The Rise of Subscription Box Ecommerce
Twenty-five years ago, the world was obsessed with one-off purchases. We went to stores to buy books, makeup, clothes, video games, and food. The experience of browsing and choosing, and taking things home was very appealing.
Today, that behavior is shifting dramatically. More and more, people are turning to subscription box services that offer weekly and monthly, home-delivered products.
Consumers are trusting in the curation services of these companies to choose for them and shortcut the time and decisions usually required to make a purchase. Today, Dollar Shave Club, Ipsy, Blue Apron, and Birchbox are all companies that are starting to become household names. Pretty incredible considering many of these companies didn’t exist less than 10 years ago.
The Booming Box Market
Forbes estimates that interest in subscription ecommerce and subscription box services has grown by almost 800% in less than 5 years. From 2011 to 2016, revenues grew from $57M up to $2.6B.
There’s been a lot of interest in the ‘subscription box’ industry since Unilever acquired Dollar Shave Club for $1 billion (a purchase price that was five times its annual revenue). Today, it’s estimated that over 7000 unique subscription box services are available in the US.
Who Buys Subscription Boxes?
According to 2018 research, subscribers to box services are most likely to be between 25 to 44 years old. Average incomes range from $50,000 to $100,000, and they tend to live in urban environments. Women currently account for 60% of all box subscriptions. However, men are more likely to have three or more active subscriptions.
Approximately 15% of all online shoppers have now signed up for one or more subscriptions to receive products on a recurring basis, especially through services such as Amazon Subscribe & Save.
The Original Subscription Service
Of course, the idea of subscription services is not new. It began back in 1926 when the Book-of-the-Month club was a launched as membership service that offered readers new and exciting books delivered each month by mail. The service aimed to introduce new authors to the world.
In its first year, the club featured The Sun Also Rises by Ernest Hemingway, as well as launching the careers of Margaret Mitchell, author of Gone with the Wind, and JD Salinger author of the infamous Catcher in the Rye. After starting with 4,000 subscribers, the club had more than 550,000 within twenty years.
Over 90 years later in 2019, the Book of the Month club service is still providing a monthly subscription and promoting debut authors to its loyal audience.
Loyalty Builds over Time
The value of the subscription service model seems to be in both convenience and cost saving.
Many people are tempted by the convenience or value of a membership or subscription service. For others, the curation aspect is an appealing factor driving the majority of sales. The prospect of receiving personalized, exclusive, and unique offerings is what drives many people to try the box subscription services.
The statistics show that the loyalty to the subscription brand builds over time, as curated selections prove valuable to the customers who receive them. Word of mouth plays a huge part in the growth that many subscription services have experienced in the past few years.
Ecommerce continues to be a driving force in the economy, and services that offer convenience seem to be the next wave to ride. As a digital marketing and ecommerce agency, we are always interested in how these types of services can help grow the revenues of a company over the long term. The facts seem to show that the subscription box ecommerce trend is going to keep delivering value for consumers for a long time to come.