Navigating Tariffs for Your Subscription Box Business: Stay Profitable & Strategic

Good morning, good morning. Happy Monday. Today we're gonna, we're gonna have a tough conversation today. Uh, we're gonna talk about tariffs today, and I think it's something that we need to have an open dialogue about, and I think it's something, um, that's affecting us. And I've been kind of putting off this conversation because things have just been changing rapidly. And, um, but I want to talk about some things, the ways that we can navigate the tariffs in our subscription box business. I think I think that it's really important to have an open discussion about it. And so I would love to say hi to you, so let me know that you're here. Also, I want you to, I want you to tell me in the chat, have you been affected by tariffs yet? I hadn't been. Um, Thursday I had a conver— I had a Zoom call with my Scale Your Box group, and I hadn't been affected by tariffs yet. And, um, we were going around the room talking about what the biggest challenge is in their business right now, and I want to say that 75% of them, it was tariffs, and they are being affected. And then little did I know, the next day I would get hit with some tariffs. So we're going to talk about that. We're going to talk about, um, some strategies and some things I want you to consider when we're dealing with this. And if you haven't been affected by it yet, it's something that may come up, so I want you to be prepared for it. So we're going to talk about that today. and just kind of navigate this and have an open, transparent conversation about all of this. Um, and it'll— it's going to make us better. So let me know that you're here. I'm going to come over and say hi real quick in the chat. Um, and you know what, here, what I would like to do— let me pull this up real quick. I'd love— so I send out a text on Monday mornings to my text group, um, that just says, hey, I'm about to go live, this is what I'm talking about. And so if you would like to get a text from me on Monday mornings when I go live, just as a reminder that, hey, I'm live and this is our topic of conversation, can you text me the word Monday to my text group? We have hundreds of people in that texting group that I get to text every Monday morning. But if you're not on that list and you want to be on that list, just text Monday to 940-204-0023, and every Monday morning before I go live, I will send you a quick text reminding you to jump on Facebook or YouTube. All right. Okay, deal. So let me jump over here. I see that Carolyn's here. Good morning, Dana. Good morning, Christina. Hi, Meredith. Good morning, Maggie. Good morning, Wanda. Good morning, Antoinette. Hey everybody, Rebecca's here, Beth's here. Hey, Tabitha. Um, Dana says, not in business yet, I haven't been affected by tariffs yet, but I think it will be a trickle then explosion depending on what vendors have in stock. We're going to talk about that, okay? And here's the other thing is that your supplies are going to get affected, right? So whether you're making items or, you know, I'm sure you're, you're depending on Tumblr manufacturing, whether you're buying items to then manufacture, whether that's wood for your lasers, maybe it's yarn, whatever it is, we're going to start to be affected. And so I want to just help you navigate it a little bit today. So Good morning, everybody. Good morning, Shakira. Good morning, Kelly. Good morning, Nikki. Good morning, Lisa. Hey, Doris. Good morning. Okay, let's jump in. So I told you as of Thursday I hadn't been affected at all. Like, nothing had changed for me. I've been getting lots of communication from my vendors, but nothing had really affected my prices yet. And then I got hit with it. So I got hit with some tariffs with this next round of manufacturing that we just sent into production. And this is for like April— not April, this is April. This is for like August subscription boxes. And so a lot of times when we do business with these manufacturers, and especially someone you have a relationship with that you've been sending them business over and over again like I do every single month, we— they, they don't want to lose us as a customer either, right? Like, they're dependent on us, especially when our subscription box businesses, because they get our business month after month, they get recurring revenue from us every single month. They don't want to lose our business either. And so a lot of times some of these vendors have been absorbing some of the tariffs, um, they've been halving some of the tariffs, some of them are putting all the tariffs on you. So there's really a negotiation power that you have with some of these tariffs. Now, we ship everything overseas in DDP. So direct, that is basically direct to my door, and in my price all the final numbers are in there. We don't know at this point if we'll be hit with an additional tariff bill or if it's all going to be wrapped into DDP until I got notice from one of my manufacturers as we're producing stuff for the fall boxes. They said, okay, we're, we're adding 50 cents per item because of tariffs. And I think, okay, I can handle 50 cents per item. I have 4 items in the box for my regular box, so that's going to cost me $2 per box. Okay, because I have a healthy profit margin, because I have a 60% profit margin, I can absorb $2 right now. I'm not going to continue to absorb $2 very long, but I can absorb $2 right now in my profit margin. So I want you to think about that. And so here's what, here's