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Subscription box services are a huge trend in e-commerce. Whether the contents are carefully selected by the customer [Blue Apron, Dollar Shave Club] or come in the form of a mystery box [Ipsy, Bark Box], people love this business model.

Image Source – Subscription Box Business

Buyers love the personalized surprise every month, while sellers love the predictable income due to recurring fees. It’s also satisfying to source specialty items and cater to a specific niche of discerning customers.

Why It’s a Blockbuster Idea to Start a Subscription Service

The subscription e-commerce market has jumped 100 percent annually for the past five years. According to a recent Forbes article, e-commerce subscribers are in the sweet 25 to 44-year-old demographic and bring home $50,000 to $100,000 a year. Although many current subscribers live in urban environments of the northeastern U.S., the market is growing exponentially. In fact, about 15 percent of online shoppers have one or more subscriptions to get products via monthly box services.

Women make up 60 percent of subscribers, but men are the ones most likely to have at least three active subscriptions to avoid trips to the store. Let’s look at the types of box services currently available in the market.

Three Types of Subscription Box Services

The different box types appeal to the core reasons people love getting them. Some subscribers want a monthly surprise, while others want to pick out each item for an uber-customized package.

  1. Build-A-Box – Customers choose each item from a list. Food and meal plan businesses often work off this model to provide variety and flexibility to clients.
  2. Mystery Box – Subscribers don’t know what they’ll get each month. The box includes regularly available merchandise as well as limited edition products. It provides a rewarding customer experience that increases profits and moves inventory quickly.
  3. Membership Model – This subscription resembles a Costco membership for a monthly fee. It grants access and purchase ability at the store. Membership models build customer loyalty and up-sell capabilities.

How to Build a Subscription Box Business in Eight Steps

Let’s look at each stage of building a subscription box business.

  1. Start with a great idea – Think of products and services that would appeal to a specific market. Common themes are makeup, fitness, or food. When figuring out your niche, get as specific as you can. For example, the categories above can be segmented further into glamour makeup, martial arts equipment, and workout snacks.
  2. Research potential customers – The more honed-in each box is, the easier it is to sell to a specific group of customers. This lets you optimize retention and customer experience.
  3. Develop a prototype box – Try out prototypes in sample markets to get feedback on each component. The idea is to develop a product your target customer will be delighted to receive every month.
  4. Pre-launch by building a community that can get the word out – Use online content, contests, and other strategies to generate buzz and collect email addresses.
  5. Pre-sales phase – This is where you convert test markets and leads to your first paying subscribers.
  6. Show me the money – Presales revenue lets you build and ship the first month’s boxes.
  7. Build – Grow your target demographic to achieve predictable monthly revenue. Use smart tools to manage your inventory and figure out the right quantities to buy. There are free economic order quantity [EOQ] calculators online that can help.
  8. Encourage word of mouth, shares and referrals. If your product is great, people will come back, but it’s equally important to get new customers in the early stages.

Two Manufacturing and Supplier Tips

The production of items for your boxes is a major consideration. Will you outsource this or handle it in-house?

  1. Negotiate – One of the most difficult things to negotiate is what percentage of the subscriber fee the supplier gets. Consider a per unit, per click, or per minute model that’s appropriate for your industry.
  2. Do it yourself – In the subscription business model, the more you can do yourself, the better. In-house sourcing is streamlined and gives an entrepreneur more control over quality and productivity. It comes down to cost and efficiency, but if you have the wherewithal to do so, this is the preferred sourcing.

Two Important Lessons from Successful Subscription Businesses

  1. Price it right – Establishing a price point involves how much you offer and how often, which lets you predict costs. it takes some research to stay competitive and set a realistic margin expectation based on the local market.
  2. Focus on both growth and retention – Customer retention is vital once you establish a steady subscriber base. Business owners must watch competitors and gather feedback from current subscribers. Product development and services should embrace new technology to enhances both the brand image and bottom line. Take Netflix for example. The subscription-based business constantly adapts to ensure growth.

Conclusion

Ultimately, you need to convince your customers that your products or services are worth paying a monthly charge. The way to do this involves maintaining the speed, quality and customer service your subscribers deserve. Then, it’s a no-brainer, and you’re on your way to becoming a sought-after brand with no problem turning a one-time interaction into a continuing relationship.

