Subscription boxes have sprung into the limelight in recent years. Whether it’s a beauty addict getting their fix of the latest glow-up products or an expert time-saver getting their monthly essentials delivered on auto-pilot, Amazon subscription boxes offer something for everyone.
In fact, the subscription box market is growing fast. According to research by UnivDatos Market Insights, the market for subscription boxes is tipped to grow an additional 68% to reach a jaw-dropping $478 billion by 2025.
In typical Amazon fashion, the eCommerce giant sought to claim its slice of the subscription box pie by launching its ‘Subscribe and Save’ subscription service model in 2007 — and it’s been a hit ever since.
Amazon’s subscription services (including Prime) made a staggering $19.21 billion in revenue in 2019, around 20% of its total revenue. Not only that, research by Hitwise (now a division of Connexity) found that 58% of eCommerce subscription buyers were Amazon shoppers, doubling the odds they’ll buy on Amazon.
Data also shows that Amazon’s subscription buyers are more engaged and ready to spend.
A study by Consumer Intelligence Research Partners found that Amazon’s subscribed buyers spend $600 more than those not subscribed to any services.
Clearly, Amazon has cracked the subscription box code. And there’s still room for creative sellers to get in on the action.
But what does it really take to succeed as an Amazon subscription box seller? Let’s find out.
What Are Amazon Subscription Boxes Anyway?
Amazon’s subscription service, ‘Subscribe and Save,’ allows customers to sign up for deliveries of items they frequently use at a promotional price for regular, repeat purchases.
Here’s how it works:
- Amazon operates a tiered discount system ranging from 5-15% (with the bill footed to you, the seller). Plus, any offers your store is running at the time of purchase will also be applied to the order.
- This discounting strategy removes a nice chunk of change from what the customer would have bought anyway, adding to its appeal for buyers.
- To seal the deal, Amazon offers free FBA deliveries on all subscription orders and a commitment-free guarantee.
This smart combination of excellent customer service, markdowns, and convenience is how Amazon lures buyers in and keeps them.
Ready to sign on the dotted line for your business?
Wait one second. There is a catch.
Amazon ‘Subscribe and Save’ isn’t open to every seller. There are specific requirements you must meet in order to qualify for enrollment.
Aside from requiring that your selling account is in good shape and that you are the brand owner of the items you wish to enroll in the program, Amazon will judge your eligibility using four criteria:
- Fulfillment history and in-stock rate
- Sales performance
- Product category
- Average selling price
Read Amazon’s rules about what it takes to get accepted into Amazon’s ‘Subscribe and Save’ program.
Selling Subscription Boxes on Amazon: Is It Really Worth It?
If you’re the skeptical type, you may look at the Amazon subscription box model and think, ‘All these benefits sound great for the buyer, but what’s really in it for me?’
As the seller, you are sacrificing a significant chunk of your revenue to discounts, after all.
Luckily, the benefits of enrolling in Amazon’s ‘Subscribe and Save’ program aren’t one-sided.
Let’s break down its top advantages:
Explode Your Customer Lifetime Order Value
Whether your buyer is aware or not, a subscription to your product in order to snag a deal and have one less task to worry about makes them loyal to your brand until they decide to cut ties.
This in-built repurchasing model increases the lifetime order value of the customer exponentially. Research has found that each dollar or pound put into Amazon subscription boxes generates a 7X ROI on average.
Boost Your Customer Acquisition Rate and Sales
An Amazon subscription service is an excellent customer acquisition strategy as it allows you to cast your net wider to reach more customers, as well as different types of customers.
For instance, research has shown that 52% of UK 25-34 year-olds have signed up to at least one subscription box. Since this age bracket is already using subscription boxes and is likely to include working professionals, your discount could be just the thing that reels them in while they’re window shopping.
On the flip side, the same study found that 12% of 55-64 year-olds and 8% of consumers aged 65+ have one or more subscription boxes. These demographics tend to be in the late stages of their career and likely in management positions, or have multiple commitments.
Those taking advantage of subscription services are probably looking for a predictable, convenient service that’ll lighten the life admin burden — which is where your Amazon subscription boxes can step in and save the day.
Steadiness on the eCommerce Ride
It’s a fact that the eCommerce market is performing exceptionally well. But this doesn’t mean it’s without its faults, such as high return rates and long waits for payouts — both of which can kill your cash flow.
