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Benefits of Subscription Box Business Model

Discuss about the Idea Generation for Customer or Market Problem.

In the era of digitalization, the future of business is mostly depended through electronic commerce market. Due to hectic life schedule, people are nowadays are unable to purchase their preferred goods or services within a limited time period (Joyce & Paquin, 2016). It becomes impossible for the people to take care of themselves by purchasing the required products. Therefore, to erase this crucial problem of the customers from the business environment, a business idea has been generated. Subscription box business will prove to be helpful to provide the products required by the potential, customers through e-commerce trends.

A subscription box business will provide service to the target customers or subscribers who pay for the box on a regular or monthly basis. The boxes are to be sent to the customers on a monthly, quarterly or weekly basis. The subscription box services are to be made for beauty products services. The service will help the customers to avail their choice of product on their door-step by subscribing for it in the company websites (Sarooghi, Libaers & Burkemper, 2015).

There are major benefits that can be easily availed from the subscription box business model that can be described as follows:

Saves times: customers just have to subscribe once for the desired products and would be able to enjoy benefits for several month. In subscription businesses, the customers are only persuaded once to opt for their services (Palattella et al., 2104). If they are contented with the services they can further continue it on an ongoing basis.

Simplicity: subscription box services send their potential customers similar kinds of services or products each month. This makes the business operation very smooth and simple.

Lower costs: the prices set for the complete subscription box is quite lower than the prices of the goods if purchased individually (Toro-Jarrín, Ponce-Jaramillo & Güemes-Castorena, 2016).

Faster and safer procedures: the services delivered to the customers are obtained within a short interval of time, which makes the business more successful.

Very cheap and simple: Subscription box business can be created at a very low cost. Initially a website is needed to be created and then recurring payments are to be needed by the customers. It is no necessary to pay for the stock upfront but credit facility is also available (Tukker, 2015).

Predictable revenues: the revenues that are to be earned from the business can be easily predicted beforehand.  The purchases are made prior to the sale of the goods; therefore it guarantees monthly recurring revenue from the subscription model. Successful subscription model are generally those that have targeted specific niche (Foss & Saebi, 2017).

Proposed Business Model

Better retention rates: in the recent times, retention plays a major role in the increasing profit of the subscription business model in a successful manner (Metallo et al., 2018). The opportunity to maintain the customers and therefore retain the services is very easy.

Manageable stock control: the subscription box business model also has predicted the volume of orders that is required to be fulfilled and dispatched in the specified period of time. The businesses also offer sample of some the beauty products that can turn out to be highly beneficial (Carayannis, Sindakis & Walter, 2015).

The business model is a beauty products subscription services that is based to be in Sydney. The concept is very simple and in each month, the potential customer has to pay $50 dollars for the box each month. The box will be filled with an optimized selection for five to six high quality beauty products. The ecstasy of this subscription box is highly appealing to the customers. The customers get a clear knowledge about the various high quality products that are present inside the subscription box.

The business model focuses on advertising the subscriptions to the target customers (as shown in the appendix). The business is completely depended on marketing or promoting the products and proper logistics (DaSilva & Trkman, 2014). As the marketing of the products helps in securing the subscribers to generate the core revenues while effective logistics help in delivering the elegant box to the customers.

In the rapid growing mobile society, the future of the proposed business can be easily evolved into the mobile apps. By expanding the business through mobile channels would lead to add values through combining the content platform and subscription services. This is widely used by the customers. On the other hand, the business model provides extensive space for advertizing to its brand partners (Souto, 2015).  The subscription box services furthermore will serve as a link between the consumers and famous brands. This would facilitate in providing the brands with vital information’s so that they can identify the consumer demographics. The business model will provide a platform for all the popular or branded content, products placements and advertisements.