References1, 2, 3, 4 & 5

About the Author

Laura Gayle is a full-time blogger at BussinessWomanGuide. She regularly writes on business, entrepreneurship, & e-commerce. You can contact Laura here.

NiYO Solutions Inc., an emerging fintech startup for salaried employees, has raised $13.2 million [85 crore] in Series A funding to drive the continued expansion of its payroll and benefits platform in India. The investment was made by Social Capital, JS Capital LLC [the family office of Jonathan Soros], and Horizons Ventures with participation by existing investor, Prime Venture Partners. In total, the company has raised more than $14 million in venture capital. Adding on to its continued growth and popularity among businesses across India, NiYO aims to serve 5000 organizations and over 1 million salaried employees by the end of 2018.

NiYO was launched in July 2016 as a pilot in Bengaluru and has already clocked more than 500 corporates and is being used by over 100,000 salaried employees in these organisations, through its partnerships with YES Bank and DCB Bank. NiYO is a one-stop solution for all employee payouts; it’s solutions include salary accounts, meal cards, canteen solutions, corporate gift card, reimbursements account, international travel card and corporate credit cards.

With this fresh funding, NiYO plans to strengthen and expand its product suite for the salaried segment besides taking the product to tier 2 and 3 towns. The funding will also be used for further product development, team expansion and increasing presence in tier 1 cities. The addressable market is close to 75 million salaried employees in India who can benefit through a simple payroll & benefits solution which can increase the take home salaries and simplify financial planning & other banking needs.

Employee Payroll in India and around the world has traditionally seen very little innovation in the past several decades with banks hardly providing any differentiation to customers. This, coupled with inefficient, paper-driven processes mean that most employers and employees fail to take advantage of tax exemptions and other savings that the law provides for. Same holds true for investment and lending products for salaried class where the power of payroll is largely ignored in product design.

NiYO believes that it’s cutting edge technology and processes can combine the erstwhile unconnected worlds of Human Resources and Financial Services. The future is mobile and with support for disruptive platforms such as Aadhaar and the Unified Payment Interface [UPI], NiYO will enable its customers to simplify and control their banking, taxation & finance needs. All this while ensuring a transparent, compliant & efficient process for employers. NiYO has also filed multiple product & process patents in this space.

NiYO comprises of a corporate portal for salary disbursal, payroll card to receive salary and spend on ATM/POS/Online and a mobile app to track transactions and do basic banking functions like fund transfer etc. With eKYC and self-onboarding enabled on the NiYO app, users can easily access their account details and keep a tab on their expenditures and allowances digitally. It also has a capability to attach bill proof through mobile and also allow digital storage of bill and receipts on the cloud.

The mobile app allows employees to review all card transactions as well as check balances in real time. While it helps the organizations to digitize the benefits and payroll process and be more compliant and transparent, it also provides employees a unique experience of a single card for all requirements. The solution does not require either the corporate or the employee to change bank accounts.

Vinay Bagri, CEO & Co-founder, NiYO, said

These are exciting times at NiYO. We deeply believe that the rapidly growing number of salaried employees in India have not seen much innovation when it comes to their own payroll and benefits. They are mobile and app-savvy and very demanding. At NiYO, our core objective is to maximize employees’ effective salary by bringing innovations in payroll and benefits processes. Our aim is to optimize the product suite for employees in areas of taxation, lending and wealth. We have been fortunate to partner with JS Capital, Social Capital, Horizon Ventures and Prime – all of whom are top tier investors with deep fintech and operational expertise to take us to the next level.

Arjun Sethi, Partner, Social Capital, said

NiYO is digitizing the entire employee payroll and benefits value chain, making the process easier and more transparent for employers and employees alike. This is an area that hasn’t seen much innovation in the Indian technology ecosystem, despite the massive addressable market. We believe that India is on the brink of unprecedented consumer consumption, and that movement begins with infrastructure that manages people’s earnings in a reliable and modern way.

Sanjay Swamy, Managing Partner, Prime Venture Partners, said

NiYO’s strong growth since its inception is testament to both the innovative nature as well as rapid customer adoption of their solution which addresses a massive opportunity – providing effortless and innovative solution to manage payroll and benefits, powered by mobile. The combination of SmartPhone penetration and IndiaStack makes the timing right for NiYO’s patent-pending innovations to come to market. We are privileged to be associated with this stellar team from the start of their journey and be part of their vision to disrupt the payroll landscape.

