Building the Perfect Box: A Guide To Product Procurement

Choosing products for your box, often called ‘Product Procurement,’ is one of the most exciting and important parts of your business.

Subscription box product procurement

Choosing products for your box, often called ‘Procurement,’ is one of the most exciting and important parts of your business. It’s here that the promise of your product comes to life, and depending on your performance, customers decide if they stay or cancel their subscription.

When choosing your products and tackling this task, take these three main considerations into mind:

1. Understand Your Niche & Value Proposition

Let’s start with some general positioning you should keep in mind when selecting products.

Your Niche

At your business’ core is your niche. This is the market, trend, or lifestyle that your business serves. It’s that idea you’ve identified as having a special characteristic: an idea worth marketing to.

For example, if you deliver artisan food each month, your niche is defined by customers who value artisan foods over “regular” food. Ask yourself what’s at the heart of your business. Is it art for children, gamer gear, or organic snacks? Who are your customers? What is the community behind your product? That’s your niche.

This is important because understanding your niche is critical in fulfilling it. Your members signed up to your service because they have a specific set of products in mind, sort of like a checklist of what they think defines the business. If you’re curating for an eco-friendly audience, it needs to come through in your procurement. Ensure that your products breathe the culture behind your business.

Your Value Proposition

While your niche defines the ethos of your business, your “value proposition” defines the promise of value in your box. This isn’t always a monetary promise, like “$50 Retail Value.” Perhaps it’s your promise of discovering brand new small business, handmade goods, or another indicator of a special high standard you hold, like fair trade.

Living up to your value proposition is as important as properly servicing your niche. If you make the promise of a specific monetary value, like the $50 mentioned above, missing it or not living up to this value affects both retention of customers and reputation of your business. Reflect on your value proposition throughout the procurement process, asking yourself if the items selected live up to the standards you’ve outlined.

2. Understand Variety, Aesthetic & Quality

The truth is, you can fulfill your niche and value proposition and still have dissatisfied customers, an incredibly frustrating experience that likely all procurement teams have experienced at one time or another. Why does this happen?

Well, it may be due to how your box looks.

Effectively selecting products also requires you to understand the aesthetics and visual quality of your box build. Aesthetics can most simply be understood as the beauty in the design of your box. Getting this right means your customers aren’t left feeling like they need to add up retail prices or count products to make sure they got everything.

Ask yourself:

  • Does it feel full? The feeling of fullness is a great way to psychologically prime your customers. Even if you have smaller sized items, used speciality packing material or something else to keep products tight and well presentable when your box is opened.
  • Does it look worth it/Is the quality of the products clearly apparent? The visual quality of your products is another big part of satisfying customers. Even if the product is large, poor packaging can degrade perceived value. Make sure your products look as beautiful as possible.
  • Do you have variety? No one wants to receive seven variations of the same product. Keep your products varied and unique to help customer see the value of curation and your procurement process.

Remember: Make the unboxing experience one that delights the senses, providing a true experience to your customers.

3. Positioning Your Business to Vendors (and Negotiating!)

Equally important to positioning well with your customers is positioning  yourself with vendors, the businesses providing the products for your box. While there’s no cookie cutter way of doing this, procurement usually takes one or more of these two strategies:

  1. Free Sample/Product Marketing
  2. Wholesale, Less, or At Cost Product Buying

The strategy and methodology behind Free Sample/Product Marketing procurement relies on the value proposition that by including their product, a vendor is exposing themselves to highly qualified, converting customers. These customers are signing up for your service to discover products that they intend to become loyal customers to. In the same way that a vendor should see value in product sampling at Costco or Whole Foods, they should feel confident about putting their product in your box: you’re connecting them with customers.

  • Pro: Free products mean a larger margin/less cash out of your business. This means you can keep prices lower for customers and still have high profitability.
  • Con: This is probably one of the harder procurement methods, especially when scaling. You begin to rely on multiple vendors (perhaps you find that most businesses can only provide 3-5000 units free), which can create logistical challenges that, while overcomable, will require time and effort.

