Why Coffee is the Ultimate Subscription Business You’ve Been Looking For

August 30, 2024

Today, I want to talk about a very interesting niche – selling coffee. Why coffee, you ask? It’s simple: coffee is a product that naturally fits into a subscription model. By attracting a customer once, you create a recurring client who regularly buys more when their previous order runs out. By setting up retargeting campaigns correctly and reminding the customer at the right time, your customer base will grow very quickly.

But there’s an important point: your coffee must stand out from the brands and varieties you can find in the nearest supermarket. There has to be a wow effect that will interest the user and make them want to try your product.

Starting the Research:

1. Analyzing Ads in the Facebook Ads Library: Go to the Facebook Ads Library and enter "coffee" in the search bar. You’ll see more than 50,000 active ads. To make sense of such a large amount of data, let’s narrow down the search filters.

Here’s an interesting point: according to European legislation, Facebook is required to disclose the number of ad impressions in the EU. This can help us find advertisers who spend a lot on ads, confirming or disproving our theory about the market demand for the product we intend to sell.

2. Choosing the Country and Filters: I choose Germany as a country with good purchasing power and a large population. The Netherlands can be an alternative. We select only active ads from the last 3 months and get 6,200 ads – much better. I activate a Chrome extension to roughly determine the spend for each ad and manually review the results.

What do we see?

Significant ad spend. Note that this is only a part of the ads, and only on these creatives, $19k and $16k respectively were spent.
Website - https://no-coffee.de/shop/entkoffeiniert/no-coffee/no-coffee-entkoffeinierter-premium-roast
This is decaffeinated coffee. We check the traffic using the SimilarWeb extension: the traffic is only from Germany. There’s a decline in user numbers, but this is likely due to seasonality.

Let’s check their activity on Google ads and boom:

Other Advertisers:

To ensure the vertical is successful, we do research on the US market – the largest one. Unfortunately, we won't have data on ad spend there, but we can indirectly determine the effectiveness of ads by their creation date and activity. We find active ads from September 2023:

We understand that the vertical is viable and needs to be tested.

Next Steps:

  1. Testing: Conduct tests (you can find the steps here) and look for suppliers in the region where you plan to operate.

  2. Promoting the Product: It’s best to promote the product either as a bundle, offering 4 packs at once, like here:

Or as a subscription, offering a discount. This will increase the average check and improve ROI.

Extra Way to Acquire New Customers: Email Marketing

One great way to bring in new customers is by running a giveaway ad campaign on Facebook. This method helps you gather users' emails, which you can then use to follow up. Once you have their emails, send them personalized messages that highlight the unique aspects of your product and why it’s the best choice. This approach not only grabs attention but also builds a direct relationship with potential customers, helping to turn them into loyal buyers.

Here are some tips for making the most of your email marketing:

  • Segment Your Email List: Break down your list into smaller groups based on what customers like and how they behave.

  • Personalize Your Emails: Use your customer’s name and tailor the content to their interests.

  • Use Compelling Subject Lines: Write interesting and relevant subject lines to catch their attention.

  • Incorporate Clear Call-to-Actions: Make it easy for customers to understand what to do next.

  • Optimize for Mobile: Ensure your emails look great and work well on mobile devices.

  • Test Different Email Formats: Try out various designs and layouts to see what resonates best.

  • Analyze Email Performance: Regularly check how your emails are performing to see what works and what doesn’t.

  • Automate Where Possible: Use tools to send timely and relevant emails automatically.

  • Keep Your Content Relevant: Always provide valuable content in your emails.

  • Continuously Refine Your Strategy: Use feedback and insights to keep improving your email marketing efforts.

Best services for these tasks are Mailchimp and Klaviyo.

Influencer Marketing: The Hidden Gem

A hidden gem for selling coffee online is influencer marketing. It works amazingly well for this type of product. Coffee enthusiasts often look to their favorite influencers for recommendations, and a genuine endorsement can create a powerful buzz. Partnering with influencers who align with your brand can help you reach a highly engaged audience, boost brand credibility, and drive significant sales.

The easiest way to start influence marketing campaigns is to use TikTok marketplace:

Conclusion. Key Insights & Takeaways:

Strengths:

  • Recurring Revenue Model: The subscription nature of coffee sales ensures a steady stream of income.

  • High Customer Retention: Properly set retargeting campaigns can significantly boost customer loyalty.

  • Unique Product Appeal: Offering a coffee variety that stands out can create a strong market position.

Weaknesses:

  • High Competition: The market is probably saturated with many coffee brands, making it challenging to stand out, but trying various traffic sources can help to reach an untapped audience.

  • Dependency on Ads: Relying heavily on Facebook ads can be risky if there are changes in ad policies or costs.

  • Seasonal Fluctuations: Sales may dip during off-peak seasons, affecting overall revenue stability.

Opportunities:

  • New Traffic Sources: Expand to new platforms like TikTok, Google Ads, and other social media channels.

  • Email Marketing: Implement and refine an email marketing strategy to nurture leads and retain customers.

  • Enhanced Creatives: Continuously improve ad creatives to better capture audience attention and drive conversions. You definitely need to try so-called UGC (user generated content)t ads.

  • Product Diversification: Explore additional coffee-related products or accessories to increase the average order value.

  • SEO Optimization: Invest in SEO to drive organic traffic and reduce reliance on paid ads.

  • Partnerships and Collaborations: Partner with influencers and other brands to reach new audiences.