Defying the conformity of traditional eCommerce business models, subscription based proprietors have been going through a bit of a boom in the last few years.
By no means are subscription businesses a brand new concept, because they’ve been around for some time. If you’ve never come across one before then you’ve probably never had niche interest that could only be fulfilled by way of an independent magazine landing on your doorstep every month.
Since its online breakthrough in 2010, more and more subscription businesses have emerged on the scene, but don’t worry if you’ve not got a passion for fly fishing or model trains, because these are an altogether different beast.
Whether you’re a vinyl hoarder, coffee connoisseur, pet owner or beauty lover, there’s bound to be a subscription box with your name on it. As the name suggests, subscribers are delivered a box full of ‘goodies’, usually once a month, although knowing what’s inside the box often remains a mystery until it’s opened. Well, that’s probably part of the appeal for most consumers.
Creating a sense of intrigue and surprise for online retailers is part of the phenomenon called ‘discovery eCommerce’. It also helps to tackle the real problem being faced by both customers and retailers – more choices, but less time. With so many outlets, products and services available online how do consumers decipher between them? As a result, a subscription box brimming with products based upon likes, dislikes and interests is now seen as the perfect way of bridging this gap.
Katia Beauchamp, co-founder of Birchbox, a trailblazer for the subscription box market, believes that the delivery and opening of a subscription box has helped to transform eCommerce from a ‘flat, two-dimensional world by giving it texture’.
In reality, the makeup, lipstick and eyeshadow that you receive as part of your monthly Birchbox subscription is merely just a bi-product of the personal and tailored shopping experience you ultimately crave.
Regardless of whether you’re a forerunner for subscription as way of discovery, self-indulgence or simply product replenishment, there’s no denying the fact that this online business model has been gathering pace for quite a while, especially as there’s now over 300 different subscription box businesses operating in the UK.
A saturated market
The real irony is that some subscription box businesses were created out of a demand for making the lives of consumers that bit easier, but there’s simply no hiding away from the fact that this market is now heavily saturated. For example, there’s now over 75 different subscription box businesses operating in the food and drink industry alone.
Whether it’s craft beer, loose leaf tea or even Japanese candy (yes, that does exist), each subscription service may indeed focus upon their own separate niche, but the market for consumers who are not only interested in their products, but who are also willing commit to a subscription box is realistically very small.
Value for money is often a recurring theme when it comes to the leap of faith of subscribing. Ultimately, consumers are looking for double the value of what they initially spend. For a business itself, low retention marketing rates often mean that this can easily become a reality.
One of the real issues facing the online subscription business model is that of fatigue. In addition to the overly competitive market, it’s believed that all good things must come to an end, to which some experts label it as a ‘novelty’ industry, whereby customers may sign up for a couple of months based purely on intrigue then cancel soon after.
To be fair, people have been expecting the subscription business model to capitulate for a number of years, but so far so good. Yes, there are real issues facing this industry, but businesses such as Birchbox appear to be weathering the storm by constantly evolving. In fact, they’ve recently opened up their first retail store in New York which allows customers to physically create their very own gift boxes.
Is bigger really better?
Well, we’re not talking about increasing the size of the subscription boxes, although this may appeal to some consumers. Instead, we’re looking at whether the emergence of bigger brands will help to further revolutionise the subscription box industry.
In the early days, flexible start-ups that could quickly react to the ever changing demands of the online consumer were those that regularly found success. However, the juggernauts of Adidas and Sephora are two brands which have decided to latch onto the success of the subscription box business model by unveiling their own.
Avenue A was launched in February by Adidas, a quarterly delivered box filled with shoes, clothing and accessories curated by a range of celebrities. Whether or not you’re a purist who feels that the subscription box industry has no room for such big timers, welcoming these names to the field certainly helps to reinforce market longevity and viability.
If there’s one thing to keep your eye on over the next few months, then it has got to be subscription commerce, and there’s no surprise that Amazon are leading the way with their Subscribe & Save service. Basically, subscription commerce allows consumers to receive scheduled deliveries of provisions and necessities such as toilet paper and pet food.
The Gillette Shave Club is a similar model, but the biggest similarity between the two is that they’re both focusing on consumer essentials.
In addition to this, Amazon have also unveiled Amazon Dash which allows customers to automatically re-order products with the tap of a button. It’s been available in the US for a while, but recently launched in the UK – Amazon say orders through Dash have increased by 70% in the last three months.
Also, fair play to guys at Carling who have created their own beer button which sits in your fridge and is designed to be pressed in emergencies.
Thinking inside the box is still critical to most online subscription businesses, however we can already see how the industry is prepared to think outside the box in order to sustain its continued dominance in the eCommerce market.