On the other hand, you have some form of product buying. Generally, this is a more sustainable approach for procurement. Vendors tend to take greater interest in the deal, but are still able to be negotiated with by employing some of the sales strategy found with free sample marketing. First, we suggest you start at a wholesale/distributor cost pricing ask. This is due to the likely large volume of orders you’ll be placing. Work with the vendor and negotiate for a price that works in your build. If you need to push them down, stress the same marketing aspect mentioned above: qualified customers are discovering their product. Don’t be afraid to ask for at cost pricing or a cost share arrangement.

  • Pro: More sustainable procurement. Your team has a budget and is able to be flexible with buying products. Some months, you may procure under budget and find yourself with higher profitability.
  • Con: You need to build purchasing into your price point (price to customers). If you plan on spending $10 on products per box, you’ll need to know what you’re left with after shipping and other normal expenses. This means you’ll likely have a higher priced box. Generally I recommend spending around 20-30% of the average revenue per user on products.

Note: When pitching how your service provides valuable promotional benefit to your partner’s (vendor’s) brand, brush up on the specifics and science of the argument. Part of what you’re offering is what’s known as ‘social proof’ or ‘informational social influence,’ a psychological phenomenon where your customers believe that because you chose the product, it is a correct product to choose. Statistically, customers (and people in general) are more likely to choose a product after being referred. We see this both in business relationships and in customer advocacy for your business. In this case, you’re the referral source for the product, and it follows that your customers are more likely to start using the new product individually. The more you build this concept of trust and vetting with your customers, the greater value of your referral.

Keep the Big Picture in Mind with Procurement

In each of these strategies, we’ve covered general, big picture topics. Specific methods and choices vary from subscription service to subscription service, so start by taking a step back and working through the rudimentary definitions of your business. When building your box, consider your market – the niche. Consider the promises you’ve made – the value proposition. Consider the feel of the box – the aesthetics, quality, and variety.

With vendors, keep in mind that you’re providing a useful service for them, regardless if your business is built on promise of Discovery. Remember, you’re a trusted source providing a referral to a new product. This type of advocacy is beneficial to any business, be sure to use that angle to your advantage in negotiating.

Now go build some amazing boxes!

*Tip – Subscribe to a handful of some of your favorite subscription boxes. Getting a look at how similar businesses are procuring products and putting together box builds can give you a fresh dose of inspiration and insight into what other business owners present to their customers.

Cratejoy is an all in one subscription commerce platform that includes everything you need to start your own subscription box business online. Try it free for 14 days.

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About Jameson Morris

Jameson Morris is an entrepreneur and pioneer of Subscription Commerce. As a self proclaimed 'subscription box serial entrepreneur,’ Jameson has founded multiple successful subscription businesses, such as Conscious Box, Escape Monthly and Yogi Surprise.

51 Responses

  1. Ana Denmark

    Hi! I’d love some advice on how much overage to buy each month. What percent of items should I anticipate needing to replace?

    1. Hi Ana! This can really depend on your fulfillment process and how diligent you are with packing. You shouldn’t see more than 1-2% breakage each month, but that can vary, especially if you include delicate items (like glass or products that can be susceptible to air pressure).

  2. Rafael

    James – this is great and super helpful. But I’ve come across a major roadblock: printed packaging.

    You probably know this, but according to my research, to get a cardboard box fully designed (ie not just a brand stamp on the top/outside) you need to get a die cut and order color plates, which looks like it’s 100’s of dollars per plate (can vary depending if they incorporate the cost into each box or not) and a minimum order of 1K to 10K boxes. What about those of us who are at the baby stage, bootstrapping, and can’t/don’t want to make that invest yet because we are still in such an early stage with only a few customers?

    I ended up ordering 250 boxes from ecoenclose (100% recycled and recyclable) to have enough volume for my first customers and some more that I gain soon. I chose them because they offer lower volume and cheaper plate/stamp fee (there will be a design on the top of the box, but with margins), but if I wanted the entire box designed (meaning colored) it would cost thousands of dollars and I’d have to have at least 1,000 of them.

    So what’s your advice for the super early stage guys?

    Thanks,
    Rafael

      1. Hey Deena and Rafael. I can provide an answer.

        1. If you execute a solid prelaunch, you can recoup your custom box costs within 1-2 months. I did this with each startup of mine and it is well worth it. Determine your price point and calculate how many sales you need to make month 1 in order to pay off the investment. Center your prelaunch campaign around this number and work on getting hundreds or a few thousand presubscribers. As a rough example, if your net profit margin is 30% of average revenue per transaction (ARPU), and that equals $10, you need 150 customers month 1 to get the $1500 or so it will cost for custom packaging. If your prelaunch list converts at 15%, that means you need ~1100 presubscribers.

