Product Pitfalls with Mario from Cratejoy

#024 - In this second of three-episode series, Julie chats with Mario Barrett from Cratejoy to talk about the pitfalls of overcomplicating your subscription box product.

Mario currently leads Seller Success at Cratejoy. Before Cratejoy, Mario spent time in management consulting and has experience starting, operating, scaling and selling subscription box businesses.

Links:

Sparkle Hustle Grow
Cratejoy

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Transcript

Julie: 0:29

So you want to launch a subscription box and don't know where to start? Girl, you are in the right place. I'm Julie Ball, a subscription box coach and your host here at Subscription Box Basics, a podcast for new and aspiring subscription box entrepreneurs that want to avoid overwhelm. So grab a coffee, some pen and paper and let's have some fun! Hey and welcome back to Subscription Box Basics with Julie Ball. That's me. I'm your host. And this is episode 23 where we're talking to Mario Barrett from Cratejoy. He's the Senior Director of Seller Success and this is the second episode of three where he is kind of pulling back the curtain and giving us some details on what the data tells them and what he sees as some of the most successful tactics. So we're jumping right back into the conversation with Mario. Okay, Mario. So what's one of your favorite things about working in the subscription box industry?

Mario: 1:26

I have so many favorite things.

Julie: 1:29

Me too.

Mario: 1:29

I'll go with two though. So the first favorite thing I have for the most part, every subscription box we work with is a small business, it's a sole proprietor. It's someone trying to hustle and make it, and like if you talk to anyone at Cratejoy like we are, we just love that. We love helping. We love to build things that help you actually be successful. And we don't say it anymore, but our motto used to be like, like, we want to help people quit their jobs basically. Like we want to help them build a business to go out and do what they love and like have that passion. And it's why I like it on the phone with sellers because I like to hear what they're doing. I like to learn about, Oh my gosh, how'd you solve this situation? That's a crazy thing you're going through right now. And it's just exciting. And that's what I love about it because I get to work with a ton of small businesses and watch them grow and be successful. And it shows me that it doesn't matter who you are or what you're selling, you can make it, you just have to like really find that fit and serve your customers like real pain point or need and you make it, you don't have to have like some advanced fancy degree or skill set. It's just like just go hustle and like do a good job.

Julie: 2:36

Yes!

Mario: 2:36

It's actually kind of, it's not that simple but it is that simple.

Julie: 2:40

Right.

Mario: 2:40

But it's also like the variety. The other thing I like are the variety of boxes we see out there. I mean it's just, it is shocking at how many different types of subscription boxes there are. I'm telling you when when we talk to people that don't know about Cratejoy and like, oh yeah, like oh you got the subscription box marketplace and the SAAS tool. Like Whoa,"How many of you guys have?" Like a hundred to now we have like 3000 boxes on the marketplace. It's like crazy to think there are that many out there and there are way more than that outside of Cratejoy.

Julie: 3:11

Right.

Mario: 3:11

So it's just seeing like how people are are actually approaching this and like redoing the model all the time, how they're trying to connect with customers. Because if you read a lot of stories, a couple of years ago I was like, Oh, there's so much saturation in subscription boxes. It's on the decline but we're seeing the absolute opposite. While you might not have the volume of people starting, you're actually having a higher volume of people being more successful because finding their niches or finding their customers and they're actually like really fine tuning the products and growing.

Julie: 3:40

Which is so important. If you can't try to please everybody, you've got to fine tune it and really niche down. I always talk about that. so that your exact target audience should know immediately when they see it. This was made just for me.

Mario: 3:55

Oh yeah. Like if, if you ever hear a mirror, so here's our CEO. If you ever hear him talk about this, like he uses this like Shetland pony example because you can provide a box to people who love it, Shetland ponies from all over the world and they will immediately connect with that as the product for me. Like that's like, it's like a box for people who have pet, like pet pigs. Like I mean like there, there are those boxes and like,

Julie: 4:20

I know!

Mario: 4:20

Oh my God, you're like, Oh my God, I have a pet pig. I should get this box.

Julie: 4:24

I should get this box. Yeah.

Mario: 4:24

Yeah.

Julie: 4:26

Awesome!

Mario: 4:26

It's crazy. It's cool though.

Julie: 4:27

I know it's fun to see all the variety out there, so thank you for that. let's dive into our topic, which is over complicating your product. Yeah. So this is a thing where we, when we launch a business, sometimes we just, we get overzealous and we get really excited and we want to give all the people, all the things, but it's just going to be a disaster. And so you have to, as we talked about, you really have to niche down and solve that pain point. And how do you do that? Which products are you going to provide? What are you going to provide a community? Are you going to provide what type of inserts and proprietary materials? So it can get exhausting if you try to do too much.

Mario: 5:09

I agree. It is absolutely overwhelming. A subscription box is actually a very difficult thing to do. Uh, it's, it's not an eCommerce store. It's not like you're, you're not buying a hundred t-shirts and just letting them sell.

