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HOW NEW IS THE SUBSCRIPTION BOX BUSINESS?

Posted By: OceanX    |    Mon, 12/12/2016 - 02:55    |    0

From fresh food from Blue Apron to lingerie boxes by Wantable, there’s no question that membership and subscription programs for physical products are hot. Today, subscription commerce touches almost every retail product in the market. But where did it all start and, more importantly, how did the sub-scription economy become what it is today? 

SHORT HISTORY OF SUBSCRIPTIONS: BASIC & LOCAL

Many have touted the rise of the box business as a recent phenomenon citing Birchbox’s arrival on the scene in 2010 as the start of the box subscription boom.  However, subscriptions of physical goods have been around since the 1800s. Starting with the direct delivery of basic necessities from local sources— like milk, butter and newspapers — the first subscriptions were based on replenishment, freshness and convenience.  These services remained intact until the rise of the supermarket and Walmart of the world made shop-ping in a store as convenient and a better value than local deliveries.

MIND OVER MATTER

Jumping ahead to the start of the 20th century, book clubs began to pop up. This shifted the focus from necessities to discovery, compliance and offering members a sense of belonging. At this point, businesses started to consider not only what customers need, but also how they think and feel. When members joined The Book of the Month Club, they were introduced to new authors and their membership served as a status symbol for the aspiring intellectual.

LOSING THE CUSTOMER FOCUS

As the book club model gained momentum, other industries adopted it. By the early 1970s, consumers had options: Wine of the Month Club was launched; Columbia House was satisfying music fixes around the country; and Bottom Line Books joined the book-club scene. Unfortunately, as these brand owners sought to increase profits, they made a few wrong turns. Columbia House and Bottom Line started using the ‘negative option,’ offering a very low intro offer (sometimes as low as $1) then sending unsolicited, continual shipments until customers opted out. These so-called forced shipments led to misunderstand-ings, frustrations and unhappy customers — and tainted the subscription model as a whole. 

INFOMERCIALS, CELEBRITIES AND SUBSCRIPTION SALES 

Fast-forward to the 1990s and subscriptions got a badly needed makeover with the infomercial. Featuring skincare like Proactiv, as well as fitness and nu-trition companies such as Beachbody’s P90X and Shakeology, these programs were designed to meet consumer needs. They targeted certain audiences by fo-cusing on cadence, portioning, personalization, convenience and value.  For in-stance, the skincare line Proactiv appealed to the widespread but highly specif-ic audience of acne sufferers. Backed by top celebrities like Jessica Simpson and P. Diddy — and marketed heavily on TV — it was undoubtedly one of the most successful infomercial-driven subscriptions brands of this time. 

THE FUTURE LOOKS BRIGHT

Now, we’re seeing yet another remake of subscriptions, one that’s been heavi-ly influenced by the rise of e-commerce. Today’s models span the gamut: from all-you-can-handle digital content like Netflix and Hulu to membership models like Amazon Prime to the sharing economy of Zipcar. But there’s a clear standout among all the subscription business models out there: the box busi-ness.

There are thousands of box businesses, and they come in all sizes. Some are mom-and-pop shops, while others like LootCrate, IPSY and Birchbox are much bigger. Then there are the giants. Many mega retailers, including Target and Sephora, have recently launched subscription programs to connect more deeply with customers; while Unilever went straight to the source when it bought Dollar Shave (and access to its customers) for $1 billion last summer.

No matter the size of a box business, all take a wildly different approach than their predecessors: combining personalized online experiences and curated goods with the convenience of in-home delivery. Rather than trying to ensnare customers, they work hard to entice and keep them. For instance, fashion-delivery services StitchFix and Trunk Club by Nordstrom engage in a conver-sation with customers, asking them to complete online style assessments be-fore matching them with a personal stylist. Tracking the likes and dislikes of each customer, that stylist can then tailor future deliveries for greater success. 

By combining customer-centric experiences (online and off) with transparent billing, subscription businesses are seeing their sales tick up once again. Can’t wait to see what’s delivered next.

 

Category: New Membership Economy Subscription Strategy