After relocating from New York to Raleigh in 2015, Jenna Martucci found it overwhelming to locate places, activities and shops that matched her interests.
There wasn’t a convenient resource that connected Triangle residents with local retailers and eateries, she thought. A fan of the go local movement, Martucci wanted to create a product that would strengthen the bond between Triangle small businesses and the community.
Along with her boyfriend, Will Altman, Martucci pieced together the idea for a subscription box service called rootsRaleigh.
“It may sound silly,” laughs Martucci, “but we really love local stuff, and we want to give people local products that they love.”
Martucci and Altman originally thought of creating a news service or blog, where they would profile restaurants and shops as well as connect Raleighites with events. However, with a competitor already on the scene, rootsRaleigh morphed from written word to a subscription box.
A Kickstarter campaign is planned for this spring to help Martucci and Altman begin designing and selling boxes, which they estimate will be priced around $50.
If it can hit a $5,000 campaign goal, rootsRaleigh will join a growing submarket within e-commerce that already offers over 2,000 different monthly subscription boxes, including at least a dozen that are based in North Carolina.
The subscription box phenomenon began with Birchbox, which in 2010 started curating a unique mix of beauty products in boxes and shipping them every month to thousands of customers. Over the years, new niche subscription boxes or copycats have joined in on the trend—My Subscription Addiction has 242 beauty-themed boxes listed in its directory..
Investors initially followed the hype, investing hundreds of millions of dollars into companies that impressed with their products and service models. Blue Apron, a weekly meal-kit subscription service raised $135 million, hitting a valuation of $2 billion (Business Insider), and Dollar Shave Club raised $147.8 million after its marketing video went viral (Subscription Commerce Insider). It was eventually acquired in 2016 by Unilever for a whopping $1 billion.
But Forbes reported recently that venture capital funding has dropped by 90% in this category since its rise six years ago, which has increased the level of competition between subscription box providers.
Martucci says the number of active subscription boxes has never been a concern. Besides providing highly sought after local products, rootsRaleigh has a “get one, give one” business model, which she believes will distinguish it from others. With every rootsRaleigh box that is purchased, a “give box” full of essential hygiene products will be donated to a local charity.
“We are currently working with Raleigh Rescue Mission, but we are hoping to partner with more,” says Martucci.
Surviving in an Oversaturated Market
The business model for subscription boxes and services is attractive to new startups due to the steady and predictable revenue stream. The single-checkout-for-multiple-purchases strategy makes it easier for a company to retain its customer base. But the excessive hype surrounding the model can be misleading for those considering entering the market—a lot of marketing and discounting has been required to make these services go and stay viral.
To help startup subscription box companies, Cratejoy and Subbly offer resources like industry insights, selling platforms and marketing assistance anyone can use to make it easier to kickstart a new service.
Martucci and Altman have leaned on Cratejoy’s Subscription School to gather helpful market information and instructions on how to enter the industry. Once they launch rootsRaleigh, Martucci says they plan to keep with the overarching theme of supporting local businesses by working with Raleigh marketing experts.
Stacy Berns, a retail expert in the communications space, believes the best subscription boxes contain novelty items that subscribers would not see or purchase on a regular basis. According to Berns, subscription boxes or services must fill a void or meet a need in the oversaturated market in order to stand out, especially against retail giants (as reported in Forbes).
If You Sell it, Will They Buy it?
Because they are niche services, subscription boxes need to come out of the gate with a large customer base, which takes time to build. Add the overwhelming amount of competition, high costs of shipping and labor and the need to constantly evolve in the retail industry, many companies can’t make the cut.
Recently, big box retailers like Walmart, Amazon, Sephora and Macy’s have joined in on the subscription box trend, changing the game for the smaller, homegrown companies. This level of competition could make it difficult for smaller subscription services to source products or simply get the attention of their audience.
According to Nathan Spencer, financial partner at Craft Financial LLC, sourcing products is always a challenge, no matter what the competition is like. Not only do subscription services have to find products that their audience will want, Spencer says, but they also have to keep a good relationship with their providers.
“A contract is always a good idea. You are the one your customers will hold accountable if a source backs out,” he says. “If you don’t have a contract that outlines what happens when you have a disagreement, then you will need to have backup sources.”
Spencer says that creating a successful subscription business isn’t impossible, but recommends that owners keep their day job as a source of supplemental income.
As the industry evolves, experts suggest that smaller subscription services will need to gather continuous feedback from their customer bases and invest in the promotion and design of their products to ensure they will not be quickly forgotten.
Focusing on the sale will no longer cut it in today’s market, says Jeff Yoshimura in an interview with MarketingProfs. He notes that price wars don’t matter in the e-commerce industry since customers are willing to pay for goods they believe have value. According to Yoshimura, investing in customers and creating an experience every time a box is open is how subscription boxes will move forward in years to come.
Martucci and Altman have spent countless hours building the community around rootsRaleigh. Besides attending networking events, they have walked the streets of Raleigh to find businesses to partner with. Martucci says the overall reaction to their idea has been positive, “Everyone is so helpful, which you don’t always find. It is nice giving [businesses] out pitch and seeing them react with excitement.”
With a growing arsenal of partnering companies and community enthusiasm, the couple hopes that by the end of the year they will be sending out packages of coffee, beer, fitness necessities and more with the rootsRaleigh logo printed on top.
North Carolina Subscription Services
In the meantime, there are plenty of other active North Carolina subscription boxes and services. They range from selling beer or meat products, to air filters or candles that are sourced from within the state. More on these businesses below.
