How Publishers Can Boost Revenue With A Subscription Box, Part 1
Magazine publishers, don’t let the changing advertising landscape get you down. You have something not many businesses have: a successful magazine brand. Even brands like Red Bull, Airbnb, and AllRecipies have come into our turf with print magazines sold on the newsstand to get that unique exposure, trust and loyalty that only a magazine can engender among readers. It’s time to think beyond ad sales and single copies. It’s time to think outside the box by thinking inside the box -- the subscription box.
In early 2017 I purchased two small, fledgling subscription box businesses, both in the Brazilian jiu-jitsu space. Since then, I’ve leveraged my magazine brand, Jiu-Jitsu Magazine, to grow the combined subscription box business by nearly 5x in just over a year, while at the same time helping to grow magazine advertising and circulation. By the end of 2018 our subscription box business will account for more revenue and profit than the magazine operations. I couldn’t have done this without the unique position having the magazine affords me.
In this three-part article series I’ll go over all the information you need to start and run your own subscription box business, while leveraging many facets of your existing magazine or content brand. In this article I’ll cover how to determine if a subscription box is right for your brand and important considerations, such as your offer, how to brand your box, which platform to choose, how to find and purchase products, how to market your box offerings and even how to leverage your subscription box to sell ad space!
In part two I go into the inner-workings of fulfillment for subscription boxes.
Would A Subscription Box Be Right For You?
If you’re a publisher, special interest magazine or blog you might be a perfect fit for a subscription box. Many of today’s most popular subscription boxes sell for between $25 and $50 with or without shipping. A successful subscription box is curated by those that really know their customers’ tastes and preferences. That’s what makes magazine editors great curators for a subscription box. Magazines like Runner’s World, Men’s Health and Cosmopolitan have all launched successful subscription box businesses to service their readers along with new customers. We advertise that our subscription box, The BJJ Box, is curated by the editors at Jiu-Jitsu Magazine.
Don’t let the fact that all the examples I’ve included are consumer titles, with some creative thinking you could easily come up with a subscription box idea that might work for B2B’s as well. Maybe the model includes trials to services or product samples, and the box is sponsored by an advertiser rather than paid for by recipients. I’m sure there’s a way to make just about any box work.
Before you jump right in, or dismiss the idea, let’s take a look at some things to consider when launching a subscription box. .
As with any business, most product offerings can be put into two camps: value or some unique proposition. Having the leverage of a magazine or successful blog puts you in a unique position to eventually deliver both. I know that thinking runs contrary to most business strategy beliefs, but some of the most successful subscription boxes deliver both value and unique products that can’t be found anywhere else. Lootcrate and FabFitFun are two companies whose boxes boast hundreds of thousands of subscribers. This level of scale allows them to provide both unique and exclusive products along with that high-value proposition.
When I originally took over The BJJ Box I went with the value angle. It worked very well but attracted customers that placed more emphasis on value than the unique qualities of what I had to offer. Scale has allowed us to increase margins consistently. Since then, I’ve launched an additional offering that’s less about value and more about exclusive products. Test different approaches with your offering and see which resonates best in your market and with your readers.
I purchased two small existing boxes in the space that had very similar price points and product offerings. One had stronger brand recognition than the other along with all the social media assets so I chose to conduct business as The BJJ Box. By adding the “Curated by…” tag in some of our marketing I make the association to the magazine.
If I had to do it over I’d probably do it the same way. I like having the subscription box under a separate brand from the magazine. This makes detachment for an exit much easier. It also allows for branded products under the box’s name that might not make make sense under your publication’s name. Give consideration to both options should you decide to move forward.