        2. If you don’t want to make the investment, you can certainly use non-custom boxes. Bulk order all at once (ie. 1000 for 5 months of boxes or whatever you decide). I’d consider getting a kemi/white box and using a stamp or sticker. Another option would be to use some other type of custom packaging (maybe a sleeve for the box) to communicate brand. Make sure it has an awesome interior (nice packing material, etc) and has nice printed materials until you finalize your product.

        Hope that helps!
        Jesse

        1. Nick

          Thanks for this – very helpful.

          As a follow up – how do you balance a prelaunch campaign when your box idea is still in flux. For instance, I’m trying to tailor my box to fit my customers needs. I know my target, but I’m still learning about their tastes and what appeals to them. Its been though to do a prelaunch b/c I don’t exactly know what the final box will look like. This also affects my pricing of the box etc. However, I feel like I still need to engage with my customer base before I send them some boxes. Do you have any suggestions?

          1. Totally. In your prelaunch, you don’t need to list price, so don’t worry too much about that. In terms of branding, feel free to try new things every week – just monitor how it affects conversion rate. Throughout the prelaunch, you could also survey your presubscribers and ask them about taste, preference, budget, etc. Prelaunch is definitely the time to test and be in flux – no need to have a 100% completed product.

        2. Jessica

          Jesse – thank you for the helpful information and examples on custom boxes! I’m wondering, since you’ve done this a few times, if you have a good benchmark for a prelaunch list conversion rate. You mentioned 15% in your post – is that a good rough number to work with for estimation purposes? Thank you!

  3. Mel

    Hello-
    Thanks so much for the very useful information! Do you have any sample agreement letter/contract that can be used for companies that you procure from? I’m sure each opportunity is different but would love to see a few samples.

      1. Anna

        Hello,

        Such great information. I would also really want to know if you can provide this information. It would be really helpful as i am completely clueless in regards to this.

        1. Monika

          Hey- yes I was wondering the same. Would it be possible to see some sample emails or templates that have been successfully used to procure items for the box? This has so far been my biggest hurdle.

          1. Joss

            Hey Jesse / Jameson – great article once again and loved the ‘Product Sourcing Webinar’ you recently did on this top. I wanted to ask for your advice on how to follow up and confirm brands that agree to feature in your box (when using the free sample business model) – i have a lot of companies that are keen and i would like to confirm their buy in and bring them on board. I don’t think a PO or shipping PDF is appropriate here – any advice? How did you guys works this for Conscious Box?

          2. Hey Joss,

            Yes totally – we used a sample agreement, which was like a PO. It listed the product, # of units, and key dates (like a normal PO). The vendors sign then pass back to you. It’s mainly used to sure-up the transaction and add some security for you so you know the products will actually come in. Just outline:

            – Dates of order/shipping
            – SKU or Product Name
            – # of units
            – Agreed month/promotion specific (good for vendor to see)
            – Other small assurances either one of you might need

            Cheers,
            Jesse

  4. Kia

    Hi James! How do you go about procurement if you biz model is similar to Trunk Club where the customer can be charged for what they want to keep and send back what they don’t?

  5. […] The best approach is to consider the consumer who has just paid for a subscription and is receiving your box for the first time. Think of an adjective they’ll use to describe that box – Classy? Warm? Fun? Modern? Be sure the packaging not only represents your brand but is also functional and cost effective.  An article in Paste Magazine shows 15 popular subscription services and their packages. There is also a great article again by Cratejoy discussing packaging and the guide to perfect produce procurement. […]

  6. Monika

    For the prelaunch, can you build a sample box to use as an image of the type of contents the box will contain with products that have not technically been procured on a wholesale basis yet? So as to avoid buying 5-10 different products in bulk at wholesale cost, only to wind up with the potential all that your box isn’t selling and now you’re out the money and stuck with all of the items pre-purchased?