Having a recurring source of revenue in a product-based business is something to be proud of. Consistent income can inject stability into your business, lessening the effects of the natural peaks and troughs inherent in selling online.
Recurring revenue can also lay the foundation for other business initiatives like providing the capital needed to invest in new products and marketing channels.
It’ll also help you keep your sell-through rates in line with Amazon’s Inventory Performance Index (IPI) requirements.
This setup can have positive knock-on effects on your business. For instance, once you’ve built up a good IPI score, Amazon may remove inventory limits from your account. From there, you can reduce the amount of money you spend on third-party logistic companies and increase your ROI.
Get Your Brand Noticed
Amazon’s ‘Subscribe and Save’ model gives you what every business wants: more eyeballs.
The additional exposure increases your pool of potential customers, which can boost your brand awareness (and sales!).
The more traffic you have, the higher your chances of converting these leads and accelerating your sales volume. This additional traffic can also solidify your reputation by helping you become more well-known in your niche.
For example, Bio Schwartz, a supplements company, reported an increase in repeat customers from 10 to 30% upon enrolling in the program and selling its Amazon monthly subscription boxes.
The Amazon subscription box model is also a great way to lure in new customers.
For instance, a subscription box could work well for customers eager to try different types of snacks, but unsure where to start. It can even capture the attention of thriftier shoppers who may have passed on your item for another store because of a great deal or promotion.
Also, Amazon regularly features the best-performing offers on its dedicated Amazon Subscription Boxes page, which is yet another avenue for new customers to discover your brand.
Grab That Buy Box!
Registering your products on Amazon ‘Subscribe and Save’ boosts your chances of securing the coveted Buy Box.
This is because the brands that can use the ‘Subscribe and Save’ button are brand owners enrolled in Amazon’s subscription service. Amazon will help you draw attention to the changed button. For example, once you’ve enrolled on Amazon’s subscription service, your buy button will automatically default to the ‘Subscribe and Save’ option to draw more potential buyers to it.
Customers love Amazon subscription boxes, and Amazon awards the Buy Box based on factors like quality of customer service, price, shipping options, and seller rating.
The Amazon subscription box’s popularity and the superior service it provides automatically places your business in a better position to win the prized Buy Box.
3 Top-Selling Subscription Boxes to Inspire Your Own
Now that you have a clearer picture of what Amazon’s monthly subscription boxes can do for your business, it’s time to get your creative juices following.
Don’t be afraid to think outside the box for ways to increase the value of your boxes.
- Bundling other useful items with your main product
- Creating a bundle of the same product but with different quantities
- Offering a free digital download with tips on how to get the most out of the product or reach a particular goal related to the product
To give you some inspiration, let’s take a peek at some top brands that have nailed their product strategy and created top-selling subscription boxes on Amazon.
This skincare brand taps into its target buyers’ curious, beauty-conscious minds by bundling the latest Korean face masks at affordable rates.
This brilliant mix keeps customers engaged by enabling them to explore the brand’s trendy product offering. This approach could also lead to repeat purchases of their favorite products later on down the line.
This brand brings adventure to its potential customer’s doorstep by enabling them to taste various teas from around the globe.
The Simple Loose Tea Company has capitalized on the customer’s desire to ‘try before they buy’ by offering a low-cost ‘sampler’ subscription box option.
This strategy offers a great way to capture people who don’t want to commit without knowing what their buying options are.
Once these buyers have discovered the teas they like, they can progress down the customer journey to buy larger, more precise boxes.
Sock Fancy uses the element of surprise bundled with tons of color to brighten up their subscription holder’s day.
Subscribers can look forward to one surprise sock each month in vibrant colors and bold patterns.
Props to Sock Fancy for finding a way to make the average sock something to get excited about. Plus, they have dedicated sizing for men and women.
Ready to Start Your Own Subscription Box Service? The Time to Act Is Now!
With more people signing up for subscription boxes, it’s clear they are here to stay and slay the e-commerce market.
The great news for sellers is that this market shift opens up a simple, cost-effective way to get the upper hand over your competitors and raise your business profile by selling subscription boxes that add value through discounts, convenience, and of course — excellent customer service.
To make a lasting impression, get creative with your bundles to make signing up a no-brainer for customers.
And if you need some extra funds to get started, we can help. SellersFi’s Working Capital solution can help you invest in new product lines like subscription boxes and complementary products to keep your business growing.