Like the idea of creating a business by signing up a few thousand people to receive a parcel of treats, essential items or other consumables in the mail each month?
The subscription commerce model, whereby customers pay a set amount for a regular shipment of supplies, has been tried worldwide, with everything from cosmetics to T-shirts.
![A screenshot of herfashionbox.com, which is accepting orders for the "summer box".](/web/20161103175501im_/http://www.smh.com.au/content/dam/images/g/r/w/y/t/w/image.related.articleLeadwide.620x349.gsf5hi.png/1477961412382.jpg)
While there have been some stunning success stories such as Dollar Shave Club, the razor subscription business established in 2012 and acquired by Unilever for $US1 billion earlier this year, making a go of it is no mean feat.
This month saw Her Fashion Box, a subscription business founded by Generation Y entrepreneur Kath Purkis, hit the headlines, after NSW Fair Trading advised customers to steer clear of its offering.
![Her Fashion Box](/web/20161103175501im_/http://www.smh.com.au/content/dam/images/g/r/w/w/9/b/image.related.articleLeadwide.620x349.gsf5hi.png/1477961412382.jpg)
The company, which charges $59.95 a quarter for a box of seasonal fashion and beauty items, secured $200,000 in funding from investors Janine Allis and Andrew Banks when it featured on the second season of venture capital reality TV show Shark Tank this year.
According to NSW Fair Trading, the warning followed complaints from customers who never received a box, struggled to obtain a refund and had payments deducted from their bank accounts after cancelling their subscriptions.
So what are the secrets to building a successful subscription commerce business and not ending up in hot water?
Defining your business model and ensuring it meets an ongoing requirement, for starters, says Nicholas Egonidis, founder of the Daily Jocks Underwear Club. The Melbourne-based business has been shipping smalls on subscription since 2012. It dispatches about 6000 packages each month to a global collection of gents who pay $30 a time for their upmarket undies selection.
![Kath Purkis, creator of Her Fashion Box.](/web/20161103175501im_/http://www.smh.com.au/content/dam/images/g/r/x/8/z/7/image.related.articleLeadNarrow.300x0.gsf5hi.png/1477961412382.jpg)
Companies that don't address a genuine need may find themselves churning through subscribers as quickly as they acquire them, Egonidis says.
"Are you replenishing products, helping people discover new products?" he says.
"Convenience, value and experience are vital ingredients for success in subscriptions. Make sure you are solving a real problem, otherwise the novelty can wear off."
Getting to grips with logistics is also crucial, according to Greta Stojanovic who spent three years running subscription beauty box service Lust Have It! prior to its acquisition by Aussie Commerce in 2015.
Beauty boxes typically comprise samples from several different suppliers and ensuring everything arrives and is dispatched on schedule can be a challenge.
"Things get held up at customs, sometimes a supplier just might not be able to get a product to you in time," Stojanovic says.
"If you're counting on that, then that's a big issue. You've got to be able to move fast – processes have got to be such that things can be done at the last minute.
"Say, for example, information cards, they can be done the day before shipping [to customers]."
Having an emergency supply of product that can be substituted for scheduled items that have gone AWOL can be a good contingency plan, providing there's space for storage.
"If you build a bit of a pipeline then you can juggle it," Stojanovic says.
"It's a logistical nightmare and you do really need to have some fantastic systems in place."
Cash flow woes can also strike, if products need to be ordered and paid for months before the costs can be recouped from subscribers. Operators who can't afford to grow and pay for stock commitments can easily run aground, Egonidis says.
While it's impossible to please everyone, subscription businesses need to ensure keeping customers happy is a priority, given the ease with which negative feedback about their products and service can be disseminated online.
"It's about managing what you look like on all sites, on social media, forums," Stojanovic says.
"There's a lot to keep your eyes on and when things can get tough because you're getting some negative feedback online you have to be very prepared to handle that … We usually had great feedback from customers publicly but we did try very hard to manage that. We had a lot of customer support people who were very responsive, especially in times of crisis."
A poor delivery experience can also turn subscribers off, regardless of the quality of what's inside the package when it (eventually) arrives. Working with a postage company that's serious about service and can deliver on time and budget is vital, Egonidis says.
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