There are a number of different software solutions available for physical subscription box management. The previous owners had both chosen Cratejoy. It’s very user friendly, has templated design options, strong customer service and appears to me to be the market leader. Another solid option is Subbly. Although I’ve not used this platform, I’ve done some research and it seems quite capable. If you want to go the WordPress route for site design, WooCommerce (www.woocommerce.com) has a subscription plug-in option. Another popular alternative is ReCharge, an app for Shopify storefronts. As of the writing of this article Cratejoy is doing beta testing on a Shopify app that will allow all the benefits of Shopify along with their services. I’m currently working on a Shopify store to move my site over to once the beta period is over. All of these options will keep track of subscribers, recurring billing, subscriber preferences, shipping label output, etc. You’ll want to consider pricing structures depending on your anticipated size, frequency options (i.e. monthly, bi-monthly, quarterly, etc), how it handles single product offerings, customer service and scalability.
Getting Products For Your Box
Figuring out the product mix will take a little intuition and research. Figure out what you’re readers would want on a recurring basis. Small group surveys through email can help give you a sense of what to include. When looking for products, the first contact should be with companies you already do business with, advertisers or prospective advertisers.
Having a subscription box has helped me sell quite a few ads. Writing a check to an advertiser that’s providing you great value strengthens the fact that we’re partners. It also makes closing the sale on a prospect that much easier when immediate revenue can be tied to that new ad contract.
Depending on the market you’re in, you might have companies willing to provide products or samples at no cost. These are GREAT when they come around. Selling the fact that you’ll get their product or sample in the hands of proven buyers is a real selling point. When it comes to purchasing products, I always shoot for a cost of about 1/3rd the retail price. So if the item retails for $15 I’m really trying to get that product for no more than $5. For most manufacturers, this amount of margin still provides them some profit to work with. This will vary by market and product.
One option for getting products that’s worked really well for me is licensing. In each of our monthly boxes we typically include a t-shirt. Rather than purchase inventory directly from the company whose shirt we’re including, we work out a deal to license the artwork for the shirt and have them produced locally on a shirt spec that they agree to. This saves them from investing in inventory, lowers our cost from reduced shipping and allows us to make the shirt a limited edition by making an agreed change to the color offering, etc. I’ve used this technique with books, journals and DVDs as well.
Adding A Physical Element To Digital Products
One other technique I’ve found very useful is creating high-quality gift cards to convey value for digital products. Let me explain, video instructionals are very popular in the jiu-jitsu space. I’ve negotiated one to three month offers with these digital vendors and had high-quality gift cards produced with unique codes and scratch offs. I’ve found this helps to convey value and a tangible element to digital products.
Marketing Your Box
The obvious target for your box offering is your existing readership, both subscribers and those that pick it up on the newsstand. They should be solicited in your social media, through email, within the magazine, even through texts (see part two in this article series). Your good reputation will translate into sales with minimal marketing expense. Influencers in your space are also a valuable tool. FitFabFun does a great job of sharing unboxing videos done by influencers among their target audience. I recently started instituting an email drip sequence for new magazine subscribers that offers them a bonus item in their first BJJ Box. So far it’s proven very successful with a nearly 18% conversion rate.
Segmenting Your Box Offerings
When I first took over the two subscription boxes businesses, each company had one offering: $25 plus $9 shipping. I immediately added a $35 VIP plus shipping option. Since then, I’ve increased the pricing to $27.99 and $37.99 plus shipping. 68% of those that sign up for the lower option upgrade to the VIP offer within the first 60 days. In total, the VIP option outsells the basic by a ratio of 3:1. Just recently we began offering a $249 quarterly “Crate” and managed to sell 4x as many as I had hoped thanks to a marketing partnership with the featured supplier.
I could go on and on about the virtues of adding a subscription box to your publishing business, and I will, in my next installment! If you have any questions, please ask in the comments section below.
Mike Velez is the Publisher of Jiu-Jitsu Magazine and has over 23 years experience in magazine publishing with both consumer and trade titles. He also consults with publishers looking to create growth and revenue by creating additional value offers to their existing readership and advertiser base. If you’d like help with launching a subscription box you can reach him at firstname.lastname@example.org.