MASTERING THE SUBSCRIPTION MODEL: ONE CEO’S FOUR RULES FOR SUCCESS

It’s often said that a successful E-Commerce business begins with a great idea. Though there is truth to this statement, most great business ideas actually stem from a problem or dilemma faced by a consumer — a fundamental need for an item or product that doesn’t exist. Think about it: For as long as consumers have problems they will always be searching for solutions.

Such was the case for entrepreneur Melanie Moore back in 2011. Before she launched her women wear brand Elizabeth & Clarke, Moore struggled to find a basic white shirt — one that blended style with functionality and didn’t cost a fortune. Living in fashion-forward New York City, Moore figured this would be easy. But as she began searching she quickly realized that everything was either poor quality, too sheer, or not suitable for the workplace. Her frustration led her to identify a gap in the marketplace: a high-quality, basic white shirt for women that’s affordable, stylish and professional. As a result, Elizabeth & Clarke was born.

If you’re looking to implement a successful and profitable subscription model for your brand, here are Melanie’s four rules to keep in mind:

Whatever You’re Selling, Make Sure it’s Replenishable 

Validate your idea by making sure it has market demand. The product line you’re offering should be a “must have.” It should be an item that’s replenishable or that needs to be replaced at regular intervals. Food, cosmetics, and clothing are key examples of this. It’s also important to think of yourself as the consumer; what items do you need to purchase regularly? And how easy are they to find? (Remember Moore’s white shirt dilemma?) With every idea you have, ask yourself what value is in it for the customer.

It Needs to be Difficult or Inconvenient to Replenish

In order to generate and maintain customer interest, you have to get creative and stand out. With a subscription box business, it’s important to offer a product that a consumer would have difficulty finding elsewhere. When planning new collections, focus on the design, quality, and functionality of each item based on developments in the industry. Pieces can be easily mixed and matched for a variety of outfits.

Your Product Has to Stand on its Own

How much value does your customer perceive when it comes to your products? Just because you’re offering them as part of a subscription box model, it doesn’t mean that you should put all your eggs in that basket as far as differentiation is concerned. Sure, the convenience of having products curated for you and not having to physically go to the store to purchase them is great, but not as critical as making sure that your products can stand on their own and that they’re unique in the industry. A great test would be whether or not you feel you can sell your products one off and that there would be demand outside of them being offered as part of a subscription.

Maintain a Low Weight-to-Value Ratio of Your Product

Shipping is a core aspect of any e-commerce business, and shipping costs need to be carefully measured. One way of doing this is to evaluate your weight-to-value ratio, which is the measure of the monetary value a product has per pound. Generally speaking, this number should never exceed 0.1 so that your shipping costs stay reasonable. For example, if you have a box that weighs five pounds and its retail price is $5.00, you’re probably spending too much money on shipping.

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