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Subscription Boxes How to Make Ecommerce Subscription How to make ecommerce boxes a steady revenue stream In partnership with FIPP Insight Report Contents 01 Time to start thinking about 01 subscription boxes / p03 Written by: Jessica Patterson Editor: Sylkia J. Cartagena 02 Types of boxes / p10 Design: Ian Crawford © FIPP. All rights reserved 03 Revenue options / p13 SUPPORT FIPP 04 Planning ahead / p16 Find our features, reports, webinars and other resources useful? 05 Logistics / p19 FIPP is a not-for-profit trade body with the sole purpose of helping the media industry to develop better strategies and build better businesses. Marketing / p24 06 Support our work with an individual contribution of any size so we can keep communicating trends, sharing knowledge, and improving skills, worldwide. 07 Case studies / p26 Click here for more. 02 FIPP Insight Report 01 Time to start thinking about subscription boxes OR magazine publishers, multi- platform and brand-focused Fmedia houses, there has been a push towards reader revenue these past few years. New investments in live events, exponential expansion into brand licensing, and exploration of other marketplaces including ecommerce, have provided diverse new streams of revenue. This move to monetisation of consumer revenue is one of the largest shifts in the past decade, wrote FIPP CEO James Hewes in the Innovation in Media 2019- 2020 World Report. It won’t stop there. 03 FIPP Insight Report In this report, FIPP aims to provide Media companies should start thinking subscription box companies around you with a guide on how to start your about subscription boxes, because the world, though nearly 70% were membership boxes strategy and convert they’re highly successful if done right. based in the US, the report said. The it into a revenue source. It answers some In our research, we’ve found that if you most popular categories, as measured of your most pressing questions about have the correct approach, it’s more by site visits, were grooming, followed subscription boxes and how to launch than likely subscription boxes are a by food and clothing. By 2023, 75% yourselves into this million-dollar- good fit for you. Subscription boxes are of organisations selling direct-to- market, helping you find solutions and about providing your subscribers with an consumer will offer subscription opportunities for your business. experience they’re not getting elsewhere. services, the SUBTA report states. It’s about taking advantage of habit, for a We hope you find it useful. subscription box to become a habit, too. As a magazine media publisher, you’re an authority in your niche, and on a daily Publishers are moving to grow their According to the 2019 State of the basis curate content that best suits your subscription revenue as digital ad Subscription Commerce Economy audience’s needs, wants and tastes. It revenue fails to live up to its promise, Annual Report, the global subscription makes sense to extend that authority to as print revenues continue to shrink, commerce economy is growing. “From subscription boxes. and as scale and clicks don’t cut replenishment, to discovery and delight, it anymore. Subscriptions have subscription boxes are a medium for Who wouldn’t want to introduce a more proven to be a solid revenue base consumers to be introduced to and predictable, recurring revenue stream? for sustainability and growth. They engaged with a recurring delivery of Subscriptions provide those revenue may not be as fast-paced as other niche products as part of a marketing flows, and they are something magazines revenue streams, but they’re steady. We strategy and a method of product have been doing for decades. Building off know this, you say. We’ve been doing distribution,” the report states. those strengths, we look at what steps subscriptions for years. So what? magazine media can take to start their As of 2018, there were close to 7,000 own subscription boxes. 04 FIPP Insight Report Subscription boxes in the READERSHIP GROWTH DRIVING DRAMATIC needed more now than ever. Hearst times of pandemic SUBSCRIPTION WAVE (%) Autos said it saw a large uptick in sales in March/April 2020, and over that period When we began writing this report in of time, launched a limited-time bonus 300 Source: Pocketmags.com YOY increase in UK January, Covid-19 was a whisper in 268 offer aimed at those sheltering in place 259 page views, 23 March to 26 April 2020 international news. Two months later, 250 or staying at home. when we finished it, the world was in lockdown. How quickly things changed 200 177 Readership growth is driving a dramatic for all of us. 154 150 subscription wave, said Martha 150 Stone, CEO of the World Newsmedia 104 In the time since then, executives from 97 97 Network during the ‘Data-drive pricing 100 80 strategies that grow subscription 50 revenue,’ FIPP webinar in May. According to Pocketmags, there was a surge % in