Julie: 5:22

There's so many moving parts.

Mario: 5:22

Right. Then you're doing everything too. Your operation, so you're sourcing your merchandise and your operations support your logistics, your marketing, your like literally every single thing of one and it changes every single month.

Julie: 5:37

Right.

Mario: 5:38

Yeah. It's like, Oh, great. but yeah, so t he, on the complication side, we see the, t he boxes that we see that usually fail are the ones that do like what you said too much for too many people. They try to be like, Oh, I'm g oing t o have seven different tiers of this box and each box is going to have 19 products. So I'm going to have, you know, 2900 like v ariation. And y ou're like, good luck. Absolutely good luck. Like that's we, we want you to be successful. But we just see the data that it's, it's very hard to do that. And you see the same thing like trying to change terms t oo. S o they want to give people the opportunity to buy weekly, biweekly, monthly, b imonthly, quarterly, like okay, those are all different products. At the end of the day, that's a different product you have to source and actually deliver on. And you will be overwhelmed doing a monthly box, I guarantee you, because it goes faster than you think.

Julie: 6:35

Oh my gosh. Yeah. That cycle. Every time I swear it's like Groundhog's day, you know? And it just, as soon as you finish packing and shipping, it's like onto the next thing.

Mario: 6:45

Oh yeah. I used to pack boxes in my living room, I'm sure it resonates with people. And I remember packing 500 boxes in the living room takes a long time. Just printing the labels takes a long time. Yeah. And you're like, Oh my gosh. And so before you even like get out to a fulfillment center, you have to realize that you have to store this inventory, you have to manage this. The simpler it is, the easier it is for you to actually deliver on. And then the work targeted you can be with who you're actually trying to sell.

Julie: 7:17

So as a consumer, I feel like we get decision fatigue too. If you give them too many options, then you might lose the sale. so what from a data perspective, can you tell us anything about like how many terms to offer or how many variations to offer?

Mario: 7:34

Yeah, so, if you went back to Cratejoy 1.0 we had just about every option in the subscription world like tr, you could literally run the most complicated business you ever wanted to. And I know what the data showed is that the most successful boxes, which means the most likelihood for survival and growth are monthly termed boxes,

Julie: 7:58

Okay, hear that people? Monthly boxes.

Mario: 8:01

Monthly that ship either on a month to month or three, six or 12 month prepay schedule. We used to do nine months that just never worked. People didn't use it if people didn't buy it. But it's, that is what people are I guess conditioned to do and you can do quarterly and there are plenty of successful quarterly boxes out there. The, we get this question a lot, so everyone wants to do like a seasonal quarterly box, which just hot, like people want to do that and they want to ship in and so maybe I should back up quarterly. It means two things. You either ship every three months from the date of purchase. So that's a quarterly ad hoc. So that's just like, Oh every three months you get a box or you ship four dates every year. So you should have like whatever December 1st, whatever the, everyone's on that December for shipment. And so that would be like the winter box, the spring box, so summer box, the fall box. So those are very popular and those can do really well. The trade offs are, you are only touching that customer four times a year with a product, which means you're only doing four renewals a year, so your cashflow has to be like really big. If you're trying to run that type of business and you, you can make it work, but we find that you lose interaction with the customer between shipments.

Julie: 9:20

Yeah. You're not top of mind.

Mario: 9:21

Right. So you have a really like robust marketing plan and communication plan to actually start to communicate and touch them and engage them with community online. We see it as like most of those boxes just didn't make it. They just weren't able to sustain. They didn't have the cash flow. The the month to month was actually pretty popular because you get cashflow every single month and like across the board we usually see 70-ish percent of people are month to month subscribers. The rest are prepays and that's pretty much across the board that I've seen as I look at the data. And that gives you cashflow every single month and not only pay yourself for the time, but you're touching people every month. So you're renewing them, you're talking about that you're sending them updates about this and what you're getting is what you had. You're trying to solicit feedback and you're able to make more cycles throughout the year, which that's good. They may not be as big as like a three month charge cause in a three month box you can put a ton of value and charge a lot of money.

Julie: 10:18

Right.

Mario: 10:18

But I think you're also limiting your buyer pool. There's definitely a trade off with the each side. I can't say one's better than the other except I say I say that or people are successful with a month to month.

Julie: 10:29

Right, from the data.

Mario: 10:31

From the data, if you were a big time influencer or you were like Kim Kardashians, yeah, you can absolutely launch a quarterly with seasonal boxes.

Julie: 10:40

You could put your name on anything,

Mario: 10:42

Right. Like you have to like know yourself, your potential audience and what your cashflow needs are. And like really kind of understand like what would work for you.

