Pivoting problem for a food subscription startup


3

I launched my website which sells healthy snack subscriptions about two months ago. We provide healthy snack alternatives to white collars. That arent available other than our site

We sell nutrition boxes consisting of mixes of various nuts, dried fruits designed by a nutritionist.

There are 2 different sales models on the site.

One time orders

  1. Ready boxes
    Mixes in these are boxes are designed by nutritionist. The boxes are designed for different nutritional needs such as low calory, energy and vitamins You can order them for one time.
  2. Create your own box - This module lets you design your own box based on your pleasure.
  3. Subscription.
    You can create a delivery schedule up to 12 weeks. You can get the same box every week or get a different box every week. It's up to you to decide it.

Initial feedbacks are usually positive about the website. People like the food.

We have been featured on 4-5 blogs. We did some mail forwarding and that's it. We have around 1000 members in 2 months. Considering the 1st month has passed with a lot of bug fixing and other problems we are moving forward for the last 1 month.

Other than 1000 members. We have 2 corporate customers who are buying from us in bulk weekly.

20% of sales are sent as gifts from one person to other - this was something we didnt expect in the beginning.

Here are my concerns.

  1. Number of subscribers are fairly low. People prefer to buy a box whenever they feel like rather than subscribing. There are customers who shop almost every week but they dont use the subscription module. And it's imperative that to make the business model sustainable I need to increase the number of subscription sales.
Possible reasons:
  1. You can order one time boxes therefore so why subscribe ? (Although it's free to cancel)
  2. Until last week we used to give 10% discounts to 4 week and + subscriptions. The discount rate may be unattractive.
  3. We charge the whole 4 week price amount at the checkout. Maybe rather than paying full amount at once they would prefer to pay weekly and cancel at any time they want. This will cause me to switch my collection module to a weekly recurring payment system. My payment system supports it so no big deal.
  4. My user base is not big enough to give a true image.

Before making any major changes in business model, such as eliminating one time orders and directing people into full subsription model. I want to make sure I'm testing the right variables.

I will be glad to hear from people with experience in product subscription businesses about their experiences.

Marketing Subscriptions Business Model Ab Testing Customer Retention

asked Jun 16 '11 at 05:54
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Hakkasan
21 points

3 Answers


1

From a consumer's point of view I wouldn't really want to tie myself to a subscription because I want to be in control of what is sent to me. Maybe if the discount was >=20% it might sway me. Therefore I wouldn't fight this one - let these guys continue to buy on an ad-hoc basis. Use email/social marketing to keep reminding them to come back for more.

Corporate subscribers are the ones to focus on. Many businesses like to offer their staff free snacks and drinks as a microperk, and the trend surely is for these businesses to offer healthy options. My company for instance has free fruit on offer. If you want chocolate or crisps, you have to buy it from the vending machine. So I think that your model of providing nutritionally balanced snacks is great for a corporate subscriber. Additionally the corporate subscriber will typically buy enough to satisfy perhaps 85% of the demand in their company (it'll all be gone by Friday lunchtime) as we never like to see money go to waste! So a corporate will set up an order, and then luckily for you, forget about it for a good long while...

Focus on getting subscriptions from corporates, but continue to let individuals order ad-hoc boxes; these may well lead to bigger subscription orders further down the line.

answered Jun 16 '11 at 23:21
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Edralph
2,333 points

0

Funny you ask this, I'm a subscriber of a similar service here in Australia called Harvest Box. You don't get to choose what nuts and healthy snacks are sent to you, it's a surprise every week. But it's cheap and you pay by the week.

I'm sure you could perhaps take some ideas that Harvest Box have and see how the process works: http://www.harvestbox.com.au/ Anyways... My two cents on this situation is don't force people to subscribe. One time and buy when you feel like it sales make your service more accessible to people who aren't sure if they can afford to buy something from your service one week.

If you eliminate that accessibility from your service, by the looks of it you'll be losing a lot of customers, and losing any customer for a new startup business is damaging. For the subscription model to work properly you need to give customers a reason to subscribe.

One of the primary reasons people subscribe to something is to dramatically make a saving. If a one time delivery is $7 a week, maybe perhaps say if you subscribe and pay monthly, you only pay $5 per box for the month. You're losing $2 every box, but you're getting a steady stream of income per month which in turn might actually mean you come out way better than you previously did.

answered Jun 16 '11 at 13:43
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Digital Sea
1,613 points

0

Actually , in India , where there are lot of colleges , or even offices, you find establishments which serve food on a subscription bases , you pay monthly a certain fee and you go every day to eat a full course meal .. or certain times you can buy a bundle of tickets .. There is a significant price difference between what these establishments charge per meal compared to a walk in Restaurant and the food is more like home cooked meal .. Seems like this is going online .. and there are a lot of such establishments popping up in India who are serving meals via online ordering .. I recently came across www.tiffindabba.com site which had a good web design .. and when I checked it at the time of posting it here , site was reporting an internal server .. check it out ..

answered Jul 24 '11 at 05:08
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Slimads
17 points

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