqueness fuels initial enthusiasm for curation subscription businesses, this strategy is prone to a higher churn rate. Moreover, because these products are often non-essentials, subscription box firms thrive when the economy is growing, but they are also the first to go during a downturn.

  • Operational complexity

This model requires your brand to pay higher operating costs, including packaging, branding, and regular shipping. Compared to other types subscription box models, the curation business model is much more complicated and needs more resources. 

Replenishment subscription box

The replenishment business model, which accounts for 32% of the subscription economy, is becoming increasingly popular with many customers because it focuses on reducing costs and being convenient. Customers can use replenishment subscriptions to automate the purchasing of critical supplies, typically at a discount. This model helps them to renew some or similar items without effort.

replenishment subscription box

Because most products don’t need to be restocked on a regular basis, the types of products you sell are crucial in this business model. Razors, diapers, vitamins, and pet food are ideal examples of commodities and convenience goods that work well with this subscription box. 

Advantages 

  • Increase customer lifetime value and loyalty 

The replenishment business model mostly provides essential items that customers use frequently. Therefore, it enables you to go beyond one-time purchases and instead form ongoing relationships with your customers. 

When it comes to purchasing their daily products, consumers want convenience and ease. Therefore, they frequently prefer to stick with a brand they know rather than hopping around. Subscriptions, when designed to be as flexible as possible, provide that opportunity, boosting your ability to build a loyal customer base.

  • High  customer retention rate 

The replenishment model has particularly high long-term subscription rates due to the nature of the products sold by these businesses. In particular, 45 percent of members have remained subscribers for at least a year.

Disadvantages

  • Short margin

Consuming products are the major offerings in this model. Therefore, it requires your business to compete on price and offer generous discounts. This means you need to keep their costs very low and operate at scale in order to earn profits.

Access subscription box

Subscribers to Access business model will pay a monthly subscription in exchange for discounted rates or exclusive benefits. JustFab, NatureBox, and Thrive Market are examples of access subscription businesses, and their main value proposition is to provide customers with exclusivity.

Advantages

  • Provide additional features and benefits to enhance customer experience 

Customers who pay for exclusive access to perks have the opportunity to receive customized offers that will help you strengthen your relationship with them. Create a community of individuals who can interact through forums or Facebook groups to extend that value even further.

  • Flexible and easy to apply for many business types
  • Build a community of advocates, not just customers 

Disadvantages 

  • Cost more time investment

Accessing requires more than a single service or product that can be added to the cart at checkout. Therefore, you will need to invest time and effort to ensure that your membership offering is comprehensive and well-maintained. 

4 tips to make the subscription business model work for you

Do market research 

The first step to start a business is to do market research and assess product viability. Some product categories, particularly in the subscription space, are oversaturated, making it significantly more difficult to enter the market.

The meal-kit category, for example, has extremely high cancellation rates within the first six months, owing to competitive pricing and broad similarities among the leading players. So conduct market research to ensure there is a demand for your product, and keep an eye on your competitors.

Be clear and stick to your business goals

You should draw out very clear points about your business goals and commit to them. With a result-oriented mindset, your company can operate more efficiently. Keeping the subscription box model attached to your business goals is the most ideal for a successful business.

Marketing your subscriptions in various channels

Subscription business models employ a variety of channels to attract new customers and engage existing subscribers. Influencer marketing can help you gain social clout if you’re just starting out.

And, because subscription-based businesses rely on frequent and meaningful customer engagement, email is a critical tool for all business models. It’s important to remember that each subscription business model has its own “marketing match.” For example, affiliate marketing is the most popular acquisition channel for the curation model. Recurring packages then provide an integrated marketing surface for engaging with those customers.

Keep an eye on customer retention 

In the early stages, the acquisition must take precedence over sales. However, once you’ve got the ball rolling, it’s time to shift gears and focus on customer retention strategies.

Remember that it costs more to acquire a customer than it does to retain one, and a loyal customer base can always provide more value. Most subscription businesses focus their entire effort on acquiring new customers, but this is not the most effective way to grow a business.

Conclusion

Selecting the right types subscription box model for your business is necessary to maximize your profit and quickly scale your subscriber base. Each type of subscription business model will have its own advantages and disadvantages so you can take them into consideration to determine the best one for you. 

That’s all about How to choose the right types subscription box model for your business. Hope that this post is helpful to you. If you have further questions, please leave them in the comment box below. 



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