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Co. Found an Opening in Subscription Box Trend

Environmentalists might cringe at the thought of disposable clothing that needs to be replaced on a monthly basis. So we asked Fresh Clean Tees if they considered their business part of the “fast fashion” industry.

Melissa said she’s aware of the problem, and recently wrote a blog post on how to “upcycle” old and unwearable T-shirts.

Matthew said they’ve considered launching sustainability programs; for example, discounting return shipping for customers to send in old T-shirts to be recycled or donated, although no programs are in place thus far.

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“It’s a super important issue, and it’s one of our priorities moving forward,” Matthew said.

The Subscription

Box Shopper

Ages 25-44

Higher income

Higher education

Female

Source: HitWise

Matthew and Melissa Parvis jumped on the subscription box trend just in time to claim a sliver of an increasingly fragmented pie. Newcomers to the crowded market, however, will have to fight to survive.

The couple’s startup, Fresh Clean Tees, delivers regular shipments of plain, solid-colored T-shirts to men. Started as a side business (with the founders still working full-time jobs), the company quickly attracted 1,000 regular subscribers and is expected to bring in $500,000 in annual revenue this year. The traction was more than the couple expected.

“We’re shipping like 1,000 packages a month out of our house,” Matthew said. The guest bedroom became the fulfillment office, and the garage was the warehouse.

“If you want to be profitable early on, do it yourself,” Melissa said.

The company is growing at a rapid clip, requiring both Matthew and Melissa to quit their jobs and focus on the business full time. They just hired a fulfillment company this month, and are moving their inventory to a warehouse in Vista.

Fresh Clean Tees is profitable, Matthew said, and the company is projecting annual sales of $2 million by 2018 based on “very conservative” estimates of their month-over-month growth.

What to Put in the Box?

Starting a subscription box business has been a popular entrepreneurial trend over the last few years, following the popularity of BirchBox, Dollar Shave Club, and other breakout successes. In this model, customers sign up for monthly or quarterly shipments of products that come directly to their door. In some cases, the products are consumables that need to be replaced regularly, such as razors, tampons, and coffee. Other boxes focus on a theme, such as makeup or yoga, shipping an assortment of random theme-related goods to surprise users each month.

Matthew said he thinks commonly used consumables are the way to go if you’re looking for long-term commitments from subscribers.

“We didn’t want to go niche with the product,” Matthew said. “Successful subscription box companies like Dollar Shave Club or BirchBox have a wide variety of people who would use the product.”

Why T-Shirts?

While plenty of subscription box companies already exist for clothes and consumables, Fresh Clean Tees sort of combined the two concepts: clothes that need to be replaced regularly. The idea cropped up when Matthew noticed that his plain T-shirts didn’t last longer than a few months before looking shabby. Lots of men wear T-shirts underneath suits or dress shirts, and these often get stained from sweat. Men have two versions of plain T-shirts: the throw-away kind they can buy in packs of six, and the designer kind they would wear as everyday apparel.

Matthew and Melissa wanted to offer shirts that could be versatile, worn as undershirts when needed, but fresh enough that they can be worn out in public.

The boxes include three T-shirts, and customers can choose from a variety of color combinations. Customers can choose to get the shipments once per month ($36), bimonthly ($39), or quarterly ($42). Sixty percent of their customers choose to get their T-shirt box monthly.

Competition Coming to a Head

While Fresh Clean Tees is growing at a pretty good clip for a two-person show, challenges could be ahead for new entrants to the subscription box market.

“People trying to get on the subscription market now are a little late,” Melissa said.

Birch Box, a makeup-themed subscription box service founded in 2010, was the first to the market. Shortly after its debut, thousands of followers jumped on the trend, including the Dollar Shave Club, which was acquired by Unilever for $1 billion in 2016.

Subscription box sites are considered a niche market in e-commerce, but a recent study found that these online retailers have grown nearly 3,000 percent over the past three years. Although no good data exists to estimate the size of the market, the founder of subscription box marketplace CrateJoy estimated that there were 10,000 subscription box companies in the market, generating a combined $5 billion in revenue during 2014.

But there have been murmurings of attrition in the market, with fierce competition weeding out the weak.

How to Stay Relevant

There are varying opinions on how to compete in the crowded market. The Parvis’ said consumables, a big audience, and a very small inventory (only a handful of products) are key.

“Inventory is what kills most of these businesses,” Matthew said.

Another local subscription box founder, Maxine Garcia, had a different take on the elements needed for success. Garcia founded a yoga-inspired subscription company called BuddhiBox in 2015. The company reached 1,500 subscribers and $500,000 in sales in its first year. Garcia said she believes the reason for her early growth was her niche audience and the variety of products she offered.

“If the products aren’t piling up every month, there would be a greater desire to stick with a subscription box for a longer period of time,” Garcia said. “If you’re subscribed to a beauty box and you get a mascara in it every month, pretty soon you’re going to cancel because you can’t possibly get through that many mascaras.”

Garcia did say her sales have remained consistent since founding, not rising or falling. She said to maintain her sales she has to regularly check in with subscribers by sending surveys and discovering what’s working, what’s not working, and new products her audience is interested in.

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