*Almost* $10K MRR and razor thin margins sending a monthly subscription box

Backstory, my cofounder and I were trying to launch a loyalty app focused on getting small business brick and mortar shops more foot traffic and about a month before the official rollout, COVID hit.

We obviously had to pivot the idea, but we kept small businesses at the heart of the plan. With everything closed and people sheltering in, we decided to launch a subscription box with small biz goods to send out to folks who wanted to experience unique products and support the SMBs who were struggling.

We went from new idea to launch in less than a week. What enabled us to move that fast was a few key things:

• We already had relationships with small biz owners (which is a hard thing to build at scale). For new SMB partners, we went through Faire.
• We used Shopify + a few plugins to get the site up and running.
• Friends & family were obviously the first few customers.

Our business model was simple: source goods at wholesale price from small businesses, pack a box with 4-6 different products, send out to customers. With this we had to price relatively high ($40-$60) per box. Even at this price, we were running 1-3% margins because of packaging and shipping.

After about 8 months, we were able to grow to almost $10K MRR, but our margins remained the same. We were both full-time college students and I was also interning for Volvo while running this. A positive was that aside from sourcing goods and packing/sending boxes, the time devoted was relatively low. We ran a simple referral program (again and plugin from Shopify) to get new customers and had small businesses that were featured in the box promote us on their individual social medias, so growth continued.

What ultimately caused us to phase it out was three things:

1. Space constraints – sourcing, packing and shipping $10K worth of small business goods required more than my college apartment living room and we didn’t have enough capital to get a bigger space. Which leads me to point #2.
2. Our margins were too small to make significant improvements or investments in areas we knew we needed.
3. Neither of our passions were in the physical goods space, but we both recognized the timing, our ability and the potential impact all aligned at the start of COVID so we dove in anyways.

All in all, we learned a ton. Small business owners are hard to sell to unless you’re able to directly tie why or how your business helps them move product. Ship as fast as you can because your first few customers likely already know the product isn’t at its best, but rather they believe in the idea and the potential. And most importantly, I can’t stress enough the importance of having fun and liking the project or business you’re building. That sounds cliché, but nothing will ever get your all if you don’t enjoy and this is something important to recognize early.

Thanks for reading, this was fun! Soon enough, I’ll share a current update of what I’ve been working on! In the meantime, you can catch me on Elon’s Playground.