From Hot to Not: 4 Reasons Some Subscription Services Fail

If the iron was always hot, you could hit it whenever and however you wanted.

The massive and ongoing growth of the subscription industry is not a new story. From 2015 to 2019, the subscription economy had already grown by over 300%. Today, over 68% of U.S. adults use a subscription service for at least one household item.

This development is largely great news for entrepreneurs and business executives. Subscriptions have been shown to heighten customer engagement and increase purchases overall for almost any organization.

That doesn’t mean every new subscription service is guaranteed to succeed. In fact, with such fierce competition and enticing opportunities at every level, failure is inevitable. But the best entrepreneurs take notice and avoid the pitfalls of their predecessors. So here are four reasons why some subscription services fail, with four concrete examples of success taken from my years as a subscription box expert.

1. They cast too wide a net.
   Let’s say I asked you if you wanted to subscribe to a “monthly flower service.” Assuming you were interested at all, you’d likely have at least a dozen follow-up questions just to get the discussion started. What kind? How many? How are they delivered? Who’s picking the flowers? What’s their personal taste?

   The retail industry is expanding at a breakneck pace, which means there are more potential customers and more products/services on offer than ever. This expansion means more opportunity, but it also means businesses can’t cast their net too wide when targeting consumers. In fact, over 70% of customers now expect some level of customization when making their purchases.

   Amanda Stucky is a shining example of this sort of specification in creating a subscription concept. Amanda is a planner junkie. But, she didn’t set out to just “design a great planner.” Rather, she first defined her ideal customer — hardcore Hobonichi planner enthusiasts — and crafted something unique and special just for them. This is the sort of service the 2024 consumer expects and often demands.

2. They don’t curate correctly.
   Every subscription service needs to consider three basic things when curating their selection of products: price, profit margin, and perceived value. Unfortunately, it’s not uncommon for a new subscription box to focus too heavily on one or two of these considerations to the detriment of the other. They may have strong margins and plenty of practical value, but a price that makes the audience grimace. Or they match a good price to worthwhile products, but with barely any profit margin in sight.

   A subscription box isn’t just a well-crafted, highly personalized experience. It’s a well-crafted experience that is also affordable for your target audience, sustainable for your business, and capable of providing long-term value to your customers. Consistently curating a product list to meet these demands is no easy task, which is part of the reason over 20% of subscription services fail to increase customer retention.

   One subscription professional to achieve major success in this area is Jonica Thompson of Jonica’s Bakery. Jonica has created a thriving subscription box with a waitlist full of eager customers, but that wasn’t until she navigated all the complexities of curating a monthly selection of profitable perishables to be shipped across the country.

   Jonica knew that product curation and quality assurance would make or break her endeavor, so she took the time to go through a number of tester boxes with her established customers as a means of receiving feedback and making adjustments. Only after a number of tests, as well as a litany of questions about packing peanuts and heat-sealing methods, did Jonica finally land on the box that she offers to her customers today.

3. They don’t go all in for their launch.
   Hype is powerful.
   The Make-A-Wish Foundation became a topic of conversation across the entire country and received a personal video of thanks from President Obama when they decided to make #BatKid’s dream come true. In 1999, Half.com put up some of its own money and convinced a town in Oregon to rename itself after the website. The story quickly went viral, and the dark horse of a company was ultimately sold to eBay one year later for $350 million.

   Subscription boxes are built and sustained on excitement, and the initial launch is your first opportunity to climb aboard the hype train. There’s no place for hesitation. Succeeding with a subscription requires a “full speed ahead,” “I am Batman” mentality when getting things off the ground.

   Sarah Cummings of the Redheaded Camel had already established a successful business of hand-lettered products and original artwork when she decided to create a subscription service for T-shirts and door hangers. Initially, Sarah’s subscriptions struggled. However, once she committed to a full-fledged launch, including live online engagement, a clearly communicated early bird bonus, and more active outreach across the board, her numbers went up and stayed up. Why? Because buildup is everything.

4. They aren’t prepared to grow.
   In 2024, any consumer trend or growing demand can shoot off like a rocket, which means retail businesses need to be prepared to handle rapid periods of growth. For subscription box entrepreneurs, this often means hiring some extra help, sourcing products to scale, and slowly relinquishing control of certain aspects of their business to other professionals.

These decisions are part of your new “CEO” mindset, which affords you a look at the bigger picture of your business. Where else can this rising demand be satisfied? Are there brick-and-mortar locations to handle any overflow? Are there additional services and products for those seeking more or sitting on a waitlist? Hype and 21st-century demand may be powerful, but their strength can be a double-edged sword for aspiring entrepreneurs who are unprepared for growth.

Conversely, Nicole Jenney of GPigBox was fully prepared to grow her business. So, when her subscription box for guinea pig owners took off like a rocket, she was able to capitalize on all of her momentum, soaring to 500 subscribers in just four months and winning a coveted industry award by the end of her first year. How did she do it? By leaving her entrepreneur identity behind and embracing her new role as a CEO. She responded to her customers’ demands with decisive action, built a right-size team to handle the workload, and maintained excellent customer service throughout the entire process.

Written by Sarah Williams.

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