tip number 1 for you on this. I want you to ask for transparency from your vendors. I want them to put the tariffs on a separate line item on my invoice, on my bill. I wanna know how much you're charging me for these tariffs versus how much it is for the production because that's gonna change things. So if I know, um, say this pair of glasses right here, so I know if this pair of glasses is going to cost me $8 to produce and you're adding 50 cents to that, I have $8 for manufacturing, 50 cents for tariffs, $8.50. I'm gonna put that in my notes so that if and when the tariffs get lifted, say by the time this ships in July, I need to get refunded for that 50 cents. You see what I'm saying? I don't want you to wrap it into the cost of your product because then you're not going to know what that is if and when the tariffs get lifted. So I want you to see that I need them to be transparent with us about what they're adding to, to what, so that if and when this changes, we have a clear understanding of what that means for us. It means I don't have to pay this 50 cents per item, um, on, on my bill because tariffs got lifted. Tariffs went back to normal. Do you see what I'm saying? If they just told me these glasses are now $8.50, um, then I don't know if tariffs get lifted if I get a discount or not because it's not clear what I'm paying for those tariffs. So I want you to ask for transparency with that from your vendors, um, so that you can really understand the charges, um, are from, you know, the tariffs are just their regular manufacturing costs so that we have a clear communication on removing them if and when that happens. Okay, um, now, um, Fabiola, it does. I am talking about like directly from manufacturers, but I'm also talking about vendors. Um, we are going to see— I've gotten some emails from my existing vendors in the States right now. Obviously they're getting their product overseas and they act as a wholesaler, um, here. Um, an instance would be like my t-shirt supplier, the distribution for our t-shirts. They're saying we're not raising prices right now until June 1st, so they're kind of giving us a heads up. But I also want to talk to my rep and I want to say, when you raise prices What does that mean? And I know right now I can look at prices of the shirts that I always use, I know what that price is. So when they raise that price come June, is that directly for the tariffs? And if and when that goes away, I should then be able to negotiate my price back down to what it is today. So I want you to understand that too, okay? It's, we're going across the board. Like if they're saying, if your vendor, if you're using wholesale, they're probably wrapping the tariffs into your charges. But I need you to understand, I need you to ask them how much of this is tariffs so that you have transparency with your costing on things like that. Okay, here's the other question that I've been getting. So, so number, number 1, if you're a note taker, I want you to ask for transparency on tariff charges from your vendors and manufacturers. Okay, number 2, I have already seen this and I have seen this within our community already, and I just want to give you my sincerest advice on this, okay? Number 2, I don't want you to give negative energy to the tariffs in front of your audience, okay? So I don't want you showing up as a product seller, as a subscription box business, giving all this energy, this negative energy to your audience regarding the tariffs. I'm being charged $2 more per box right now for my August box. Excuse me. I'm not about to go run to social media and talk about how the tariffs are going to put me out of business. I'm not going to go talk on social media about how this increase price is suffocating me as a small business. I'm not going to talk about how this price increase is going to change all of your prices and prices are going up. What that does is it causes fear for your audience. It causes negative connotation with your brand. It causes reluctance to buying in front of your audience. I'm all for transparency, but you have to remember that people don't know our cost of things anyway. We're not out there actively saying, Oh, I got this pair of earrings for $2 and I'm charging you $18 for it. We don't actively go say that anywhere. So why would we actively go talk about tariffs in front of our audience that are consumers? They are hearing it every time they turn around. It's on the news every single day. It's in social media nonstop. Like, they don't need to hear it from you, and you don't want to be another source of controversy, drama, or contention in their life. They are shopping with us because they connect with us. They value our products. They, they align with our values of our brand. And we don't need to be a negative source of energy in front of our audience around the tariffs. Okay. So I don't want you to project your fear, project your uncertainty, project your negative connotation about these tariffs to our consumer audience. We can do that together as business owners in our little group called Launch Your Box. If you're concerned about it, if you have worries about it, let's have open dialogue about it. But let's keep that behind the scenes. Let's not put that out in front of our consumer audience because we're kind of shooting ourselves in the foot with that. And we're going to talk about some other strategic things to help you navigate this. But we don't need to give any negative energy around tariffs. In front of our audience. Okay. Okay. So I