Charlie Mulligan and Samantha August, two Charlotte locals with a shared passion for beer, came together and developed Brewpublik in 2014. This beer subscription service provides a menu of 3,500 beers for subscribers to choose from. Each beer has been put through what they call a “beergarithm,” an algorithm that breaks down what beer lovers look for in their drink of choice that helps connect subscribers with their dream brews. Brewpublik deliveries can be made to homes or offices, and it services San Francisco, Berkeley, Oakland, Charlotte, Raleigh-Durham and Charleston, SC. A six-pack sampler is $15, and beers can also be purchased a la carte. Since inception, Brewpublik has raised more than $5 million.
Subscribers of Coffee Crate receive curated roasts from NC roasters. Originally founded in Durham in 2014, the service was purchased by Angie Rainey, a barista turned entrepreneur, the next year. Coffee Crate sends out monthly boxes ($23 to $29) from its new headquarters in Asheville. Boxes contain three 4 oz. sample bags filled with coffee beans from around the world, brewing tips, tasting notes and sometimes a surprise. All roasters are fair trade certified and hold Organic, Direct Farm Trade, and Rainforest Alliance certifications.
On top of providing organic choice beef and pork cuts to restaurants and grocery stores, Durham-based Firsthand Foods offers monthly “(M)eat Local” boxes sourced from North Carolina farms. Depending on the seasonal selection, subscribers can receive a small (3 – 5 lb) or a large (5 – 7 lb) box that they pick up from designated locations around the Triangle. Monthly boxes start at $115 for the small option.
The Produce Box
Want to have a variety of fresh, seasonal North Carolina produce shipped to your door every week? Look no further than The Produce Box. Headquartered in Raleigh, this privately held subscription service provides a variety of curated boxes that offer five to eight types of farm-grown fruit or vegetables. Subscribers can also choose to receive a customized box and skip weeks they don’t want to receive a delivery. Pricing starts at $24 per week for a one-to-two person household. First time subscribers will pay an additional $20 annual fee. The Produce Box delivers across North Carolina.
Tom & Jenny’s
You can now get your sweet fix with monthly deliveries of Tom & Jenny’s brand caramels. Developed by husband and wife team—MBA-lawyer Tommy “Tom” Thekkekandam and dentist Sindhura “Jenny” Citineni—the sugar free candies help reduce cavity-causing bacteria. The subscription box is a separate product offering in the company’s virtual store. Subscribers receive monthly shipments of two, four or six bags of desired caramel flavors, starting at $18.99.
Carolina Monthly (on Cratejoy)
Based in Madison, NC, Carolina Monthly sent out its first box in the summer of 2015 after raising $5,000 in a Kickstarter campaign. Subscribers of e-commerce boxes themselves, the three founders developed Carolina Monthly after tossing around the idea of creating a subscription box of only North Carolina made items. Shortly after, they purchased the Carolina Monthly domain name and became an LLC. Carolina Monthly ships boxes to subscribers around the country every month that contain a mixture of items that originated in NC, including soaps, prints, crafts, books, clothing and more. Boxes start at $21 a month and contain four to six full size items.
Based out of Charlotte, MissionCute delivers monthly boxes filled with curated home and lifestyle goods from businesses around the US that sell locally-made or free-trade items. Each month, MissionCute donates a portion of net proceeds to a nonprofit organization. Subscribers can choose between a mini box (two to three items starting at $20 per month) or the deluxe box (four to six items starting at $39 per month).
The Sportsman’s Box
Catering to hunters and fishermen across US and Canada, The Sportsman’s Box delivers monthly “care packages” filled with hunting apparel, equipment, food and carefully curated gear. Monthly boxes are $35 per box with a 12-month subscription.
Wickbox, LLC, a luxury candle company based in Asheville, offers customers a monthly subscription candle that matches their unique scent preferences. Subscribers can choose to receive a medium or large candle every month. Large candles costs up to $39.95 and medium costs up to $29.95 (price varies for how long you choose to receive the monthly boxes).
Named the “Community Compost Shuttle,” CompostNow does exactly what you think it does: Recycle your biodegradable food waste. With this service, Triangle and Asheville-area customers receive weekly pickups from their homes, offices or restaurants. CompostNow team members swap the filled waste buckets with clean ones and transport the material to their composting site, where the material is transformed into soil for urban gardens and communities. Residential customers can request a bag of soil free of charge to use around their homes as well.
Founders Kevin Barry and Thaddeus Tarkington have received a total of $8.72 million for their Raleigh-based company that works to help customers remember to replace filters in a timely manner. Those who sign up for FilterEasy’s subscription service only need to know how many filters they need, the sizes and grade. Leave the rest to FilterEasy. Delivery is free, and according to the site, the AFF Flanders filters that FilterEasy delivers are more cost effective than purchasing one in a store. You choose how often you want to receive shipments, which can be changed at any time—and FilterEasy reminds you in case you forget. Filters start at $11.97 and are shipped throughout the US.
My Happy Plates
After a successful Spring 2016 Kickstarter campaign, Chapel Hill native Ryan Perlowin started this meal planning service that sends customized recipes to your inbox weekly. Subscribers can customize their profile to filter out recipes depending on food allergies, dietary restrictions and overall preferences. My Happy Plates promises time saved and reduced frustration at the grocery store and in the kitchen with its portioned shopping lists. After a successful Kickstarter campaign, My Happy Plates has been fine-tuning the business model in Durham’s Groundwork Labs—for now, the service costs $6.95 per month.
With a Kickstarter ramping up in the spring, this subscription box aims to connect Raleigh natives and transplants with businesses that they have yet to discover. Each box will contain items sourced from partnering local businesses. rootsRaleigh will also have a “get one, give one” policy, where it will donate a personal hygiene box to a local shelter with every box purchased. The fundraising goal is $5,000.