This aspect of the proposed business model is generally affected by various difficulties of maintaining the subscriber base. The factors that are needed to be controlled while generating such ideas are supply chain efficiency, customer’s desire and relevance (Schaltegger, Hansen & Lüdeke-Freund, 2016). The subscription box business ships around thousands of box each and every month. In order to balance the subscriber’s retention and attentions, customers are provided with the limited edition boxes and gift options. The subscription box could further add values to the targets customers, retention of its subscriber base and promote growth.

Marketing and Logistics

The business development model for the subscription services is highly remarkable as it is achieved by adding a pace for the content to their products. The cost that is required to accomplish the sources of the revenue that is very low related to the logistic costs by providing to their subscription box.  The business also hires very less or minimum production staff members, thus reduces the overhead costs for the products (Bocken et al., 2104). Magazines are also introduced for the established subscribers that is provided without and overhead cost. The subscription business model for the beauty products has provided great opportunity to expand the marketing business through social networking sites and media. This would not only prove fruitful in adding values to the brands but also the targeted customers. The mobile app for the beauty subscription e-commerce business could facilitate in gaining maximum profitability and efficiency (Klang, Wallnöfer & Hacklin, 2014). This approach is a very low cost technique to develop the additional value required for the brand.

References

Bocken, N. M., Short, S. W., Rana, P., & Evans, S. (2014). A literature and practice review to develop sustainable business model archetypes. Journal of cleaner production, 65, 42-56.

Carayannis, E. G., Sindakis, S., & Walter, C. (2015). Business model innovation as lever of organizational sustainability. The Journal of Technology Transfer, 40(1), 85-104.

DaSilva, C. M., & Trkman, P. (2014). Business model: What it is and what it is not. Long range planning, 47(6), 379-389. (DaSilva &Trkman, 2014)

Foss, N. J., & Saebi, T. (2017). Fifteen years of research on business model innovation: how far have we come, and where should we go?. Journal of Management, 43(1), 200-227. (Foss &Saebi, 2017)

Güemes-Castorena, D., & Toro, M. A. (2015, August). Methodology for the integration of Business Model Canvas and technological road map. In Management of Engineering and Technology (PICMET), 2015 Portland International Conference on (pp. 41-52). IEEE.

Joyce, A., & Paquin, R. L. (2016). The triple layered business model canvas: A tool to design more sustainable business models. Journal of Cleaner Production, 135, 1474-1486.

Klang, D., Wallnöfer, M., &Hacklin, F. (2014). The business model paradox: A systematic review and exploration of antecedents. International Journal of Management Reviews, 16(4), 454-478.

Metallo, C., Agrifoglio, R., Schiavone, F., & Mueller, J. (2018). Understanding business model in the Internet of Things industry. Technological Forecasting and Social Change.

Palattella, M. R., Dohler, M., Grieco, A., Rizzo, G., Torsner, J., Engel, T., & Ladid, L. (2016). Internet of things in the 5G era: Enablers, architecture, and business models. IEEE Journal on Selected Areas in Communications, 34(3), 510-527.

Saebi, T., & Foss, N. J. (2015). Business models for open innovation: Matching heterogeneous open innovation strategies with business model dimensions. European Management Journal, 33(3), 201-213.

Sarooghi, H., Libaers, D., & Burkemper, A. (2015). Examining the relationship between creativity and innovation: A meta-analysis of organizational, cultural, and environmental factors. Journal of business venturing, 30(5), 714-731.

Schaltegger, S., Hansen, E. G., &Lüdeke-Freund, F. (2016). Business models for sustainability: Origins, present research, and future avenues.

Souto, J. E. (2015). Business model innovation and business concept innovation as the context of incremental innovation and radical innovation. Tourism Management, 51, 142-155.

Toro-Jarrín, M. A., Ponce-Jaramillo, I. E., &Güemes-Castorena, D. (2016). Methodology for the of building process integration of Business Model Canvas and Technological Roadmap. Technological Forecasting and Social Change, 110, 213-225.

Tukker, A. (2015). Product services for a resource-efficient and circular economy–a review. Journal of cleaner production, 97, 76-91.

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