Subscription Box Industry Analysis: How This is Impacting E-Commerce
When it comes to making an impact on e-commerce, it pays to think inside the box. The subscription box has taken the web by storm. Today, you can get anything from candy to clothing every month via subscription, and as our subscription box industry analysis will show you, people are eager to try (and buy) a variety of items every month
Subscription Box: The Early Years
The very first subscription box-type service was simply called The Sampler and curated a variety of products from independent artists and suppliers. Since then, subscription boxes have seemed to grow exponentially, with many brands doubling and tripling their subscribers and profits year after year.
Research by McKinsey discovered that over the last five years, the subscription e-commerce market (also known as SubCom) has grown by more than 100% over the last five years. Sales were just $57 million in 2011 but exploded to $2.6 billion in 2016.
Getting the Attention of Big Brands
Big brands themselves have noticed the meteoric growth of subscription box services and have thrown their collective hats into the ring. Further research by McKinsey shows that Proctor & Gamble’s Gillette on Demand, Sephora Play, and Walmart's Beauty Box are all representative of these brands’ forays into the SubCom space.
Other brands are more content to simply purchase established brands, such as Unilever’s $1 billion purchase of the now-famous Dollar Shave Club, one of the earliest participants in the subscription box model of e-commerce.
Beyond the Box
Forbes recently analyzed McKinsey’s report to learn what it was about the subscription box industry analysis that made it such a popular and attractive option for consumers. They discovered some startling statistics, including the surprising revelations that shed more light on who subscribers are, what they value, and much more.
Women Comprise Over Half of Subscribers, but Men are Subscribed to More Services.
Men seem to value the automated convenience while women appear to like the ability to try out and test products they wouldn’t ordinarily learn about through their most common content consumption channels.
Over Half of All Subscriptions are Curated
Consumers of all types of subscription boxes like having personalized, custom-tailored experiences. If they fail to receive this kind of experience with their subscription box service, they’ll quickly cancel, making it in the company’s best interest to continue delivering relevant, customized items.
Our own subscription box industry analysis has revealed that these services live and die on the accuracy of the customer experience. Churn can be high for these companies, so they need to focus on what their audience loves and continue to refine and tweak it until it’s more precise and amplifies the brand.
Along with that comes the very real statistic that over 70% of these subscription industry services are based in the USA. What’s to stop a competitor from launching a BirchBox lookalike in China, or a Blue Apron-style service in the U.K.? Absolutely nothing. And because they have existing examples to draw from, they may very well be able to capture and corner their share of the market.
More than Just “Stuff in the Mail”
Many subscription box services are more than just getting a curated selection of items in the mail. For example, Amazon and Netflix have built up their subscription empires by offering exclusive access or a premium level that regular subscribers don’t get. This, in turn, has created an off-shoot of the subscription box: the on-demand delivery option. YouTube is also testing the waters in terms of its own content delivery service.
The Birth of Same Day Delivery
One of the more interesting business models to be born as a result of the subscription model is the same-day delivery option. Amazon’s Whole Foods is rolling out grocery delivery within hours across the country. In terms of media, cable and satellite companies are scrambling to offer more and more of the latest movies and shows on-demand.
With more and more solutions becoming available to turn same-day delivery into less of an Amazon-exclusive realm and more of a commodity, our subscription box industry analysis predicts that you’ll be able to not just subscribe to a service, but buy the products featured there, on-demand and have them delivered to you within hours.
Not Every Idea Lends Itself Well to a Subscription Model
For every Birchbox, Dollar Shave Club, BarkBox and Graze, there are countless other similar ideas that have quite simply, gone stale. Cheesy puffs in the mail, for example.
It’s also worth noting that, according to Entrepreneur, subscription box services as a whole really hit their peak in 2015 and have fallen since then. That’s not to say that there’s no room for competition, or that subscription boxes have had their moment in the limelight and are doomed to fade into internet oblivion like flash sales and other hot-then-not trends.
How Are Subscription Boxes Impacting E-Commerce?
With all of this being said, it’s clear that subscription boxes have affected e-commerce sales. But rather than taking away from them, they’ve added an entirely new facet to them, as well as shown even greater importance on the cruciality of solid, rewarding customer experience. Subscription box commerce relies on data and metrics to understand what their users want, yet no amount of data can deliver that kind of seamless, one-on-one experience that customers crave.
So while there may be a distinctive difference between trying different kinds of toothpaste or children’s toys, there is still and will always be a need to simply browse online and see what catches your attention. Subscription boxes aren’t going anywhere, but neither is e-commerce. If anything, the industry as a whole is becoming more data-focused and more centralized on creating a seamless experience for customers that makes them want to continue subscribing.
The bottom line is this: subscription box services can learn a lot from e-commerce in terms of creating an impeccable customer journey. But at the same time, e-commerce companies can also learn from the subscription services in terms of building brand and customer loyalty. It very well could be the beginning of a beautiful partnership.