About NiYO

Founded in 2015 by Vinay Bagri and Virender Bisht, NiYO’s mission is to increase cash flow for all salaried individuals by leveraging technology in areas of payroll & benefits. NiYo features an integrated solution comprising of a Multi-Pocket Card, a Mobile App and a digital account with multiple wallets.

Vinay has spent more than 18 years working with diverse organisations like Parle, 3M, ICICI Bank, SCB, ING and Kotak Mahindra Bank. He combines deep understanding of distribution and retail banking having spent over a decade in leadership roles across unsecured lending, retail liabilities, corporate salary and retail banking strategy.

Virender is a seasoned technology professional with 16 years of experience in creating world-class software products for companies like MobiKwik, Makemytrip (MMYT), StudyPlaces.com, Exponential Inc, GE Medical Systems and Tata Consultancy Services. Virender is a hands-on technologist and has a reputation for building scalable solutions for e-commerce and payments domain. For more information, please visit NiYO

In an effort to provide a comprehensive overview of the Indian Games industry, The National Association of Software and Services Companies [NASSCOM] have released a report titled the Indian Games Market Review at the NASSCOM Gaming Developer Conference 2015 taking place in Pune. The report aims to provide an overview of the Indian media & entertainment industry and digital landscape, showcasing the history and evolution of the Indian games industry, an assessment of the Indian games market from consumer spending and demographic insights into the Indian gamer.

Talking about the findings of the report, R Chandrashekhar, President, NASSCOM said

To provide a holistic picture of the growing gaming landscape in India, NASSCOM interviewed the key players to conducted an extensive survey of the Indian developer and service provider ecosystem. The report provides a road map to start-up’s, Indies and investors based on internet usage patterns, mobile smartphones and tablets, to digital media and mobile advertising.

According to the report, mobile gamers lead the market in India, with a Smartphone install base estimated at 200 million by the end of 2015 that is estimated to grow by 100 million each year thereafter.

  • Approximately 40 to 50 million people play games on their smartphones and feature phones, with an annual growth rate of 40% to 50%.
  • Mobile gaming revenues are currently estimated at $150 million across all revenue models.
  • Additionally, the console market size, is estimated to be around 3 – 4 million gamers, with 3 – 3.5 million of lifetime sales for all consoles including PlayStation 2 [2 million] and 100,000 units for PlayStation 4 and X-Box One combined.
  • The cyber cafe market is currently estimated at 3000 cafes in India with games, of which 1500 have 5 machines or more dedicated to games.

It’s estimated that there are 250,000 active PC/MMO players, with popular games including Counter strike, DOTA, League of Legends and World of Tanks.

On the content creation side, the report outlines a young industry that has changed dramatically in the last five years and now includes over 200 games development studios and service providers. The advent of self-publishing, investment and crowdfunding, has led to a new breed of agile indie developers, whose focus is on mobile and PC social games.

More than half of Indian Game Developers and Service Providers were established from 2012 onwards and the industry follows a lean structure, with 57% of companies having less than 10 employees and in 2014, 27% of all Indian Game Developers and Service Providers had revenues of above $1.6 million. The report further states that, 75% of Indian developers are focused on building games for the global gaming market. 96% of developers work on mobile games, with 61% of those building free-to-play games. Among studios, arcade games are the most popular genre, followed by puzzle and racing releases.

Currently most game developers and service providers in India are focused on the global market, with development, game art services and animation being the main sources of revenue. Approximately 9% generate revenue from the domestic market, while foreign games dominate the app store rankings. With recent developments such as Apple and Google lowering the minimum price for apps and in-app purchases in India, the report expects more Indian companies to turn their focus towards the Indian market in the future.

On the sidelines of the NASSCOM Gaming Developer Conference 2015, NASSCOM also announced the winners of the NGF Awards 2015, to evangelize the community in India and recognize their achievements in Game development and encourage the creation of IP. The Winners are:

To view the full Indian Games Market Review report visit NASSCOM report

About NASSCOM

NASSCOM is the premier trade body and the chamber of commerce of the IT-BPM industry in India. NASSCOM is a global trade body with more than 1800 members, which includes both Indian and multinational companies that have a presence in India. NASSCOM’s member and associate member companies are broadly in the business of software development, software services, software products, consulting services, BPM, e-commerce and web services, engineering services and animation and gaming. NASSCOM’s membership base constitutes over 95% of the industry revenues in India and employs about 3.5 million professionals.