just want to help you understand that because I'm seeing it with some of our subscription box owners already and it's given me the ick and I want us to navigate this in the best way possible. Okay. I want us to do this with grace. I want us to do this with confidence, even though we may not feel confident. I want us to show up in a positive way for our people and not in a negative energy. Okay, okay, so number 3, when I was writing these out this weekend, I want you to make pricing adjustments to absorb some of these costs until we know more. Okay, it's not an automatic, I need to raise my price of my subscription. That's not the automatic, that's not the go-to here. I want you to make some subtle price adjustments other, other ways so that you can help absorb some of this $0.50 per item, some of this $2 a box to bring your profit margins to a healthier level. Okay. And so we did— we took a clear look at this at the end of January and we did some price adjustments that really haven't affected anything. So I want to talk about those because we all have the ability to do these in our business before we go just just blanketly increasing the price of our subscription. It might be time for a subscription box price increase if you're not at a healthy profit margin. But if you are and we're just trying to wait out to see what's happening with the tariffs, here's some other ways that we can do this. Okay, a lot of us do a free shipping threshold. Okay, it might be time to increase that. Maybe you're at $100 free shipping, maybe you need to adjust that to $150. So that could be an idea for increasing your free shipping threshold. Okay, talking about shipping, we did a price adjustment on shipping, um, back at the end of January, and it has not affected anything. So we have a flat rate $6.99 shipping, um, in our shop for orders under $100, and we just changed it to $8.99. We didn't announce it, we didn't talk about it, we just went in the back end and changed it. Not one person has said a word about it, and we're now, um, we have a $2 increase on all of our shipping. So that's another way that you can absorb some of the costs is by just increasing your shipping cost. If you use a flat rate, that could be $1, that could be $2, just increase it. People understand that prices change. The other thing that we looked at to help us kind of absorb things and increase our profit margin this year was specialty items increase. So we do a lot of personalization. And so we went in and we increased all of our personalization by $2 as well. So anytime that we personalize something, we now have an increase on that. So it was just subtle price. That's a specialty item. You can't get that everywhere. And so look at your lineup. What are your specialty items? Is there something that you do custom that you could charge more for to just help absorb some of these, um, price adjustments? And then when, when I look at what's happening with my subscription boxes, I'm going to try to absorb a little bit of that right now with my one-off products before I make the decision to change my pricing on my subscription box. I want to wait through summer before I make any adjustments on my subscription box pricing, because I'm, I'm at a healthy margin. I'm at a— I range from 57 to 60% profit margin month to month on my subscription box. So I don't necessarily want to increase my prices if this is temporary. Okay. But what I can do in the meantime is I can take a look at my one-time products that I'm selling and I can adjust my pricing there for now to kind of absorb some of the additional costs with my subscription boxes until that gets figured out. So those are some tips. Your shipping threshold, your shipping flat rate cost. Um, if you have some specialty items that you can't get very easily other places, those would be the ones that I would increase. And then I would hesitate to increase a little bit of our one-off products to help absorb, um, some of what's happening with our subscriptions. And so So that's what I want you to think about. Like, there's other ways to think about this than just saying immediately, I need to increase my subscription box. We may need to do that, and I'm not discouraging that. We may need to do that, but I don't want to do it until we know what the result of this is. Okay. If you've already been feeling like you don't have a high enough profit margin on your subscription box, it may be time for you to go ahead and increase that. I'm not at that place, so I'm going to make other strategic moves. Before I make the decision to increase that. Okay, I have increased it twice over the last 8 years, um, and it might be time for another one. I don't know, but I want to wait till I know more. Okay, because that's very permanent. When I change a price of a, of a button-down shirt or a pair of earrings or a cardigan, that's temporary because it's going to be in my shop and, um, and then it's— I'm going to sell out and it's going to be gone. So it's not permanent thing. It's kind of a temporary thing. So I want you to think about those temporary price adjustments that you can make within your business. Okay. Now, number 4, and this is a hard lesson that I learned, and I'm going to tell you all about my failures with this, but I want, I want you to hear me say this. Do not panic buy product right now. Do not do it. I have seen emails from some of my vendors saying, stock up now before price increases, stock up here before you, you know, before we have to add tariffs. Do not do this to yourself. They're