Subscription Clubs and Social Commerce | Insights from Inside the Box [Video]

We recently suggested that one of the latest hot trends in e-commerce – subscription-clubs – especially of the ‘surprise box’ variety (panties, razors, art, cosmetics, jewellery…) is natural territory for social commerce because of the surprise element that the boxes deliver – a key driver of natural buzz.  For example, we think beauty brands – large and small -should systematically offer their best customers early access to new products on a subscription basis – ideally on Facebook – thereby locking in the loyalty and word of mouth value of those customers.

If the subscription club e-commerce model piques your interest, then take a look at Candy Japan – a new Japanese Candy Subscription Club start-up by Bemmu Sepponen – a Finnish entrepreneur living in Tokushima, Japan – and Facebook app builder. Subscribe to Candy Japan for $23.95 or EUR 16.50€ per month and every two weeks you’ll receive surprise candy – direct from Japan, complete with cute and kooky packaging.

Candy Japan is quintessential geek chic. Great for Nippophiles, and the sort of service you could imagine every creative agency/department subscribing to; Candy Japan is guaranteed to beat whatever you put on the table during meetings right now.

Several months in, Candy Japan has around 120 subscribers that will bring in about $35K per annum.  Small fry for sure right now, but with annual revenue per customer at $287 and dizzy growth, it’s an attractive proposition.

Fancy a start-up sales chart like this? Think subscription-clubs…

But what’s great about Candy Japan is that Bemmu has created an insightful companion start-up diary, logging his trials and tribulations – and sales – with the start-up in an honest and transparent fashion.  If Candy Japan is successful, the start-up diary is the sort of thing that will end up as MBA case study material.  And whilst Candy Japan has had something of a social bypass to date (YouTube previews excepted), it’ll make interesting and insightful reading for anyone involved with new e-commerce ventures.

• Pricing, marketing and margins – currently (shipping 41%, product 21%, 6% transaction fee, packaging 5%, packing help 5%, support 2% – profit (pre-tax) (20%), out of which will have to come marketing
• Conversion rate is currently 1.13% (Bemmu, why not put your store in Facebook, and make social media sharing more prominent on the web store/part of the sign up process?)
• PR works – coverage in the Laughing Squid, Daily What, Foodista, I Heart Chaos, Japanator, Tofugu, Crackajack significantly boosted subscriptions
• Package tracking; customers like it, PayPal requires it – but it pushes up the mailing costs significantly…
• Direct shipping from Japan is inefficient – a hub and spoke model with regional agents might work better (we’re not so sure, part of the appeal is receiving a box from Japan – but Bemmu, here’s an idea, contact an ad/digital agency in each region, and get them to sign up as re-shipping agents and be part of a hot new trend in e-commerce – we’ll do London/Europe!)
• Using Amazon fulfilment may not be appropriate for brand image of an exclusive subscription club
• Sending as a ‘gift’ (“gift candy assortments”) to avoid complications with authorities (FDA) (Bemmu, why not protect your venture by running non-edible version in parallel, a certain brand – Hello, Cough, Kitty – would be an instant hit with tweens – and catch the kuchikomi wave (kuchikomi = Japanese for word of mouth spreading through social networks)

(Japanese) Food for thought.