16 Aug Subscription Clubs: Insider’s View
We’ve looked at how subscription clubs work, and now we want to share insights from craft industry professionals who offer subscription clubs as part or all of their retail sales. We hope you’ll get some insight into how you can enter into this niche within the craft supply market.
As we noted in Part One, a subscription club can be something you create specifically for your own products, or you can collaborate with a curating company to have your products featured in their collections. Each way is a completely different undertaking, so you’ll still have to do your research and determine what will work best for your company.
Curated Subscription Boxes
You have probably encountered subscription box companies in your own crafting life. Whatever your preference, there’s likely at least one company working with suppliers and designers to put together periodic boxes of craft specific supplies. The subscription box is often the sole product for these companies, although they might sell overstock from past boxes on their website. Yarnbox, for example, maintains an overstock store on their website that can be accessed by both current and former subscribers.
Many subscription box companies started with just one identical box which was sent to all subscribers, but have expanded their offerings over time. Yarnbox began with a single monthly subscription box (Yarnbox Classic), then added Yarnbox Socks and a quarterly Yarnbox Luxe. BeadCrate offers two different monthly boxes at two price points–one for the Enthusiast and the other for the Collector. Quilty Box, which offers a single monthly box, has added the limited subscription Color Me Confident: The Jinny Beyer Quarterly Quilty Box, which includes a project possibility for each box, as well as a fifth project that incorporates all four of that year’s boxes.
While subscription boxes often come with patterns or project suggestions, the owners we spoke with adamantly asserted that their boxes offered open-ended creativity and were not kits. As Raquel K. McClure, founder of BeadCrate puts it:
“We want to inspire our subscribers to try something new and stretch their imagination/skills. I never use kits, myself, I always cannibalize kits to make my own thing.”
Working with what is in the box is part of the attraction for subscribers. As Patrick Claytor, owner of Quilty Box explains, the standard monthly box is the same for everyone:
“Providing inspiration and stepping outside someone’s comfort zone is a big thing for us. We have had a lot of subscribers email about how much they love the fabric we’ve sent even though they would have never chosen it in the store.”
Yarnbox takes a slightly different approach, allowing customers to answer a set of preference questions designed to set some parameters around color choices and/or yarn weights and preferred yarn craft, but all subscribers receive both knitting and crochet patterns. The color preference algorithm results in a lively ISO/Destash thread each month in their Ravelry group, although some posters are only searching for MORE of the skeins they received so they have enough for a larger project. That’s another reason for product stores on the company website–so that subscribers can get large-project quantities of a particular monthly selection they loved.
Of course, they can always go directly to that month’s product supplier. Many of the companies include coupons or discount codes from their showcased manufacturers so subscribers can buy more or additional products from them, and it is this feature that makes being a contributor to a curated subscription box attractive for the independent craft supply producer. Claytor of Quilty Box sums up the advantages:
“Being selected to be included in a dedicated subscription box is a great way to reach a new audience. Think of a subscription box company as an arm of your marketing team .
We have many subscribers tell us about going to the brand’s website to purchase more products after finding them through Quilty Box. We also are able to do surveys of our subscribers who receive products for brands. We also have dozens of affiliates who receive boxes to show their audience on blogs and YouTube. So, your reach is amplified greatly.”
Curated subscription boxes usually include the main attraction for the craft (yarn, fabric, beads), patterns or project ideas from designers, and little extras that may be notions specific to the craft (like a rotary cutter or jewelry findings), or a more generic product (like a lotion bar or stickers). These inclusions add value to the box and offer an opportunity for product placement for independent craft suppliers, and another way to create collaborative relationships within a craft. By going to the subscription company’s website, you can learn how to propose your product for inclusion in a box.
Single-Creator Subscription Clubs
Maybe you’re an indie yarn dyer who is looking to expand beyond your Etsy shop and fiber festival sales. You don’t have to be a small manufacturer for a club to be a profitable and fun addition to your business. Larger companies like Miss Babs runs its own direct-to-consumer clubs in addition to selling yarns at shows and at festivals, from its own website, and through trunk shows at selected retailers. Local yarn stores can also create their own clubs by working with dyers to create exclusive colorways and yarn weights for their subscribers.
Miss Babs’ club, Knitting Tour, is an annual subscription with four shipments, organized around a travel theme. Each shipment is a kit comprised of yarn, pattern, and little extras, like snacks and notions. According to Helen Cosgrove-Davies of Miss Babs,
“Each kit is a “trip,” themed around a particular destination. Babs works with the designer for that destination to develop special colors inspired by the location, then the designer designs a pattern inspired by the destination.”
The pattern and colorways included in each trip are exclusive to the club for six months, then made available to general customers. Knitting Tour annual subscriptions are sold in December and again in January, until the subscription limit is reached. Although subscribers can pay for their subscription in two installments, the club is a year-long commitment and shipments are not sold individually. Additional skeins of a shipment’s specific yarn may be available to club members by inquiry, or they can seek it from fellow club members on the Miss Babs Knitting Tour Ravelry group discussion board. The group also hosts KALs for each trip’s project, which are aimed at the advanced beginner to intermediate knitter. According to Babs Ausherman, founder and creative force of Miss Babs, the club accounts for 5% of the business, but it opens both new and existing customers to yarn bases they may not have tried on their own.
