Mastering The Subscription Model: One CEO’s Four Rules For Success

It’s often said that a successful 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 womenswear 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.
 
Entrepreneur Melanie Moore, CEO of womenswear brand Elizabeth & ClarkeElizabeth & Clarke is an online, subscription-based clothing brand that has revolutionized the working woman’s wardrobe. It offers an upscale blend of designer-quality shirts and blouses (sans the designer price tag, mind you) in essential colors and prints that are delivered to your door in a beautiful box at the beginning of each season.  

Moreover, Elizabeth & Clarke has zeroed in on the trend of rethinking the “fashion calendar.” Typically, when a fashion show takes place, the clothes a brand shows and models are for the seasons ahead as they will not be available for several months. It’s a formula that’s worked well for the fashion industry as retail buyers for department stores would directly fund the production of a brand’s collection with the orders they place. Fast forward to today, and the fashion shows that were once solely for the industry are now accessible to the end consumer thanks to the internet. Elizabeth & Clarke is capitalizing on that trend by extending wholesale prices to consumers and giving them the opportunity to purchase new collections three to six months in advance, just as though they were a buyer at a department store. It gives Elizabeth & Clarke the ability to fund its growth through revenue and extend significant savings to its customers in return.

Elizabeth & Clarke has zeroed in on the trend of rethinking the “fashion calendar.”

Recently, we had the good fortune of chatting with Moore to discuss her vision for the company as well as some of the best practices she implements to maintain a thriving and profitable subscription box model. 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:
 
1. 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.  
 
In order to generate and maintain customer interest, you have to get creative and stand out2. 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. Elizabeth & Clarke exemplifies this by designing all of its collections in house, which means its brand can’t be purchased anywhere else other than through the company’s web site. This positions Elizabeth & Clarke as unique and gives it a market-leading edge. The company also studies trends. When planning its new collections, it focuses 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, and Elizabeth & Clarke chooses classic colors and prints that are timeless.
 
3. 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.

4. 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. 

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

At the end of the day, it’s important to ensure that above all, you’re putting your customer experience first. Put yourself in the shoes of your customer. For example, order your product and experience the shipping as they would. This will give you keen insight into how your company performs when it comes to presentation — which is crucial in a subscription box business — as well as packaging, shipping and timeliness. What does the box look like when it’s delivered to your door? How is it packaged? Did it meet or even exceed your expectations, and was your unboxing experience pleasant? More importantly, use your product as if you were your consumer. Furthermore, make it a point to collect as much qualitative and quantitative data as you can from both the top and bottom of the funnel. Ask your customers how they heard about you, what they love about your brand, and why they keep returning. This type of data is invaluable to your business and can help guide future decisions you make. 
 
Parting Advice
“Make something people want. It sounds simple, but you’d be surprised how many times that is not done,” says Moore. “A lot of times you might start a business based on this brilliant idea you have. Many times it’s an idea that is searching for a problem instead of a problem searching for a solution. Focus on your customers and solve their problems.”

It’s also time for entrepreneurs to get back to basics and think about sustainability. Gone are the days of trying to build a business as fast as possible with the goal of becoming an overnight sensation. If you’re looking to build your brand, you need to be focused on the fundamentals and lay the groundwork so that profitability is realistic and achievable for your business. Lastly, you need to be in it for the long haul. To do so, so you need true passion and grit. These two principles are prerequisites for success and sustainability. 

To find out how Dotcom can help you grow your business, please reach out to us at your leisure and check our free EMERGE E-Book book here.