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US|The Mechanics of Subscription Boxes

Mar 1, 2019.Stephanie WuTokyo, JP
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Courtesy of Stitchfix and BirchBox Official Press Image

There’s nothing like celebrating your birthday every month like the giddiness and joy when receiving a monthly ‘subscription box’. The idea that isn’t relatively new and offers varieties in women’s and men’s apparel, makeup, beer/wine, meal kits, video games, and vitamins. According to emarket research company, Pipecandy, the US makes up for 70.2% of the world’s number in using subscription boxes which became popular roughly in 2010. What are the prospects of subscription boxes and what do they offer?

From Google Trend “Subscription Boxes”

The graph shows a nice upward climb in the search for ‘subscription boxes’ on the search engine. Number one being most searched in the US and second in the UK.

The main categories in subscriptions consist of replenishment and curation. In a nutshell, replenishments serve to save time and money on commodity items such as vitamins or shaving creams. As mentioned in the beginning, emotions evoking giddiness are associated with curation subscriptions which are meant to surprise and are highly personalized. These categories include makeup, apparel, food, video games, etc. Studies by McKinsey in 2018 show most e-commerce subscriptions fall under the curation category, revealing that users prefer to be delighted in something new, innovative and personalized, getting the bang for their buck. Though 40 percent of the time, subscribers tend to cancel their subscriptions when they feel unsatisfied making this a difficult process for businesses to conduct their investments. However, for replenishment services, users had a long-term subscription rate of 1 year with 45%; about 10% higher than curation services. Currently at the top for long term subscriptions are Amazon Subscribe & Save, Dollar Shave Club (Men’s grooming), Ipsy (cosmetics), JustFab fashion (apparel & shoes) , Stitchfix (personal styling service) and Loot Crate (video game merchandises). Most subscriptions go by monthly but varies among the businesses that cost from $10 per month or more. There are many layers to the business model of subscription boxes one of them being of course, by using influencers. In the case for Ipsy, they had influencers create videos to show product usage thus generating ad revenue. Stitchfix for example, carries selections of different branded clothes to promote the brands in turn receiving on both ends. Sephora too, has their own box called Sephora Play using it as a tool to make more customers spend money and loyalty.

In the end, businesses relying on generating revenue through subscription boxes shouldn’t expect customers to sign in regularly. Establishing the contents through multiple channels seem to be more effective in the long run as seen with Glossier’s marketing by keeping their customers engaged at all times. Perhaps adding more interactions will allow consumers to feel that there’s more than to subscribing to just a box. With that being said, I hope that within the recent trends, businesses will participate more in the idea of sustainability or allow social good to progress by helping out different communities such as GlobeIn which supports global artisans for a US$ 10 or 40 subscription.