By now you must have heard that subscription box services are one of the fastest growing trends in the startup world. From cosmetics to fashion to food, the last few years have featured a parade of subscription box companies, from winners like Birchbox and Blue Apron to losers like Boxy and Walmart’s Goodies. The subscription box concept is pretty simple: customers sign up for monthly or weekly deliveries of curated items hand-picked by the vendor. Many entrepreneurs are jumping into the subscription box world after realizing the potential for recurring revenues from sending inventoried items to new customers. As someone in a direct to consumer subscription-based business, I appreciate the appeal of this model to new entrepreneurs looking to launch their own business.
Last month’s NY Times article, “Want to Shop for a Surprise? Try a Subscription Box” detailed the new trend. The article spotlighted “CrateJoy,” a startup that helps entrepreneurs launch their own subscription box business. I‘ve been following CrateJoy since their beta launch, and I realized early on that they had tapped into a great market with a large upside. As a “SAAS” (Software As A Service) model, CrateJoy capitalizes on the growth in the sector by streamlining the process for launching a subscription box startup. Cratejoy’s services cost $39 a month, plus 1.25 percent of each client’s subscription revenue and 10 cents for each billing transaction. After beta testing with a limited pool of customers, CrateJoy opened to the public in October. Within a month, it had 100 paying merchants. It now has 8,000.
According to Amir Elaguizy, Cratejoy’s cofounder and chief executive, around half its customers are first-time business owners. One of them is Chana Schottenstein of Green Orchard.
Early this year, Schottenstein heard about a trend within the food subscription box segment called Smoothies in a box. (Think Blue Apron for Smoothies.) These startups ship fresh or frozen ingredients to a customer’s doorstep—everything ready to be dumped into the blender. Schottenstein found a few startups operating in the space, but after seeing flaws in each approach, she set out to create her own smoothie subscription box. She had a great idea, a product she was passionate about, and a great partner in the produce business, but Schottenstein was missing an integral piece: software needed to launch a subscription e-commerce business. When Schottenstein reached out to me for advice on software, I told her I had a solution that would cut both her startup costs and time to set up the technology infrastructure: Cratejoy.
Cratejoy was the CTO that Green Orchard needed. Schottenstein quickly got to work with a graphic designer and the Cratejoy platform and within days had a working beta website ready to take orders. Instead of spending tens of thousands of dollars and hundreds of hours on software, Schottenstein and the Green Orchard team spent time working on their product, logistics and marketing plan. Cratejoy was the missing ingredient Schottenstein needed to launch her dream of being her own boss and running her own startup.
When I asked her if she would have gotten to this point alone, Schottenstein told me that, without Cratejoy, she would have given up on her startup. Green Orchard hasn’t launched yet, but Schottenstein tells me that she is only weeks away from launching her beta service within New York. She estimated that Cratejoy has shaved six months off her launch date and got her to this pivotal point with minimal costs.
While the subscription box space gets more crowded by the day, companies like Cratejoy allow entrepreneurs to dip their toes into this exciting segment with a low barrier to entry. Cratejoy is doing for subscription-based business what Shopify did for e-commerce. I don’t see it slowing down anytime soon. For Schottenstein and Green Orchard, Cratejoy was the wild card needed to launch the business.
With over 300 people subscribed for the beta launch and over 4000 Facebook followers, Green Orchard looks like it could be the next big thing in the subscription box world. Regardless of whether Green Orchard is successful or not, Cratejoy offered Schottenstein the chance to try building her dream company fast and cheap.