going to keep encouraging you to buy more of their product. It's a sales tactic. I'm going to tell you, I did this in 2020 and 2021. Because I fear bought, I panic bought. Because do you remember— I don't know if you remember, but there were a whole lot of ships sitting in the ocean with product on it that couldn't get to customs and couldn't get delivered. And I was panic buying anything that was in stock in the U.S. because I was worried I wasn't going to get, um, new product for, um, my boxes or my shop. And I was buying anything and everything. And it is 2025, and I am still digging myself out of the product that I bought in 2020 and 2021. And also it greatly affected my cash flow. I was in a real tough position. I bought so much product, I didn't have enough working capital day to day to handle the business expenses. And I got myself in a really big bind. And I just am speaking from experience here. Do not start panic buying. If there are— like, I know my t-shirts are going to go up in June, okay? I may buy July, August, and September t-shirts early, but I'm not gonna buy for the rest of the year. I may do a little buying early knowing prices are going to increase, but I don't have the cash flow or the space to be buying a whole bunch of product, nor do I want to put myself in a position that I did in 2021 when I had product out my ears I couldn't use it. I bought too much product and it's still sitting. I've had to liquidate it, um, just to get rid of it. So please do not listen to your vendors when they keep encouraging you to buy early, okay? They are trying— it's a sales tactic for them. Because what's going to happen for a lot of our wholesalers and our manufacturers, they're going to lose clients over this because businesses will go out of business over this. The strong will survive, but the weak will not. And they are going to lose vendors. They're going to lose their, their income. So they are encouraging to sell, sell, sell. It's a sales tactic and it's a scare tactic, and I don't want any of us to succumb to that. Okay, okay. Now on the flip side of that, number 5 is let's be strategic. And I've got some takeaways for you in this section. But business comes in waves, and this is just another wave that we have to get over, and this wave will not last forever. I mean, if you look at the stock market, it shows us that the highest highs come after the lowest lows, and we can see that from like 2008 and '09 when the economy was really, really rough. We can see that, we can see that in 2020. Um, when people were losing their jobs, when people were out of work, when people weren't leaving their house, like, we can see that the highest highs come after the lowest lows. This is a low, which means the highest highs are going to come after this because people will not survive this. Your competitors may not survive this, but if we are strategic We'll come out of this on top and we're going to be that much further when people start to restart their business. We're not going to restart anything. We're going to keep going. And that's what we saw through 2020 when a lot of small businesses went out of business. The ones that made it through are stronger than ever. Okay. And so here's some things I want you to be very strategic with your business. Pivot is our middle name. And if it's not your middle name, if you haven't had had the luxury of pivoting your offerings and your products and what you do over the last 10 years, it's going to become your middle name. And we have to be okay with that. We cannot get so stuck on what we've always done because this is not the economy that it's always been. This may— whatever you did in the past may not work in the future situation. So I need you to be open to pivoting. I want you to think about the price adjustments that we talked about in number 3, but also I want you to take a look at if If this lasts through the summer, what will I do? What price increases do I need to make on my subscription box? That is my threshold, and I'm just lending that to you if you wanna use that as a good placeholder. If this lasts through July, I will be price increasing as we go into the fall. So if you wanna use that as a measuring stick for your own business, I want you to kind of just think about it that way. Let's stay the course. Let's navigate this for a few months and see what's going to happen, and then we'll make better decisions after we know what it really is. Okay? And then let's make product changes. I told you about— I don't know if I've told this group this or if it was one of my paid groups, but I, I was working on boxes for fall a few months ago, or a month ago, and there is a cardigan I was going to put in my October box, and the price went up like $4 a cardigan, and that doesn't work in my budget. Um, I had mapped out this entire box. I knew what we were going to manufacture. I knew what we were going to put in it, but I had to stop because I cannot absorb a $4 price increase on one product. You cannot get so stuck in your head that it has to be that cardigan Instead, we're working with another vendor to do a hoodie. It's not going to be the cardigan box that I thought. We're just going to pivot and adjust. But I can't afford to take a $4 hit in my profit margin, and none of you can either. So we have to make product changes. You have to be profitable, and that should be the forefront of your mind when you're making product changes, is what's going to be the most profitable. Okay. And so we can't just do it because it's