LI Entrepreneurs Think Inside The Subscription Box

New York

Long Island entrepreneurs are cashing in on a new, fast-growing e-commerce industry: subscription boxes.

Shoppers subscribe online to the boxes, which are delivered to their doorsteps every month. The entrepreneurs fill the boxes with themed products that they curate, including apparel and fashion accessories; eco-friendly items for moms; girl empowerment products; specialty items such as Amagansett sea salt; fancy handmade cookies; and bagels and bialys.

People subscribe for many reasons: the convenience of getting a supply of products they want each month, discovering items they wouldn’t otherwise find, and getting more value in the boxes than if they bought the same products separately.

“Getting these boxes has become somewhat of an obsession for some people,” said Andrew Hazen, 44, of Jericho, who launched the New York Bagel of the Month Club five years ago, which he said now has more than 800 subscribers and gross annual sales of $150,000 to $200,000.

“From an entrepreneur’s standpoint, however, recurring revenue models are extremely attractive,” said Hazen, who also founded local co-working-space company LaunchPad.

The subscription box industry was sparked in 2010 by a company called Birchbox, which delivers sample-size beauty products each month. Now about 10,000 companies across the nation, both startups and big-brand retailers, sell subscription boxes with a wide variety of products, experts said.

It’s difficult to track how many box businesses are on Long Island because geographic data aren’t available. Consumers search for boxes by content, not location.

Box entrepreneurs market by targeting online ads to people whose social media profiles and posted interests identify them as potential subscribers. They also form business relationships with bloggers; for instance, they may pay them commissions for referrals that result in new customers.

Liz Cadman, founder of mysubscriptionaddiction.com, a subscription box directory, review site and blog that gets about 10 million page views a month, said the industry has grown rapidly since 2012.

“Back then, there were about 200 subscription boxes,” she said. “Now, there’s well over 3,000 boxes listed on our site.”

What distinguishes subscription boxes from earlier book-of-the-month or fruit-of-the-month services is their widespread offerings, rapid proliferation and the growth of businesses providing support to box entrepreneurs.

“It’s the same model used by traditional [subscription] services like newspapers and most recently by others like LinkedIn or Netflix, but what’s happening in general is that e-commerce shopping is growing at a faster rate than that of brick-and-mortars,” said Stephanie Berger, an adjunct business school professor at Adelphi University, who teaches new product management and media planning and buying.

“In the 1990s we had the start of the internet. And in 1998 online payment system PayPal opened, making people feel more comfortable about shopping online. Then we had blogging and the idea of people sharing their experiences with each other.”
Such developments, Berger said, “allow these types of businesses to take off.”

Bagel Boss in a Box
Sometimes a subscription box provides a product people can’t otherwise get.

Former Jericho resident Tammy Strobel got a job in Tucson, Arizona, about a year ago but craved crisp, chewy, hand-rolled New York bagels.

“I looked for bagels here,” she said from Arizona. “But really, nothing compares to an authentic New York bagel. I mean I lived on Long Island for 22 years. The bagels here were awful.”

After a quick Facebook search and a couple clicks, Strobel, who remembers eating bagels with her family every week after synagogue, subscribed to the New York Bagel of the Month Club. The subscription box company, based in Westbury, offers subscription options ranging from two months to a year, which cost up to $39.95 a month for 13 bagels.

“It was wonderful!” she said. “The bagels were fresh, delicious . . . and I just felt like I was able to taste a piece of home, you know, just bring a piece of New York to my doorstep in Arizona.”

Strobel also sent a short-term subscription to her son in California.

New York Bagel of the Month Club owner Hazen partnered with local chain Bagel Boss — where he worked when he was 15 years old — when he launched the box in 2012.

“We ship about 50,000 bagels a month,” Hazen said. “It’s a baker’s dozen.”

To ensure freshness, bagels are shipped same-day delivery or U.S. Postal Service priority mail. The company also sells lox and cream cheese and includes freezer bags and storing instructions.

Hazen uses Facebook ads to target former New Yorkers such as Strobel. He also seeks out people who identify as “foodies” or “bagel lovers.”

Some subscription boxes cater to broad interests like style and fashion. The East End Shop Girl Treasure Box, based in Manorville, includes clothes and fashion accessories. Presence Jewels, in Baldwin, features earring, ring and necklace jewelry sets.

