An Overview Over the Booming Subscription Box Industry

‚Subscription‘ services are booming. Or, at least, everyone is trying their hand at a version of this. Some reports estimate a total of 2,000 subscription box services in the US.

Retail Dive has published a lengthy overview over the different directions this can take and different takes on the potential for subscription boxes and related services:

The word “subscription” implies a monthly commitment, but while many apparel services are lumped under the subscription moniker, most are more closely related to memberships, or clubs, or even expanded loyalty rewards programs than they are to traditional subscription models. […]

At their core, most of these services offer similar value propositions for both consumer and retailer, even if some of the details differ. For customers, these services offer free shipping and returns, the luxury of trying on items at home, and the pleasure of getting a box of goodies delivered to their doorstep. For retailers, the business model operates much like an expanded rewards program, allowing companies to lavish discounts on long-term customers while mining them for valuable user data such as style and fit preferences.

Stitch Fix is a prime example of how to pull a subscription​ model off:

One of the most popular companies in this category is Stitch Fix, which sends out curated boxes filled with surprise content, with no monthly commitment. Customers are charged a $20 styling fee per box that can be applied toward the purchase of anything in the box, and have three days to make their choices.

​Stitch Fix, of course, is also exemplarily strong on the data side. Subscriptions can help with gathering data about the customer‘s preferences, as the Retail Dive article states correctly. But I would warn that the sequence here is not:

​sub service -> data driven success

​but rather:

​competencies in data analysis -> successful sub service

​Data can‘t help you if you don‘t know how to interpret it correctly.

​Anyway. MM.LaFleur great example for how ill-fitting those company categories can be, as we make them up on the fly while the whole retail industry is swiftly re-organizing itself:

“While we hope the relationship between client and stylist is an ongoing one, there is no subscription obligation,” Annie Thorp, MM.LaFleur CMO, told Retail Dive. “I suspect some of the confusion about our business model stems from the recent proliferation of subscription services, and the assumption that any try-before-you-buy or ‘box model,’ like our Bento Box, must come tied to an ongoing subscription obligation.” However, Thorp said her company’s boxes are designed to allow customers to familiarize themselves with products and services. “We see our Bento Box as the beginning of a relationship between our customers and our company,” she said. “There are no strings attached, and that is intentional.”

A 2016 article in Forbes put MM.Lafleur on track to $30 million in revenue in 2016.

​The Washington Post published a longer portrait of MM.LaFleur in March.

Retail Dive has some interesting tidbits on the audience for subscription boxes:

The typical subscription service customer is a female in her early 40s with an income of roughly $78,000, Julia Fowler, co-founder of retail and fashion technology company EDITED, told Retail Dive. […]

“Looking at a group of retailers and breaking down the groups into millennial men aged 18-34 and men over 34, we observed key differences between the segments,” Marshal Cohen, chief industry analyst of Retail at NPD Group, told Retail Dive. “Millennial men spent more at Bonobos and Asos than older men, but older male consumers spent more on average at Trunk Club ($1,075) than younger millennial men ($867).”

​Read the Retail Dive article for more insight.

​More on this topic:

4 comments

  1. […] An Overview Over the Booming Subscription Box Industry […]

    Like

  2. […] An Overview Over the Booming Subscription Box Industry […]

    Like

  3. […] An Overview Over the Booming Subscription Box Industry […]

    Like

  4. […] businesses are still booming. We covered the subscription ‚sector‘ over the last couple of weeks more […]

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: