Thrive in our connected world

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, TofuguCrackajack 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.

Written by
Dr Paul Marsden
Leave a Reply to Bemmu Sepponen Cancel reply

  • Wow, awesome writeup, was reading this while waiting for shipping labels to print.

    Thanks for the suggestion about re-shipping agents. I have to be careful though, considering there is no package tracking and consumables are involved. Also “stuff envelopes at home to make money” is associated with pretty shady things.

    I have considered switching to a model / adding an option for a more expensive subscription, which would be only once a month but with more expensive candy and package tracking via EMS.

  • Nice Idea from Candy Japan. This subsciption models may need some time to fly but with a good idea you will be successfull in the end!

Digital wellbeing covers the latest scientific research on the impact of digital technology on human wellbeing. Curated by psychologist Dr. Paul Marsden (@marsattacks). Sponsored by WPP agency SYZYGY.