readership growth during the UK’s Sports Music Men’s Covid-19 lockdown, which drove a wave Women’s Food & drink Tech & gamingFamily & home of subscriptions. For example, in tech and Hobbies & crafts Health & fitness gaming, and family and home titles, UK page views increased 268% year over magazine media companies who already year, and 259% year over year, for the had subscription box programmes in period of March 23 to April 26, 2020. place, expressed that there was a surge as a result of worldwide lockdowns. Despite the challenges of the coronavirus Subscription boxes that deliver product pandemic, subscription box retailers Martha Stone, CEO, World Newsmedia Network discovery and tangible experience are have enjoyed a surge in search traffic 05 FIPP Insight Report “We created a new wing of our company – with not only new employees, but new employee categories. New departments. New physical space. This is not for the faint of heart, or the halfway effort. This changed everything...” David Webb, Editor-in-Chief, Explore magazine in Canada and subscriptions. According to a recent As people practised social distancing Your next healthy subscription report by Zuora, subscription around the world, meal kit subscription revenue stream box companies were resilient during boxes saw a flood of sudden demand. According to the Royal Mail, the UK the pandemic with more than half Blue Apron, for example, sends meal subscription box market is estimated reporting they hadn’t seen a decline, and kits to more than 350,000 subscribers. to be worth £1bn by 2022. In a report 22.5% of companies actually saw their “Within the span of 48 hours, we saw for Royal Mail, GlobalData Consulting subscription growth rate accelerate. an increase in orders that surpassed forecast that by 2022, the UK the staff we had in place to fulfil this subscription box market will have almost “The winners will be those that higher-than-expected demand, and this doubled in size to £1bn, up 72% from successfully retain the new customers caused some challenges in our fulfilment 2017. The report estimates that the top 25 they’ve gained this year,” Guy Marion, process,” Blue Apron CEO Linda Findley companies account for £500m in sales, CEO of automated customer retention Kozlowski wrote on Facebook. while there are about 400 to 600 small software Brightback, told eMarketer and micro-sized companies who account in March. ”There’s a lot to learn from for a combined turnover of £80m and an influx of new customers, and the £200m in 2017. “The business model also companies that commit to finding these presents significant opportunities for answers and making changes will survive international expansion, with our survey that future transition.” revealing that nearly 90% of subscription 06 FIPP Insight Report businesses make at least some “It’s an exciting time to be working Existing and successful subscription box of their sales overseas,” the in media because now more than businesses have developed various ways Royal Mail report stated. ever it’s critical that publishers to reduce churn, these being 1) using a think creatively and strategically magazine, and 2) selling products in- Barriers to entry into this about their specific audiences store. Online communities and unboxing industry are low, though there and how to best serve them,” videos keep subscribers engaged are challenges of delivery and explained Michelle Panzer, Chief between deliveries. fulfilment. Those that do well Marketing Officer at Hearst offer a flexible service that allows Autos. “With a strong brand and For subscribers, subscription boxes consumers to cancel or change their a passionate audience, anything’s provide tangible benefits. The experience preferences and offer some value that possible!” of opening boxes is like Christmas. It’s Michelle Panzer consumers can’t get in conventional Chief Marketing Officer, about discovery, it’s about anticipation, retail environments, according to the Hearst Autos it’s about getting great stuff at a Royal Mail report. Challenges and benefits fraction of what it would cost them in store. Consumers are looking to be “So what’s the playbook for creating That’s not to say there aren’t challenges delighted, to discover new items that a successful subscription startup? in the subscription box business. One fit into their lifestyles and immerse It’s complicated, but it seems like of the biggest obstacles to overcome themselves in an experience. it hinges on a business model that is something magazine media are goes beyond making money on the well-prepared for and knowledgeable For you, offering people a place to sign box itself, and investing in content about: churn. Retaining subscription box up for a subscription box could also play that makes the unboxing experience subscribers is as big an issue in that into them subscribing to magazines exciting every single time,” wrote industry as it is in ours.
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