HOW TO START A COFFEE SUBSCRIPTION BUSINESS

October 4, 2021
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Emmanuel Umukoro


There are 328 million people in the United state now who consume about 400 million cups of coffee per day. Coffee is the most popular drink worldwide with around two billion cups consumed every day. Coffee has also been described as the second most traded commodity in the world. This explains why the global coffee market, which was valued at approximately USD102.15 Billion in 2019 is projected to reach USD155.64 Billion by 2026 at a compound annual growth rate of nearly 6.2% over the period from 2020 to 2026. Anything consumed with that much frequency is begging to have its purchasing and acquisition automated.


In this article, we will discuss the fundamentals of starting a coffee subscription business. We will discuss the rudiments of sourcing coffee, classifying the types you should sell, list the supply chain and recommend technology partners to help you get started immediately. We’re going to cover the basics, which apply to everyone, then we’ll get into some considerations for existing business types too.


The subscription model can benefit almost any product or service, but not all products flourish on subscription as Coffee does. Coffee happens to be one of those products that e-commerce businesses have a lot of success selling on auto-replenishment plans or even creating an entire subscription business around.


Subscriptions make a lot of sense when it comes to coffee: consumers don't have to rush to see you in person or search online when their bean count runs out, and repeat business is automated from the comfort of their own home. It's a win-win situation that ensures loyalty while also assuring that the pantry is never without coffee.


Potential customers should have no reason to trust you if they can't taste your coffee through the screen. This is why some persuasion is required when selling coffee through an e-commerce subscription. Skillfully wording your landing page and gorgeous imagery with a story behind your coffee can make the difference. 


Some consumers will be drawn to a specific roast style, and some will be concerned about whether the coffee is organic or fair trade, as well as if your bags are biodegradable. Others may be enticed by a memorable cafe experience and wish to take it home with them.


In either case, for customers to form a link with a coffee roaster, the roaster must inform them about themselves and their values.


FOUR ELEMENTS OF A GREAT COFFEE SUBSCRIPTION E-COMMERCE STORE

The success of your coffee webpage lies in developing a distinct identity and translating that into an interesting webpage. There are four elements of success to pay attention to in this regard are as follows:


  1. Your e-commerce store’s landing page, and navigation or menu
  2. Your “about us” page: the page you get to tell the story of how your coffee is sourced, roasted, and of your brand.
  3. Your "blog": the page that allows you to strengthen your relationship with customers by sharing value-added resources with them.
  4. The Coffee subscription page, which includes subscription options as well as a payment gateway that accepts recurring payments.


These four unique pages will assist you in developing your brand.


TWO EXAMPLES OF A SUCCESSFUL COFFEE SUBSCRIPTION WEBPAGE

Here are three Shopify e-commerce stores that excel at the four key elements and may serve as inspiration as you create your own subscription-based store.


Raw Coffee Company

Raw coffee company - e-commerce coffee subscription box


Their logo is neatly branded on the landing page, the page is simple, minimalistic, and well-designed. The homepage is attractive and their image is product-focused.

The menu shows:

  • "About us" to help potential customers know what they do. 
  • It also emphasizes the existence of a "subscription" service, which is the most important.
  • It features "Training" as its blog segment for sharing value-added contents
  • And "Coffee", "Wholesales", and "offer" to serve as categories of "product page"


Cosmos Coffee

Cosmos coffee subscription - e-commerce subscription business model for coffee subscrption


We love Cosmos Coffee because their Menu is uncluttered and though they trade with multiple roasters, they are quick to show off their partners in a way that builds confidence. “Subscription” is spelled out on the menu to leave no room for doubt, and the story of their founder on the “About us” page builds confidence and ultimately loyalty.



From these brands, we learned that:


*  A fantastic brand helps, and the aesthetics of your webpage can inspire customers to make the first purchase but you must have excellent coffee so make one-time buyers permanent subscribers!


* The origins of coffee are extremely important to the younger market (is it direct trade, shade-grown, organic, etc).


* When it comes to coffee, timing is crucial (e.g. roasting to grind time, expiry dates, and delivery span).


* To reduce waste, purchasing patterns and orders must be timed to coincide with * consumer consumption patterns.


