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Five ways to build a successful subscription commerce business

Posted by Chad O'Connor  November 9, 2012 11:00 AM

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Ever since Birchbox launched two years ago, subscription commerce has exploded into the market. If a subscription to sample-sized beauty products isn’t your jam, not to worry—perhaps shoes, razor blades, or diapers could be of use? Even though the new boom is still relatively young, there’s some skepticism out there about the longevity of the business model. Recent articles from TechCrunch and PandoDaily argue that the market is saturated and the novelty has worn off. The latter ends with a quote from JustFab CEO Adam Goldenberg:

“Subscription itself won’t make a company successful. The same is true of celebrity endorsement. It all comes down to having a good product and excellent service.”

Two local Boston companies agree—and believe they can make it work. Tackle Grab offers a monthly supply of bait and tackle for anglers. Founder Stash Karandanis got the idea after a former girlfriend received her first Birchbox in March of last year. He loved the idea of a customizable, individualized approach to commerce—and, having been a fisherman since the age of 4, realized there was a natural market for anglers who would benefit from the ability to test different types of bait and tackle on a regular basis. Two months later, he launched Tackle Grab. “It made sense because all anglers use different techniques and are in different parts of the country,” he explains. “Because of those variables, different lures need to be used. Baits for one type of species or situation may not work for another.”

BabbaCo, founded by Jessica Kim in August last year, is a Cambridge-based company that delivers monthly themed activities for children. “I was a busy working mom of two kids,” explains Kim. “My time was so limited. I wanted to spend quality time with my kids doing fun and enriching things together rather than drag them along on errands or put them in front of the TV.” Kim’s “BabbaBoxes” contain all the materials necessary to complete the activity—right down to scissors, glue, or mixing sticks—and takes the hunting and gathering element of planned activities out of the equation.

So what have Karandanis and Kim done right?

1. Identify the Problem.
Both Karandanis and Kim singled out a specific need for customers who would benefit from regular delivery of goods. A subscription commerce business relies on a continuous need of some kind—in this case, anglers will need new bait on a regular basis, and young children and parents will have a recurring need for activities. And research was key. “We did focus groups, ethnographies, kid testing, and consumer interviews to understand what solutions parents were seeking and what would make their life easier,” says Kim.

2. Offer a Solution.
It’s simple, really: fishermen want to catch fish. Tackle Grab aims to increase their success by offering the tools they’ll need at lower prices and reduced quantities. “It’s an expensive hobby,” Karandanis explains. “Retail cost is two to three times more [than what we offer]. With fishing there’s always different variations or variables that come into play.” This is why Tackle Grab also incorporates a customized profile that matches consumers with the best possible products. BabbaCo offers an easy fix for parents by saving them both time and forethought. “Finding fun and enriching activities to do with your kids is an ongoing issue that never stops,” says Kim. By finding a thoughtful way for customers to fulfill a need, a natural niche for the subscription model emerges.

3. Know Your Audience.
Having a specific target audience is essential. Tackle Grab focuses on middle class fresh water and in-shore fishermen. “They’re working full time but have one or two hobbies they really enjoy,” says Karandanis. “So rather than traveling to find everything they need for a fishing trip, they can find it all online and spend more time on the water.” And it pays to reach out—Tackle Grab garnered nearly 200 members solely through social media, blogging, and word of mouth during their beta stage. Karandanis also adds that it’s important to treat customers as individuals rather than a group.

4. Don’t Forget Tips and Tricks.
It’s one thing to sell a product—but giving customers additional education and information will only encourage them to interact with your brand and begin to view it as a resource rather than just a place to spend money. BabbaCo takes a similar approach by posting instructional videos on the website, adding another layer of education and interactivity. Tackle Grab plans to dedicate a section of the website to tips in order to provide customers with extra skills and advice to nurture success and enjoyment.

5. Make it Sustainable.
Once you’ve got the customers, how do you keep them? You may have a great product—but the reality is that might not be enough. Tackle Grab offers reward points for referrals, memberships, feedback surveys, and full-size purchases. BabbaCo, which has several thousand members after just over a year, has a unique niche in that the products are consumable, and therefore, need to be replaced regularly. “It's not a one-time purchase,” says Kim. “The novelty doesn't wear off because the activities are completely different each month.”

Anne Vickman is a freelance writer and social media manager based in Boston.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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