Others cater to niche markets. Huntington-based Cookie Luv targets college students and sends high-end, “artisan” cookies.

Eco-friendly in East Hampton
Casey Powers, owner of Ecocentric Mom, which sells subscription boxes for $24.99 a month, worked in New York as an investment banker for eight years, doing “the Wall Street thing,” she said.

Then she got married, became a mother and in 2014 moved to East Hampton. In 2015, looking for a new career she could pursue at home, she logged onto flippa.com, an online marketplace for businesses, and bought Ecocentric Mom, a curated box for new and expectant moms interested in discovering eco-friendly products for home, health, beauty and baby.

The boxes include a mix of five to nine products with a “guaranteed” retail value of at least $40. Subscribers can pick one of three varieties — The Pregnancy Box, The Mom and Baby Box or The Mom Box.

When she bought the business it had 200 subscribers and hadn’t been growing. Powers said she knew, however, that its subscribers belonged to a strong online community, giving the business potential to grow.

Now Powers has 650 subscribers and annual revenue that she said was more than $150,000. She incorporated a blog on the company’s website, about motherhood and healthy living, where she spotlights eco-conscious products, and engages with her customers on social media.

“There’s no reason why anybody can’t say ‘OK, I’m starting a subscription box company,’ ” Powers said. “You need some boxes, some product, and that’s it.”

Software platforms like Austin-based Cratejoy, which helps entrepreneurs launch their own subscription box companies by providing billing services, website templates and bulk shipping-label printing, make starting box businesses even easier.

Cratejoy also offers a free online Subscription School.

However, despite “how easy operating a subscription box business may seem,” Powers warns there are challenges.

“There’s still so many boxes emerging and so many shutting down,” she said. “I think the sustainability [of the industry] is not a foregone conclusion.”

Powers said it’s difficult to make the cost structure of the boxes work because subscribers expect to pay $20 and receive $40 worth of products.

“People love that perceived value,” she said. “But really, how do you deliver that much value at the price point you’ve chosen? And in the end, people have to be really happy with the value you’re delivering or they’ll simply cancel their subscriptions.”

Subscription box business owners usually buy products from brands at wholesale prices.

Subscription as a supplement
Steven Judelson, a former real estate developer who opened salt-making business Amagansett Sea Salt Co. in 2011, began offering a $24.49 salt-of-the-month subscription box three years later.

“People would approach us and say, ‘I bought your salt when I was visiting Amagansett,’ ” he said. “They couldn’t wait to buy more but lived far away.”

Judelson said he now provides his nearly 300 subscribers with 1-ounce and 2 1/2 -ounce salt jars, which range from Pure Amagansett Sea Salt to varieties like Wasabi, Sesame and Nori, or Espresso, Black Pepper and Cayenne.

“Our subscription box business has grown in pace with our general sales, 30 percent every year,” he said. “We like this business model; it’s recurring and predictable. It allows us to plan.”

Camissa Matson-Gallagher and Emma Brandt, both of Huntington, run an inspirational-events business, A Mighty Lass. They also recently launched The Mighty Box, a $29.95 box featuring girl-empowerment items linked to monthly themes like “Dream It. Plan It. Work It.”

“We wanted to find a way to give young girls a monthly dose of empowerment,” said Emma Brandt, whose home garage has become a mini-warehouse. Small white cardboard boxes lining the walls are full of weekly planners, pens that read “goal getter” and “work hard,” sticky notes with affirmations, and a #HerMoment notecard featuring a subscriber’s Q&A with a female entrepreneur.

Matson-Gallagher said the box is a “great follow-up” for events and a way to stay connected to their audience.

“We’re also planning on retailing the products in our box on our website,” she said. “It gives us much more breadth for income, which is great for a company that only derives revenue a few times a year.”

Large companies like Target, Walmart and adidas have also launched subscription boxes. That leads some experts to wonder whether the market will soon reach saturation.

“Beauty boxes are the most saturated” type, said Jesse Richardson, who offers weekly webinars at Cratejoy’s Subscription School and founded Prospurly, a small-batch and organic-goods box.

But boxes that fill a need or a specific niche still have room to grow, he said: “We’re nowhere near the peak.”