Stephanie Alford of Space Cadet takes a different approach to selling her hand-dyed yarn via subscription clubs. Her original club, the Yarn Alliance, is a bi-monthly shipment of light to medium weight yarn in colorways exclusive (for six months) to club members, plus a Yarn Alliance gift, supplementary information including inspiration background, pattern suggestions and a 15% off coupon every six months. The SpaceMonster Mega Yarn Club offers a bi-monthly shipment of a skein worsted-to-bulky yarn, with a large gift every third shipment and a monthly option to buy more skeins from that exclusive dyelot for a larger project.
Both the Yarn Alliance and the SpaceMonster Mega Yarn Club are sold in limited quantities of 6- and 12-month subscriptions, with enrollment open twice a year. Space Cadet’s third club, the Mini-Skeins Club, has ongoing open enrollment, offering 5 20g mini-skeins of fingering weight yarn each month. Subscribers can opt for either Multicolor Mix or Ombre and Gradient Mix, which segue with each other and with other month’s shipments (if purchased consecutively.) The clubs offer a predictable and stable income stream, which she estimates at 33-45% of Space Cadet’s annual revenue:
“Two of our clubs are pre-paid, meaning the customer buys a 6 or 12 month subscription, and one is a recurring subscription with payment that comes out automatically each month. For the latter, customers can join and leave anytime and — while may of them do join, leave, and then come back — most of them actually stay in that club much longer than in the two pre-paid clubs. Again, it comes down to making that buying decision: when the pre-paid clubs come up for renewal, the customer has to make the decision to stay in the club — the default is that their subscription ends unless they take action and renew. Whereas with the recurring club, the default is the opposite: unless the customer takes action to end her subscription, it continues automatically and we find people tend to stay in the club longer.”
For Alford, the experience of subscription club sales changes the relationship with her customers, making it ongoing and more personal, rather than the single interactions made with sales at shows and festivals or through the website. Like a curated subscription box, SpaceCadet looks to work with makers and crafters for the added gifts included with the Yarn Alliance and SpaceMonster subscriptions and with designers for patterns for all the clubs. She has also contracted with local yarn stores to dye yarn for their own subscription clubs on bases they select and colorways they have created, like River Colors Studio’s one-year Colors of Cleveland series.
Jennifer Rice, who sell her hand-dyed yarn and project bags in her Etsy store and via Instagram (yarntasia), is a one-woman shop. She offers a yarn club once or twice a year and caps the enrollment at 10 subscribers. For her, offering a subscription club occupies her production capacity, limiting her other dyeing:
“For me, the biggest advantage is also the disadvantage. Making 3 months’ worth of profit at once (is) great for an unexpected bill, or to take a vacation, yet also takes that earning potential for those months.”
Things to Consider
These veterans were kind enough to offer some insights for creative entrepreneurs who are thinking about offering their own subscription clubs. As Alford of Space Cadet noted, the predictable revenue stream is a great advantage for a small business, as it evens out the sales highs and lows of seasonal shows and yarn-based crafting. On the other hand, customers are trusting you with their money up front and you have to deliver what you say you’re going to deliver. Ausherman of Miss Babs put it very succinctly: “Know that you can produce what you promise, and on time. Ship on time.” Fail at this, and you jeopardize your entire company, not just your subscription customers.
Subscription clubs require a great deal of planning, not just in creating and shipping product, but in how you go about accounting for your income as well. Alford strongly recommends consulting with your accountant:
“It’s extremely important that you handle those funds properly, so you don’t find yourself coming up short when it’s time to send out parcels five months down the road. Also, it’s important to talk to your accountant about the tax implications of making sales in one quarter or year for goods you will not ship until the following quarter or year. Depending on how you structure the finances, you can pay more or less tax on the revenue, but talking to your accountant can help you set things up in the most advantageous way.”
Getting your product included as part of someone else’s box or as part of a curated subscription is a big single push rather than an ongoing workflow issue, but that can have its own pressures. Which model, if either, will work best for your brand and the direction you want to take it?
Across both the curated and the single-producer clubs, owners all point to active social media engagement as part of the experience for their subscribers. The yarn-based clubs have active groups and discussion boards on Ravelry as well as Pinterest, Instagram and Facebook. McClure of BeadCrate maintains a “rather robust Pinterest with a large tutorial/instruction board” for subscribers. Quilty Box produces a podcast that includes interviews with featured designers. Subscribers engage with each other as well as with the brand, making connections over products and projects, finding and sharing inspiration. It’s the community that selling your products via a subscription club creates, elevating retail transactions into relationships.
A subscription club can be a way to control the schedule and quantity of your production. Engagement with the community of subscribers can allow you to test a product and get feedback before deciding to offer it to a larger customer base. The billing and shipment schedule you establish can allow you to guide the flow of your revenue stream. A successful subscription model might allow shifting the balance of the other ways in which you market your product, possibly reducing your travel to shows or increasing your retail outlets, as you desire. Being featured in a curated box introduces your products to new customers and can boost your direct-to-consumer sales or stimulate inquiries from retailers who want to stock your brand. Clubs are another route by which you can find the best customers for your products.
If you would like more information about using subscription clubs as a way to grow your craft business, or other marketing strategies, we have ideas for you. To learn more about the services we offer, click here to contact Leanne.