Subscription boxes have become a massive trend among consumers. Today, we can get about anything in a subscription box, from makeup to books to food. As a farmer, it can be a great way to make some extra profit and keep your customers coming back for more.
The e-commerce subscription model has grown by 100% per year in the last five years, according to McKinsey and Company. This trend has pushed multiple large corporations, including P&G, Sephora, and Walmart, to experiment with adding subscriptions to their products. A further study showed that 32% of consumers buy a subscription to save time and money, 55% to try something new, and 13% to gain exclusive access.
If this is working so well for other industries, why not consider applying it to local food?
CSAs (Community Supported Agriculture) is a great way to apply the subscription model. With a CSA, farmers are selling “shares” of their products for their customers for a season or other specified time frame. In exchange, customers receive seasonal (bi)weekly boxes of their products. CSAs are mostly popular amongst fruit and vegetable farms, but some farms are testing out protein or mixed food boxes as well!
A CSA model is a great way to ensure your income at the start of a season. With a subscription, consumers pay upfront for a service they receive for a certain period. This means less marketing work for the rest of the season. Many CSA farms even do a combination of sales, selling their CSA shares alongside produce weekly at the market. You can apply the subscription model to your business in any way that best suits you.
If this sounds like something that could apply to you, here are the components of a subscription or CSA you need to consider:
Plan for Success
To ensure success, you need to be able to plan for the upcoming season. Ensuring that your harvest will meet the demands and clearly lay out your subscription agreement with your customers. As a box is based on a set price, however, what it contains varies, and you must state this clearly in the agreement.
Be sure to include risks (in case a crop fails), the length of the service, what’s usually included in the box, and how they can get their box. A customer should be able to read the agreement and be fully aware of what they are getting in their service. Always make sure your business is fully capable of operating smoothly before offering this to your customers.
Determine Where and How to Get Customers
When starting a subscription model, you need to have a customer base to make it worthwhile. Determine who you are targeting and how you are going to reach them. Consider marketing to parents at schools, to students at university and college, or to exercise enthusiasts at your local gym. Always have a clear-cut marketing plan that includes your target audience, your social media and outreach strategy, and your branding.
We have written a ton of material on farm marketing, so be sure to check out some articles, including this one. Be sure also to consider a referral program as a great marketing tool. Referrals can quickly boost your customer base and give perks to your current customers. Many great subscription businesses exploded with referrals, such as HelloFresh.
Set Your Pricing
Different from selling your products individually online or at the market, a CSA or subscription model sets a fixed price for a fixed amount of products. Each box or package should have a predetermined quantity or mix of products. Pricing your subscription is a complicated task and should be researched well before setting. Look at what average families are willing to spend, what other CSAs are charging for their products, and use data from your own business if you sell currently. Additionally, determine how many shares/subscriptions you need to sell to receive your desired profits.
Also, think about how you are going to offer your subscription. In a CSA model, a farm would sell shares at the beginning of a season or for a whole year. Customers pay a lump sum at once for a longer period. Other subscription models have a weekly or monthly fee for a single or a few boxes. Determine which of these payment plans would work best for your business and for your target audience.
The most crucial aspect you cannot forget is to determine how you will get your products to your customers. Many CSAs operate by setting pick-up locations in common or public areas. A pick-up location allows you to reach multiple customers without delivering the boxes to various locations. Consider setting your pick-up sites in the same areas where you target your potential customers. This will often be a place where your current customers already frequent and will increase the potential for picking up new customers along the way.
Delivery can also be an option if it is feasible for your business. Offering delivery can be very attractive to your customers; however, it must be profitable. Need help calculating this? Use our free Minimum Order Value Calculator!
Selling food subscriptions can be a very profitable business! Many farms have found this to be a great way to ensure sales while pleasing their customer base. As your membership grows, it can get overwhelming to record customer data, track active members, and ensure smooth packing and distribution. Having an online real-time system that keeps everything up-to-date and organized can save you hours on administration.
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