    1. Hey Monika. Yes, you can make a little mock up of products as an example. Personally, I’ll always reach out to those companies anyways, show them the idea, and try to get them included in the box. If a brand wants off, its’ easy to remove them. They just lose out on the free promotion 😉

      1. Pat

        HI,
        very interesting thread. On this topic the question I have is: do you have to provide the same products shown in your pre-launch mock up box once you launch your subscription box? If you change products after launching your box (due to procurement issues or other problems), wouldn’t this be taken as a “bait and switch” tactic? I would think subscribers will no be so happy.

        1. Hi Pat,

          Thanks for the comment. No, you don’t. But make that clear to people, ie. “You can expect products LIKE x, y, and z.” I wouldn’t recommended heavily implying, or directly stating, those items are guaranteed unless you can actually get them. I usually suggest trying to get a least a few from the landing page to add to the cohesion around expectations.

          Hope that helps,

          Jesse

  7. Serena

    Is there any resources or templates available on how to write an e-mail/letter to companies or manufacturers requesting bulk coupons to include in your subscription boxes? This article helped in telling me how I need to present and market myself but I’m just struggling with the beginning of the letter, more specifically, the opening paragraph. I am writing to ask for coupons? I am writing to let you know that (our subscription company) love your product? Any help would be greatly appreciated!

    1. Hey Serena,

      Sure – the message should read something like “Hi there. My name is [NAME] from [COMPANY]. I’m interested in [PRODUCT] for our upcoming box, and we’d like to include [TOTAL UNITS] inside. Can you let me know your standard wholesale and what type of pricing you can offer?”

      I suggest keeping it short, sweet and to the point. Here’s a webinar on product sourcing: https://subscriptionschool.com/video/product-sourcing-for-subscription-businesses-12616/

      Best,

      Jesse

  8. natacha

    I have seen many subscription box companies selling products from a known company with their logo removed and / or using their own brand on the products. How does one go about this ?

    I want to make one box to see if all fits ok and for demonstration but i dont want to pay full price on the 5 items I will include in my box and I need to order a min. of boxes. What should I do ?

    Im thinking of putting samples in my boxes and selling the regular size products on my website.

    1. Hi Natacha,

      Thanks for the comment.

      1. White labeling is a common process with details that vary manufacturer to manufacturer. You’ll want to reach out to the company and ask if they are open to white/private labeling.

      2. If you’re doing just a few mock ups, you’ll need to buy the items at MSRP (unless you talk to the producer and they give you a discount). I’d suggest using a digital printer to do a super low quantity run of boxes. Check out our resources section for places to contact.

      3. Sample -> Ecommerce is a great model, but I would suggest you price in purchasing, so you can buy products whenever needed.

      Best,

      Jesse

  9. Kate

    Hi Jesse,

    Such a helpful article, thank you. I’m based in Australia and am in the process of launching a subscription based business. My question is, how important do you feel the aesthetics and quality of the actual (cardboard) box is? Obviously profit margins are tight when first starting out, so I’m really not sure whether to dive in and get boxes custom printed, embossed etc from the get go, or opt for a cheaper alternative like printed labels? I’m sucker for good packaging but don’t want to let my own emotions get in the way. Any tips on this would be hugely appreciated.

    1. Hi Kate,

      Custom boxes are a huge plus, but not required. I would suggest running a prelaunch, seeing how many leads you get & observing your conversion rate, then making a decision based on how subs you launch with. With 100-200 subscribers month 1, you can get pretty close to covering the costs of custom boxes.

      Hope that helps!
      Jesse

  10. Amanda

    Hi Jameson,

    Thank you for your great advice through these articles. I am learning so much in a short amount of time, and my brain is almost at capacity. Do you have any advice for working with very small vendors? I am trying to break into the world of sub boxes, with mine purchasing products from small local businesses. The number one problem I am already encountering is vendors not understanding what a sub box is and the advertising/marketing value it holds. This has made negotiating a good price extremely difficult. They are not willing to give me anything at cost, let alone tell me what their cost is. I have a feeling that because I am coming to them, they feel as though they have the upper hand.

    For example, one vendor sells one of their products for $4.50, and says my price is $3. And, because they are a small business, they can only do 300 orders max. Right now I don’t have the ability to find multiple vendors that sell similar products, so I am feeling very stressed. Any suggestions on pitching this idea of “free”ish marketing/exposure for their brand, so that I can negotiate a lower price? Due to dealing with small batches, any advice for marketing to potential customers? Obviously, with these particular vendors, I would have to limit sign ups, but I don’t want to turn away potential custoners.