THE STRUCTURE OF COFFEE SUBSCRIPTION

The most important aspect of your coffee subscription program is the structure of your monthly coffee subscription boxes. Here are the key components.


TYPES OF COFFEE

The type of coffee subscriptions you offer presents different coffee philosophies to customers.  Some of these will strike a chord with them. It's where you invite your customers to participate in that philosophy and become enthusiastic about your products and brand.


You could, for example, provide a single-origin subscription. Every bag is from a specific growing location, emphasizing the coffee's community and geography. This appeals to coffee enthusiasts who are interested in the culture of growing regions as well as the human stories behind the beans.


You may also sell coffee subscriptions for different blends. Each blend will include a list of taste notes and be precisely crafted to achieve the desired signature flavor. Like a connoisseur over a glass of wine drink it and mull over the sensory experience, many coffee consumers get delighted over this category of blend too.


Although there are a variety of coffee and subscription themes, we choose single-origin and taste as examples because those are the two most significant qualities for today's coffee drinkers. Coffee subscriptions can get personalized to agricultural cooperatives, local roasters, roast levels, and more.


Coffee drinkers appreciate it for a variety of reasons, and different types of coffee will appeal to different people. You can increase your chances of succeeding by carefully selecting the varieties of coffee for your subscriptions.


Whole Beans

After you've decided on the type(s) of coffee you'll serve, the following step is simple. Will you grind the beans, sell them whole, or sell them both?


While the beans are whole, the coffee is usually roasted. Roasters often prefer to transport their beans to retailers and coffee cafes whole. It helps them maintain the freshness of both the bean and the roast to the greatest extent possible. Fresh whole bean roasts can last up to a month in the bag if properly wrapped.


Ground Beans

For the average coffee drinker who doesn't have access to a burr grinder, ground coffee is more convenient. Ground coffee, on the other hand, only lasts around 1–2 weeks if properly sealed.


Whole coffee bean is better for serious coffee drinkers who grind their own beans at home or if shipping takes more than a few days. If you have an airtight, speedy delivery solution, ground coffee is preferable. Or your customers aren't as concerned about drinking coffee that isn't quite fresh.


However, providing both options for each subscription type is the optimum user experience.


BOX AND PACKING

After deciding the types of coffee to offer, the packaging is the second most significant part of your coffee subscription service. Your coffee subscription box will be the most memorable interaction your customer has with your company. Packaging has the potential to delight your customers, but you must select the appropriate boxes, design, printing techniques, and measurements. Let's take a look at each one separately.


Make your coffee packing worthy of unboxing

Consider the trend of unboxing videos for a moment. On YouTube, there's an entire economy built around the thrill of receiving gifts and the uniqueness of the object being unboxed. Every month, 90,000 people search for "unboxing" on YouTube. It's a real thing.


If you're unfamiliar with the concept of unboxing, it is the trend where someone opens a box in front of a camera while describing their actions and revealing details about the object about to be revealed.


While it's not impossible, aiming for your coffee subscription box to end up in popular unboxing videos isn't the purpose. Unboxing videos show that gifts can surprise and delight people right out of the box.


While there are many boxes and trending exciting unboxing videos already, this is your box and you need to customize a cost-effective shipping box. Here are a few ideas to help you build one:


Types of boxes: It's preferable that you use mailer boxes because they are strong, rigid, and they're the most common box type for e-commerce mail order subscription shipments.


Design: Use your existing company colors and logo, and keep in mind that a shipping box with predominantly dark colors will appear stately and serious, whilst lighter colors will appear simpler and more humorous. If your subscription subject is social responsibility and the struggle against poverty, it might not make sense to use a lighthearted tone.


Printing: Find a printing that uses an automated printing plate stamp; they're usually the most high-quality and cost-effective option.


Measurements: You must strike a balance between the fit and the cost of shipment by using a shipping box calculator.


FREQUENCY OF DELIVERY

You'll have to decide how frequently your shipments are sent. The majority of subscription businesses begin with monthly coffee subscription programs. Then, as their business grows, their operations tighten, and their delivery becomes more reliable, they add one-week or biweekly choices.


