A subscription box is a recurring delivery of curated products that consumers receive on a regular basis — they cover everything from groceries and makeup to international snacks and even pet toys.
The popularity of subscription boxes has skyrocketed in the last decade and is projected to be worth over $65 billion dollars by 2027, with the average consumer spending over $200 each month on various subscription services. So, if you’re looking for a way to tap into a new revenue stream, there are some tried-and-true tips and tricks for creating profitable pet subscriptions.
In this blog, we’ll explore a brief history of subscriptions, why they’ve increased in popularity, their pros and cons, and nine tips for creating profitable pet subscriptions for your business.
Product Subscriptions: A Brief History
When thinking of subscriptions, Netflix, BirchBox, and HelloFresh may come to mind. These are relatively new in the world of subscriptions — but the idea of selling subscriptions dates back a few hundred years.
Subscription models started in the 18th and 19th centuries. Back then, people subscribed to newspapers, magazines, and even book clubs. Fun fact: Charles Dickens' novels were often serialized and sent out to subscribers.
Modern Subscription Boxes
Modern-day subscription boxes were born in the era of Gen Zers and are projected to maintain their steady rise in popularity. Here’s a brief timeline of what we know of as a subscription box.
- Early 2000s: This is when the subscription box scene started to take off. An early example is the "Fruit of the Month Club" by Harry & David — curated fruits that started in the 1930s as a popular gift choice.
- 2010: Things really picked up with the launch of Birchbox in 2010. Founded by Katia Beauchamp and Hayley Barna, Birchbox sent out monthly samples of beauty products, helping customers discover new items and brands.
- 2011–2015: After Birchbox's success, many other subscription box services popped up, covering all sorts of niches. Companies like Blue Apron (meal kits), Dollar Shave Club (razors), and NatureBox (healthy snacks) joined the party, each catering to different interests.
- 2016–Present: The subscription box industry has been on a roll, expanding to cover almost any interest you can think of — fitness, fashion, pet products, books, gourmet foods, you name it. Advances in technology have made for better customer experiences, more personalized options, and smoother delivery systems.
If you were on the fence about implementing a profitable pet subscription, hopefully their long standing history will put you more at ease. Even with their success over the last few hundred years, there are still pros and cons to consider when deciding what you want your pet subscription to be.
The Pros and Cons of Subscriptions — And Why Every Company Seems To Have One
It’s no coincidence that a majority of companies have moved to a subscription model vs. purchase model — they’re more profitable. In addition to increased profits, here are more reasons why offering a subscription model just makes sense:
- Higher profit margins: The average gross margins are between 30% and 50% since they promote customer loyalty. Long-time customers on average spend 67% more than new customers.
- Predictable income: You’ll know what you’re going to make each month, and have an easier time forecasting for future purchase orders.
- Customer retention: You’ll spend less time and money on customer acquisition marketing efforts and can focus more on keeping the ones you have.
- Customer lifetime value: The lifetime value of a customer in a subscription model is often higher than that of a one-time purchaser, justifying initial acquisition costs. The lifetime value for a subscription box customer is around $365.
- Valuable customer data and insights: Customers usually enter their preferences before signing up for a subscription. Think back to when you signed up for your favorite streaming service. Remember it asking about your preference of genre or language? This information is valuable when choosing products or services you want to include.
- Feedback loop: Monthly subscriptions also create a constant feedback loop between you and your customers, allowing you to get ahead of any potential negative feedback before it occurs.
For example, when HelloFresh delivers a box of meals, it immediately asks how your delivery went. Like, if you received the box successfully: Were there any issues with the ingredients? It then nudges you to give a star rating and relevant feedback for any of the recipes.
- Customers save time and money: Let’s face it, we’re busy people. A subscription allows customers to “set it and forget it.” Convenience is king, and what’s more convenient than having something delivered right to your door? Plus, bundled products are usually cheaper than having to buy them individually.
- Customers discover new products: With your expertise in curating products or offering a new service, customers can find things they never knew existed.
But as with most things, wherever there are pros, there are cons to consider, too:
- High customer acquisition costs: It takes dedicated marketing and promotional efforts to attract subscribers, which can get pretty pricey upfront.
- Complex logistics and fulfillment: Keeping up with regular deliveries or service updates can be tricky and requires smooth logistics.
- Customer commitment issues: Customers might feel stuck in a subscription even if their needs or preferences change, which can lead to dissatisfaction.
- High churn rates: Subscribers canceling frequently can be a real headache, making it tough to maintain that steady stream of revenue.
- Accumulated costs for customers: Multiple subscriptions can add up fast, leading to higher spending than expected and causing what's known as subscription fatigue.
Now that you know the pros and cons, we’ll give you some helpful tips so you can put together a profitable pet subscription.