    I am thinking that I will line up my vendors according to their production abilities and feature the smallest batches in the first box….? Due to the nature of the products, I am tossing around the Idea of offering the box only 3 times a year, from December to May. That probably seems odd, but I am convinced, due to the nature of my products, that it will work. Eventually, as I find more vendors I am hoping to expand to 6 times a year. What are your thoughts? Thank you so much Jameson!

    1. Hey Amanda,

      I can answer that for you. For very small vendors, it can really help to have a PDF brand invitation that spells everything out. Subscription Boxes are relatively new, but product sampling isn’t – just refer to the sampling days at Whole Foods, or do some market research around product sampling and how it can have a much higher conversion rate than traditional advertising. You might want to target slightly more established brands if you’re noticing that the small ones aren’t understanding the value of you spending time, money and effort marketing their product.

      Keep in mind – there will be a conversion rate with these vendors; you might need to reach out to 30 to get 5 to buy in. This will go up as you grow and get better at your pitch.

      For potential sign ups, the businesses you’re working with shouldn’t affect your marketing – you should be predicting growth, and making orders based on those prediction. Similarly, you’ll need to get firm commitments on shipping/delivery times so you know for sure you can fulfill your orders.

      From my experience (I currently own & co-operate a small-batch subscription business), you should be able to find ample makers for your box, depending on what you products are (food, beauty, home?). We ship monthly to about 300 subscribers/month, using 6-10 products in each box.

      Hope that helps!
      Jesse

  11. Akshay

    It’s very hard to convince vendor to take their products at cost price , they are not ready to give discount more than 30% . How can i convince them?

    1. Hi Akshay,

      Thanks for the comment. It can be tough, but I would suggest creating a PDF that outlines the value you bring your partners. Also, keep in mind that sub boxes are not standard retailer — we don’t sell things in a one off fashion. Rather, we curate a one-time delivery to a target set of consumers who are qualified and interested in our niche products. That’s compelling from an advertising perspective!

      Good luck!
      Jesse

  12. Victoria Leigh

    Hello! I have a idea for a potential subscription box. I am having trouble understanding the whole ‘asking a vendor/retailer/brand’ about using their products in the box. For example, If I were to ask Utla (a retailer that sells multiple makeup brands and other beauty branded products) if I can have permission to in a way promote their products they offer by including items they offer in a subscription box, regardless of the brand of product (with their being so many brands) would it be legal to do that?

    1. Hey Victoria,

      You wouldn’t go to the retailer. You go to the individual brands and ask them about pricing and availability. Involving a retailer or ecommerce store isn’t necessarily.

      Let me know if that makes sense!

      Jesse

    1. Hi Sue,

      That’s totally up to you. Think about you will be pitching your service to subscribers, and work backwards from that. Personally, I think that niche discovery trumps big brand savings when it comes to subscription boxes.

      Jesse

  13. Eli

    Hi Jesse

    I was just wondering if you have to have licensing or something along those lines for putting name brand products into your box. For example, if I wanted to start a company where I send pens to people every month and included in the box would be pens from Paper Mate, Sharpie, BIC, etc. Would I have to have an agreement with those companies or could I just buy those pens from a wholesale store and put them straight into my subscription box?

    1. Hey Eli,

      Great question. It can depend on where you’re physically located. I would definitely encourage you to read up on local laws for your business. Also, I definitely recommend reaching out to the product partners. By partnering with them directly, that’s how you can get better than wholesale pricing & get margins up.

      Hope that helps,

      Jesse

  14. Selma Guerdali

    Hello
    I just have a question about wether or not the companies need to agree, for me to put their products in my box. I’m having a problem procuring products in Africa, and therefore need to import western products to Africa to make the box much more appealing. So the question is is it allowed to buy the products from an online whole seller or do I have to go straight to the the company in order to legally buy these products? I really hope you can help me.
    Kind Regards Selma

    1. Hey Selma,

      I would investigate local laws & regulations for what kind of license you might need. Generally, you should reach out to those companies because partnering with this is going to provide better prices that wholesale or retail. Getting product costs down is the #1 way you can drive profitability for your business.

      Hope that helps!

      Jesse

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