One tip from an existing successful coffee subscription that helps grow mail-order coffee subscription businesses is to group renewals and shipments together for each frequency. If someone joins up on the 15th and another on the 20th, both will receive their coffee on the 1st of the following month. This simplifies things and allows you to spend time on other things.


THE COFFEE SUPPLY CHAIN

The supply chain of coffee beans is a lengthy process that involves growing the beans, harvesting, hulling, drying, packing, bulking, blending, and finally roasting. In between this process, the beans go through international transporters, export sellers, and retailers like grocery stores, cafes, and specialty shops. In brief:


  1. Coffee is harvested by the growers. The coffee is then sent for processing (unless the farm doubles as a processor) where the beans are hulled and dried or wet-processed depending on the method used for that specific grower/coffee. This step is often referred to as “milling”.


  1. After beans are shelled to perfection, creating green coffee beans, they are shipped to the roasters by exporters to suppliers/brokers/roasters/retailers.


  1. Roasters then roast beans to desired light or darkness. If coffee is not sold by the roastery, it is then packed and shipped out via exporters to its various destination; brokers, distributors, and suppliers.
  2. The retailers and coffee shops then receive from the above to serve final consumers.


There can be many links in the coffee supply chain; conversely, there may only be a few links. Regardless of how large or small your coffee supply chain is, each link must be a strong addition to its chain; each link is responsible and equally important in your coffee sourcing and subscription offers. So the smaller your supply chain is, the better for you.


ADDITIONAL CONSIDERATIONS FOR ROASTERS, DISTRIBUTORS/SUPPLIERS, RETAILERS, COFFEE SHOPS, AND INDIVIDUALS

Depending on your business’s place in the supply chain, strategy, and current operational makeup, you’ll have unique strengths and weaknesses for rolling out monthly coffee subscription boxes.


Let us take a look at some of the built-in benefits for existing coffee-related enterprises, as well as their most promising areas of growth.


ROSTERS, DISTRIBUTORS, AND SUPPLIERS

A roaster, distributor, or supplier has the lowest barrier to entry for the coffee subscription business. Here are a few reasons why, as well as some things to remember if you are any of the three:


Strength

1. Purchasing coffee - Distributors and suppliers, whether they roast or not, have a significant advantage by being early in the supply chain. Because of their direct contact with growers and co-ops, they can offer a wider range of coffees. If a buyer isn't aware of this, it should be made clear in your website content. It's an excellent selling factor.


2. Shipping - Because it is their present business model, distributors and suppliers already have all of the delivery infrastructures in place. All of the fleets, routes, and operational inspections have been completed and are ready to go.


3. Pricing - Another advantage of being higher up the supply chain is that things are simply less expensive. Before it reaches the buyer, there are fewer persons that need to make a profit. This is a big advantage for a distributor. Ensure it’s clear to consumers on your website's subscription landing page or in marketing materials that the savings will be passed on to them; they'll be receiving a good deal by doing business with you.


Opportunities

1. Customer service - Customer relationship management is used in such companies, but usually at the corporate level rather than at the individual level. Your e-commerce platform can provide a level of customer support for your B2C endeavors, or you can transition some of your existing account managers to customer support responsibilities.


2. Packaging -  Your boxes aren't meant for the front lines: individual consumers if your normal customers are stores and coffee cafes. Today's consumers demand more than drinking coffee; they want to be surprised and delighted. This is why you need to make your packages appealing, memorable, and a true reflection of your company's beliefs.


RETAILERS AND COFFEE SHOPS

When it comes to serving the public, retailers and coffee shops have the advantage of being seasoned experts. This means immediate gains in terms of package design and customer service. The smallest fruit in terms of opportunities is ensuring a tight supply chain.


Strengths

1. Packaging. Your coffee business or cafe most likely lacks mailer boxes that have been developed and printed. However, you have more B2C visual assets ready to go than a supply-side company. You'll also pay proportionately less for shipping, as shipping has a percentage of your cost of products sold decreases as the price rises higher up the purchasing funnel.


2. Customer service. Again, while there may be no established customer support operation, these businesses have the benefit of sustained exposure to customers. It won't be as tough to switch to some customer support features. However, an e-commerce platform should be able to assist in this case.


