According to a 2018 McKinsey & Company study, the subscription e-commerce market has ballooned from $57 million in 2011 to $2.6 billion in 2016. Although this figure includes media subscriptions like Netflix and product replenishment programs, it also incorporates curated boxes of items like clothing, makeup, and kids’ toys. In fact, these curated boxes now account for nearly 55% of all subscriptions. Based on the same McKinsey & Company research, this market has grown by more than 100% year-over-year for the past five years. To date, nearly 15% of online shoppers have signed up for one or more subscriptions of these reoccurring product deliveries through monthly box services.
The Rise of Home Delivery in a Flourishing e-Commerce Society
e-Commerce has proven to be exceptionally popular. Carriers on a global basis are having trouble keeping up with the demand for delivery, especially during peak periods. Back in 2005, Amazon changed consumer expectations forever by pioneering its unlimited free delivery service in return for an annual flat fee. Amazon Prime now has over 80 million subscribers, and the demand for fast home delivery is at an all-time high. Furthermore, according to Accenture’s “Adding Value to Parcel Delivery” research, parcel delivery services are projected to grow by 9% annually, surpassing $343 billion on a global basis by 2020.
Streaming media subscriptions have been common for quite some time, but the demand for home-delivered subscription boxes continues to rise. There are now over 7,000 subscription box companies in the world, and about 70% of these are based in the United States. Subscription services commonly fall into one of the following categories:
- Replenishment subscription services enable consumers to automate the purchase of items that they buy frequently to save themselves time and money. Examples of these services include Amazon’s Subscribe & Save and Dollar Shave Club. Replenishment services account for about 32% of the subscription market.
- Curation subscription services provide products—most commonly “in a box”—that serve to surprise consumers with a selection of different items in a particular category, such as apparel, food, or beauty products. Companies that fit into this category include Birchbox, Blue Apron, and Stitch Fix. Curation services represent about 55% of the total subscription market, underscoring consumers’ growing demands for personalization.
- Access subscription services offer consumers “insider” access to special products and membership/VIP perks, most commonly in the apparel and food categories. These services account for about 13% of the subscription industry, and examples include JustFab, NatureBox, and Thrive Market.
Why Are Consumers Buying?
Today’s consumers aren’t necessarily interested in subscriptions; what they are really drawn to is the experience that these subscriptions are providing. According to McKinsey & Company, today’s consumers are willing to subscribe to an automated purchasing process only when it brings them tangible benefits, such as lower costs or increased personalization. Although word of mouth and positive online reviews are triggers for sign-up, the thing that really attracts consumers to these services is the perception that they are receiving something new and innovative from curation and access subscriptions. In contrast, replenishment services are motivated by the ongoing need for a particular product and/or discounts. If they are to continue subscribing to these services, however, consumers expect the level of personalization to increase over time. In fact, 28% of consumers stated that a personalized experience was the top reason for continuing a subscription.
Curating, Creating, and Marketing Your Box
Are you thinking of curating a new subscription box idea? Could your business benefit from offering an access subscription box to customers? If you do decide to create your own subscription box, you’ll need to pay close attention to the products that are inside the box. Perhaps even more important, though, is the delivery of an experience that will surprise and delight your subscribers. Subscription boxes are tangible items that have printed branding on the inside and outside, but the entire experience will become inherently more valuable if the printed components are created to further serve to the personalization expectation. If you already have a box in the market but are hoping to take it up a notch, Tukaiz can help! Contact us today to find out how our products and services can help take your subscription box business to the next level!