Subscription Box Answers

Avoiding the Expensive Box Trap: Wise Investment Strategies for Your Subscription Business

• Liam Brennan

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Don't fall into the trap of investing in overly expensive, fancy boxes for your subscription business. I bring to light a common pitfall new subscription box owners often stumble upon - spending too much on the box rather than focusing on increasing their profit margin.

I explain how we reached thousands of subscribers in BusterBox with just a plain brown box with our logo. I breakdown how keeping costs down provides you with a larger margin to make more profit or invest in quality products that truly matter to customers. For those adamant about having a fancy box, I provide guidance on when it's financially viable to consider this move. 

Lastly, I invite you to ask your pressing questions in our free Facebook group at SubscriptionBoxResources.com So, tune in, take notes and avoid falling into the expensive box trap.

Speaker 1:

Welcome to Subscription Box Answers with your host, liam Brennan. You're no rubbish, no crap. Straight to the point podcast with real, actionable tips, real strategies and insights from the industry which will help you start and grow your own successful subscription box business. You ask the questions, you ask the questions, liam gives the answers. It's as simple as that.

Speaker 2:

Welcome back to a brand new episode of Subscription Box Answers. Hope you're having a very good week and I hope Q4 sales are going well. Now, on today's episode, what I'm about to cover is mainly for new subscription box owners, because I know a lot of new box owners actually listen to this podcast and I see people falling in this trap all the time, and what I'm speaking about is expensive boxes. See, when people get started with their subscription box business, a lot of the time they think that it's really necessary to have a really fancy box which is really really expensive. Now this happens all the time. I always see people talking about it.

Speaker 2:

People reach out to me asking about box design, and I'll tell you a story from a few years ago. So I was doing a bit of consulting work a few years back and the companies that I was working with at the time were relatively new and they hired me because they were struggling to grow their business. They just could not figure out marketing whatsoever. They were stuck. They only had a handful of subscribers and I knew the niche is pretty well, so I was pretty confident that I could put them on the right track and tell them what they could actually do to start improving their customer acquisition problem. But before we got into that, I had a few questions for them and it was mainly around the numbers in their business. Because, to be perfectly frank with you, if your numbers aren't right in your business and you're not building on a solid foundation now marketing is going to solve your problems. It's actually going to put you in a position where you're going to burn a lot of money and, to be honest with you, the numbers in both of these businesses never made sense whatsoever. They earned something like a couple of dollars profit on each box sold and if you actually took a step back and you multiply that all out, they would have had to have something like 30,000 subscribers signed up for it to make any kind of financial sense. But then when you took overheads into the equation insurance, staff costs, fulfillment, warehouse costs, whatever they were doing at the time it just never made any sense whatsoever. And if they went out and they started running ads and investing in customer acquisition, they never would have earned the money back and the business would not have functioned at all, no matter how many customers they actually signed up. So I asked them to take a look at their costs. I wanted to see a breakdown of what it was actually costing them to fulfill a box. I wanted to know the shipping, the car board, the products, the payment process and fees. All of this because they were charging quite a bit for their box, so this never made any sense. Anyway, they sent me over the financials and for both of these companies, the amount of money they were paying for a car board box was absolutely crazy. It was over four dollars, which is way too much at any level to be paying for a car board box, and when I questioned them about it, the general assumption was they had to be paying this for the car board box because they had a very particular design that they had to use and if they did not use this design, people would not take their brand seriously and they wouldn't get anywhere, which was absolutely Crazy. Look, imposter box right.

Speaker 2:

We started off with a brown box with our logo on it. That was literally it. We went out and we got in touch with a number of box manufacturers and all we were looking for was the cheapest box possible with a bit of branding on it, aka our logo. Because once you start getting into, colour boxes, fancy designs, all of this stuff, especially when you're at lower volume, you're absolutely going to send your casks up through the roof and a lot of the time it's simply not necessary. So we launched with a brown box with our logo on it, and we managed to get to thousands of subscribers with that box, whereas we have had competitors who have invested in these colourful boxes, fancy designs, and none of them got anywhere close to the level that we reached. And guess how many people customers complained about the brown box in all the time we were using it? Absolutely nobody. Nobody complained, because they simply never cared. All they cared about was what was in the box and what kind of level of service we were actually giving them. They were not worried about the brown paper box. Now I've spoken to so many different box owners and so many different niches over the years and I've given them this advice and they've applied it to their own business and I have never heard one of them come back to me and say the brown box never worked. Our customers are going absolutely crazy. They're complaining about it, they're not happy. No, it's never happened. All that's happened is they've given themselves a bigger margin so they can earn more money.

Speaker 2:

Now I'm speaking in very general terms here. In a very small number of cases maybe you will have to have some particular box, but for the vast majority of subscription box businesses, at the start definitely at the start anyway you should be aiming to keep your costs as low as possible, because once you start getting into these fancy boxes, you usually have to order a set number. It won't be a crazy amount so you'd be paying more but it will cost a big amount of money to order even a small number of boxes to your warehouse or fulfillment centre. Now my advice would be right you can go with a brown box with just your logo, which is going to be cheap, or you could go with a brown box that has a sticker on it of your logo. Or I've even heard some people go with a brown box and they use a stamp to put their logo on the boxes. Whatever works for you, you should price it up and look for the cheapest option, because, honestly, it really doesn't matter that much. No matter what size you are, there is no way you should be paying $4 for a box. Ideally, you want to be aiming to pay under $1, which then gives you a much bigger margin to make more profit or actually spend it on putting products in the box that people actually care about.

Speaker 2:

When we were getting started in Busterbox, the price we were paying for a box was under one euro. I think we bought a thousand boxes up front. We paid the Tilling Charge. You normally have to pay that when you're getting set up with a new box manufacturer. It wasn't expensive a few hundred euro and then we kept the same box for years. Recently enough well, I think it was about a year ago, or it may just be over a year ago they actually changed the design of our box. And guess what? It's still a brown box Wittar Lougha want it and it just has a few more designs on the side. That's it.

Speaker 2:

If you think your box is important and you're really determined to have a fancy box, at least wait until it's somewhat financially viable. Wait until you've proven your concept and you know people are going to sign up and they're going to stick around for a decent amount of time, and wait until you actually have the revenue to justify investing it in something like that, because, trust me at the start, there's much more important things that you should be focusing on and spending your money on. I just wanted to do this episode because I see it come up so much in this space and, like I said, I know a lot of new box owners listen to this podcast, so hopefully this will help you and steer you away from that trap. Thanks very much for listening. We'll be back next week at the exact same time and if you have a question that you want answered on the podcast, as always, head over to the free Facebook group at SubscriptionBoxResourcescom. Join there, interact, post your question and it'll be answered next week. Thanks very much for listening. It's Pete here there, bye, bye.