Opportunities

1. Pricing - The sale price will be greater depending on where a retailer is in the supply chain.


2. Supply chain - Being at the end of the supply chain means having many consumers depending on you.  As a retailer, running out of coffee is synonymous with not selling coffee anymore. However, running out of coffee after someone ordered it online as part of a monthly coffee subscription box is a different story. As a result, stores and retailers must work hard to tighten up their supply chains. Appoint a single leader to be in charge of the entire supply chain, set performance goals, and keep an eye on things.


3. Infrastructure for delivery. Most brick-and-mortar businesses aren't used to packing, shipping, and tracking products rapidly. Having no need for their own routes or fleets largely insulates them from this, so it will likely be the most substantial change.


4. Purchasing coffee. You won't be able to find fresh and intriguing coffees if you don't have direct contact with producers.


INDIVIDUALS

Individuals are the most peculiar scenario here, as they will almost certainly be buying coffee from a drop-shipper from afar.


Strengths

1. Agile - You'll be able to pivot to new and engaging strategies as you discover them as a one-person team. For instance,  If you want to switch dropshippers and modify your subscription type from single-origin to solely espresso beans.


2. There's no need to waste time or worry about shipment. You'll be working with private label dropshippers who will source your beans and transport your orders for you. 


3. Low overhead -  Individuals may establish a coffee subscription business almost as easily as they can launch a website.


Opportunities

1. Customer service. An individual is most likely to rely on an e-commerce platform's customer service. Nonetheless, with a one-person enterprise, customer service is always a struggle.


2. Coffee Acquisition - Individuals gain a variety of advantages when they use private label dropshippers. One important thing they don’t get, though, is the variety of an operation that sources their own coffees. They're tied to their dropshipper and the sourcing decisions that the dropshipper makes.


3. Brand recognition -  You're beginning from the ground up. You'll have to put in a lot more work into advertising than other categories since they are existing businesses.


Low sales and revenue - Since you'll be starting small, your sales and profit expectations should be modified correspondingly at the beginning.


TECHNOLOGY INFRASTRUCTURE

After finding a supplier and understanding the risks and benefits of the supply chain you fall in, the platform you choose to sell your coffee from, and the subscription management solution you adopt to build your business with is the most important decision you can make. This is why I choose to save the best for the last. If your business is at the evaluating stage, I wrote an article that can help you figure out what to look out for when choosing an e-commerce platform and a subscription solution for your business.


Here is a summary of the things to look out for:


When choosing an E-Commerce Platform

  1. Marketing tool kit
  2. Analytics tool
  3. Ease of integration
  4. Design option
  5. 24/7 Technical support
  6. Multiple payment options
  7. Room to scale
  8. Shipping
  9. Does not require technical expertise


When choosing a Subscription Management Solution:

  1. Easy-to-use subscription app to reduce the need for technical support
  2. Flexible subscription management to enhance customer self-service
  3. Multiple payment options to help you accept payments globally
  4. 24/7 customer support
  5. Extensive features set
  6. Dunning management to reduce churn
  7. Automates actions that will allow you to offer free trials and samples, discount the first or repeat orders, or roll customers into paid subscriptions at the end of a free trial


FINAL THOUGHTS

It's not difficult to learn how to start a coffee subscription service especially if you already work in the coffee business. There are many advantages to establishing a coffee subscription and there's no reason not to offer coffee subscription boxes if you're a coffee roaster, supplier, distributor, cafe, or even an individual looking to start a business.


The market is massive, the money is recurring, and you're already 85% of the way there if you’re a roaster, supplier, or merchant. The same can be said for coffee shops and merchants, but we'd put them around 70% of the way there. Individuals, on the other hand, are probably doing some research if they're reading this. So they've made it about a tenth of the way to start a coffee subscription too.


Landing on an easy-to-use and affordable subscription management platform is one thing that will help you come even closer to getting started. Book a demo with Chargezen to see the subscription management solution that roasters, suppliers, retailers, shops, and restaurants depend on for seamless ordering, payments, and reporting. Several of them are currently running successful monthly coffee subscription boxes, and you can too.


Let's see what you build!

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