9 Tips for Creating Profitable Pet Subscriptions
The type of subscription you offer is only limited by your imagination. Subscriptions don’t have to be tangible products — they can also be for services like dog grooming, dog walking, pet sitting, and more. Here are nine tips to help you create the perfect pet subscription.
1. Do Your Market Research
This is easily the most important part of starting any venture. Research helps you determine your target market and any gaps in the market. Do you want to cater exclusively to dog-lovers, but find the market to be oversaturated? Or maybe you’re thinking of a subscription box for bird lovers, but find there’s not a huge demand for it.
Look up other competitors like Chewy or Bullymake to see why they’re successful and get an idea of price ranges. Which demographic spends the most on their pets each month? (Hint: it’s millennials at a whopping $357 per month.)
2. Define Your Niche
Hopefully, your market research has given you enough information to define your niche. At this stage, you’re narrowing down exactly what you want to offer. For the sake of this blog, let’s say you’ve settled on a dog toy subscription box.
What makes your subscription box stand out from others? Do you make your own toys? Are you able to offer it at a cheaper price compared to other popular brands? Will there be more freedom in customization? Once you’ve nailed down steps one and two, the rest will flow more quickly.
3. Create a Business Plan
A recent study found that only 35% of business owners actually finished a business plan. You may think it’s optional, especially if you’re not looking for outside funding. Trust us, those who completed one were twice as likely to be successful.
Include your business model (subscription), pricing strategy, and revenue projections. Also, determine your startup costs, like how much you need for inventory and how much more funding you need compared to what you already have. Lastly, plan your marketing and distribution strategies.
4. Source Your Products
Your next step is to source products. Remember: You’re just starting out, so you likely won’t need to hold a lot of inventory. Here are a few ways to source products:
- Wholesale: Purchase products in bulk/wholesale from large retailers.
- Online: Popular sites like Alibaba are known for selling ready-made products or for finding manufacturers. Other sites like Etsy are perfect for small to medium business owners looking for elevated craftsmanship and more niche products.
- Local stores: Look at shops in your local area. Are there any items they’re discontinuing that they’d be happy to sell at a much lower cost?
- Point of sale (POS) system: Your POS can also be a good place to look for products. eTailPet, for instance, has a built-in catalog of over 160,000+ products from the biggest names. One program will provide you with tons of variety and help you create purchase orders.
Remember: You can source products from many different places. You’re never obligated to choose just one supplier. Once you’ve nailed down a steady supply, you can move on to step five.
5. Create Your Offer
Put together your box. The packaging should be eye-catching and engaging. Now, curate your mix of dog toys and supplies. You can try a few different boxes to start to see which ones turn out to be the most popular.
It’s also important to include various subscription plans. Flexibility is key. Most companies offer a monthly subscription with a heavy discount if paid annually. Be sure customers are free to cancel or pause their subscription at any time. No one wants to feel locked into a contract, and this can be especially helpful for customers who fall on hard times.
6. Build a Strong Brand
Building a strong brand means creating a unique identity that really sticks with people. Think of a memorable name, an eye-catching logo, and a brand voice that speaks directly to your audience.
Your website should look professional and be easy to navigate, making the subscription process a breeze. And don’t forget to use high-quality images and engaging content to really show off what you’re offering.
7. Implement Your Marketing Strategy
When it comes to marketing, social media is your best friend. Use it to build a community and interact with potential customers. Partner up with influencers and pet bloggers to get the word out. Promotions, discounts, and referral programs are great ways to attract and keep subscribers coming back for more.
8. Focus on Your Customers
Customer experience is key to keeping your subscribers happy. Make sure your customer service is top-notch and that you respond quickly to any questions or issues. Personalize the subscription experience by allowing customers to specify their pet’s preferences and details. Regularly ask for feedback and use it to make your service even better.
9. Use a POS To Manage Back Office Operations
Running things smoothly behind the scenes is just as important. Use eTailPet POS software to handle billing, shipping, and customer management automatically. eTailPet can keep an eye on your inventory and streamline your supply chain to cut costs. Track important metrics like churn rate, customer acquisition cost, and lifetime value to see how you’re performing and make informed decisions.
Get Your Pet Subscription Off the Ground With eTailPet
eTailPet offers comprehensive customer profiles, in-depth reporting, and smart ordering capabilities — exactly what you need to manage your profitable pet subscription. Learn what customers are looking for, and use smart ordering to help craft purchase orders that reduce stockouts and overstocks.
The intuitive website builder can help you build a professional website where inventory is accurately maintained and customers can browse with ease. Plus, you can take advantage of eTailPet’s extensive catalog of over 160,000+ pet products.
To learn more, schedule your free demo today!