Visits to leading subscription box sites like Birchbox, Blue Apron and Loot are up nearly 3,000% during the last three years, according to Hitwise data. For consumers who came of age in the digital era, subscriptions models are typically for electronic media (Netflix), music (Spotify) and news (New York Times online), so the idea of subscribing to something in the physical world can be exciting and new.
As such, it’s no surprise that one of the fastest growing segments of online retail is based on subscription boxes. This has not gone unnoticed by traditional brands and some are now adding subscription services to their traditional product lines.
Sephora, for instance, launched its invitation-only subscription service called Play! in September 2015. The $10 monthly subscription includes a curated selection of six “deluxe” samples of products sold in stores. Unlike brands that operate predominantly or solely online, Sephora is able to use its subscription box to drive in-store visits by including a “Play! Pass” with each delivery. Subscribers can redeem their pass at a Sephora location—where they’re tempted to buy even more—for a free one-on-one session with a beauty expert who will show them how to use their Play! products.
Starbucks is also getting in on the act. But instead of focusing on a convenience model to resupply customers with recurring monthly orders like a Dollar Shave Club, the Starbucks Reserve Roastery Subscription promises to guide subscribers through a monthly exploration of hand-selected “amazing new small-lot” coffees. The $19 monthly subscription includes one 8.8 ounce bag of whole bean coffee. The launch of the Starbucks subscription box corresponds with the brand’s rollout of its upscale Reserve stores, which cater to consumers with more discerning coffee preferences.
In rolling out a subscription box offering, brands need to be careful to ensure that their service consistently makes the customer feel special and delivers value. Whether it’s convenience, lower cost or exposing customers to great new products they’re sure to love, each brand needs to align its subscription box offering to customers’ desires and aspirations. It’s an opportunity to put the best of a brand into a little package to surprise, delight and inspire customers—and keep them coming back for more.
While new and unique subscription box sites are popping up every day, many will likely have trouble keeping consumers interested after a few months. However, brands that have traditional product lines may enjoy greater success by offering a subscription add-on. For starters, traditional retailers typically have a broader array of products that they can package up without getting repetitive. Also, the profit margins on subscription offerings don’t need to be as high if they’re successfully using the service to drive repeat or add-on purchases, either online or in a physical retail space.
And perhaps most importantly, once they have a box going into a household each week, month or quarter, they have an incredible opportunity to engage customers in a way that email, social or mobile messaging could never compete with.
John Fetto is a senior analyst with Hitwise, a division of Connexity