Julie: 10:50

Yeah. So when it comes to overcomplicating things, let's talk about operations. So if you have, say you have 10 products, so we at Sparkle Hustle Grow, we put four to six items and that feels like enough to, you know, I'm always looking to reach out to a vendor here, chasing this vendor here. This order come in on time. I can't imagine having twice as many products or three times as many products. The more products that you have to fulfill, the more legwork there is with vendors, communication, stuff like that. But also in, you know, like you said, having the space to do that actually fulfilling, putting together the boxes, it becomes really, really overwhelming and very time consuming as you continue to add more and more things to your box.

Mario: 11:43

Yes. And okay, operationally, let's say you have 10 products and you have 25 subscribers, you're a newbie, you're crushing it. You have, what does that 10 times 25, 250 different products and you're in your house in month one. Okay. So let's say you forecasted like 10% over so you have a couple more, more for a couple extra boxes, 25 every month throughout the year. At the end of that year you're going to have 120 different products, times two boxes. You're going to have what is whatever, 240 different skews is floating around your house that you're at to figure out what to go do with it. So let's say you want to sell them online. Now you have 121 time products online to try to go sell or you can try to like obviously give those boxes to influencers or reviewers. But I mean what you see is like this just compounds over time and when you go to pick and pack, you go to kit, anything like that, like you're grabbing more skews, you're keeping things in more places, you have to store it. It's just way more complicated. And then you have 120 different vendors to communicate with. If you ever want to go back to them like, okay, so where's my spreadsheet?

Julie: 12:57

Which one was that? Yeah!

Mario: 12:57

It just like makes it super complicated. So you want to, you definitely want to simplify. You don't want to have the other thing within like let's say you have 10 products in two different boxes that have like a variation of different products in them that just really complicated. I ran, trust me, my first box I started, I want to have like 27 different products. I was like, Oh yeah, I'm going, someone doesn't want this one, they'll have that one and they'll have that one and optionality like wins. And then I was like, wait a second. No, I guess it would take you a week to order it.

Julie: 13:30

At the beginning I thought about putting in sized items like tee shirts or you know, something like that. But as I got deeper into it, I'm like the operational nightmare of me trying to manage all of those variations and me trying to buy the right number of smalls mediums larges, it just seems really overwhelming to me. it might come a lot of, a little bit more naturally to someone who maybe runs a boutique and then they want to add another stream of revenue as a subscription box. I think that it would be really, really a good idea. But for me, I, that's why we don't use sized items at all. We don't offer it in our boxes. not only don't we, we don't have the space for it in our small six by nine by three boxes, but I just operationally I just couldn't put my head around trying to figure out making sure that one, someone got the right size and two, I didn't want to be in the business of returns and exchanges.

Mario: 14:23

Yes, that's, yes. I usually don't see people get size and right until they hit scale because then they, they kind of know within like a, like a percentage of what they need to order every month in ordering a months in advance and have like a really good supplier locally that can deliver to their warehouse. It's, it is so complicated. I wouldn't touch sizes like I, I'd be too scared of that. It's so complicated. Unless you're like, like you said, like a boutique or someone that has the type of the inventory they can pull from and they're more comfortable with it. It's very difficult.

Julie: 14:54

Yeah, I would agree. Yeah. I think, I, that's not to say that it can't happen. So if you're, if you're thinking about that in your listening, we're not saying don't do that. We're just trying to get you to think about, think about like as you scale, is this going to be feasible? So one thing that I did at the beginning is I got some of my products and I would repackage them, maybe put them in a different box or label them or something like that. And while that was feasible in the early stages when I only had say 50 or 150 boxes, I just knew it wasn't scalable. So that was one of those things that I knew I would have to kind of pivot as I grew. So I just wanted to share that little story. And then I guess, Mario, the last question is from the data. I always love getting information from the data. Do you have any clue as to like the typical number of products that is successful? Like how many products are the most successful boxes putting in their box?

Mario: 15:52

Uh, so this is a at a volume level, so not like the most successful box or any of that. It's usually between four and seven is what we see that it's like the volume. Like most people have four to seven products. It's always category dependent. But across the board, the ones that are doing well, they're either doing an experience that like, Hey, here's a kit that you actually work on, like a craft. Or if they're doing more of that lifestyle, like curated box there, I mean it's not just like a lifestyle that's specific for that audience, but they're doing like anywhere between four and seven products. Get the value.

Julie: 16:26

Yeah. Got it. Okay, cool. So do you have any other closing advice about over complicating your product other than don't over complicate your product?

Mario: 16:37

That is the only advice I have. Do not over-complicate when in one area, deliver one type of very simple product, very passionate audience that wants to buy it and loves it, and then start to get more complicated. But you have to own something first, and that way you have like the right to sell other things I say right near quotes.

Julie: 16:59

Right, right, right. No, that's good advice. Okay, well thank you so so much again for chatting with us on this topic and guys, make sure you tune in to the next episode when we're going to talk about getting feedback on your box and what to do with it.

Speaker 3: 17:22

[inaudible].