cute and that's what I dreamt of and that's what I curated and that's what I planned. We can't, we can't make decisions on that. We have to make decisions on what makes sense for my business long term. What will keep me in business long term? I had an— I have another— I have a student who's in Scale Your Box, Lisa, and we were talking on Thursday. She has a one item of the month subscription. That comes with a very custom collector's edition item. And she was informed by her manufacturer that this item is going to more than double in cost because of the tariffs. And we were talking through this situation and she's looking at other vendors right now that's going to get her a few months out of this particular item that are not in China. But the decision is, if this is going to start to cost me double until we understand what the longevity of this is, it might make strategic sense to just pause this, that subscription for a couple months until this works itself out. She can't double the charge, okay? She can't double the charge on this subscription. It doesn't make sense. She doesn't want everybody to cancel. So the best strategic decision for her is one, look at other manufacturing in different countries, and two, if that doesn't work Let's put a 2 or 3 month pause on this until we work through whatever this is. And that's a strategic decision. Does anybody want to pause their subscription? No. But does— on the flip side, do you want to double the cost of it and lose all your subscribers? No, you don't want that either. So you have to be open to making decisions that you might not normally make. And then here's the other thing I want you to think about strategically. Reach out to some of your vendors as you're looking for product. And maybe it's time that we work on, work with some of our vendors that have product already in stock for a few months and reduce the amount of manufacturing that we do overseas for a few months. Hey, what do you have in stock in this quantity? See if you can pivot your box colors. See if you can pivot your options and make something work until this works itself out. We also have this great post every month inside Launch Your Box for other subscription box owners. It's our destash. We have extra product, a lot of us, every month, especially the bigger subscription boxes, and we get it at a really good price. A lot of us have some extra product. I have, I have sold a lot of my excess product to several of you because I get it at a really good bulk rate because of the amount of subscribers that I have. But I have excess of it sometimes. And so use that post every single month to shop through some things that people already have that don't have tariffs attached to it. But We have to be strategic about this. We can't just keep doing what we've always done, not knowing how this is going to end up. And the problem right now is uncertain, and sometimes we don't navigate uncertainty very well. But that's why we're having this conversation, so that we can navigate it together, okay? Because there's still a lot that we don't know, and it's changing. You know, it was changing daily for a while. Now I feel like it's weekly, it's every other day, I don't know, but we have to pay attention to it. We cannot put our head in the sand and act like we don't know what's going on and we're not going to pay attention and we're not going to know. We have to, we have to listen and learn and take action. The strong will survive this. And I know that if you are listening right now and you're taking notes and you're like, okay, I got this, you're going to survive this and we're going to be so much better when we come out of this. This. There's seasons in business and this is a down season, right? We're going to come out of this on top and it could be our best year ever next year if we stay the course. Some of your competitors will not survive this and that benefits us if we do, right? And we can because all we have to do is make strategic decisions. And when you're making decisions about your product, about your business, you have to keep profitability top of mind. That's the only way that we get through this. We have to keep our eye on our profit margin. You cannot put your head in the sand. You cannot throw your hands up and say, I don't know, I don't know if I'm cut out for this. Maybe you're not. If you're not cut out for this, maybe you're not an entrepreneur, and that's okay. But if you're an entrepreneur, like, we problem solve. That's our daily agenda, problem solving. We got Is it scary and uncertain? Yes. Do I have fears of things? Yes. But does that make me want to stop? No. We figure it out and we're here together to figure it out together and we're going to get through this. And I have no doubt that we're going to have our best year yet after this. I have no doubt. So we, we need to understand what happened, what's happening and how we can pivot and how we can be strategic in our business. And if we do that and we take it in stride, We're going to get through this together. All right. Thanks for having this, this discussion with me, this chat with me, because it's important and it's needed. And we can continue to have future conversations about this, but we have to work together on this and we have to be smart about what we're doing for our businesses. All right. All right. You guys have a great day. I'll be inside Launch Your Box tomorrow, I think, doing social media reviews. And I have an awesome surprise for all of our members tomorrow, so I'll see you there.