More consumers are developing the subscription box habit. Retailers should too.
Subscription box service sales have soared since the start of the pandemic, driven by consumers’ desire for convenience, value and variety.
EMarketer.com estimates that the subscription box segment grew 41 percent between 2019 and 2020, followed by a 19 percent gain in 2021. Sales are forecast to grow 18 percent this year to $32.65 billion before jumping another 17 percent to $38.2 billion in 2023.
Subscription box services appear here to stay. Here are some ways that brands and retailers can get customers to return time and again.
Consumers want unique, quality products. Selecting and curating merchandise that appeals to targeted consumers and supports brand position is essential for retention. Provide relevant recommendations, options, choices, new beyond-the-box items or Mystery Gifts (with QR code to give feedback). Leverage technology to understand product performance, issues and opportunities to upgrade assortment or offer new adjacent lines.
The best box providers provide:
- Relevant and exciting merchandise;
- The right number of options – not too few or too many;
- Flexibility to browse, choose, swap and skip;
- Feedback from others, such as “Hall of Fame” and “Most Popular” items;
- A selection of limited-time offers, seasonal specials and partnerships.
Complete the actual sales transaction efficiently. Focus relentlessly on pre- and post-purchase engagement to set the service apart, grow loyalty, retention and referrals. Identify key touch points and send an optimal number of communiques at various times during the subscription period. Utilize data and advanced analysis to understand consumer sentiment and opinions to predict preferences. Manage the number and tone of reminders. Ensure communications are on-brand, informative and useful. Provide many opportunities to engage, rate and give feedback through surveys, quizzes and QR codes at each step in the process.
While the pandemic boosted subscribers, 34 percent of Millennials say they are likely to continue purchasing subscriptions. Subscribers (including me, a confirmed foodie and new HelloFresh meal kit subscriber) feel more connected to direct subscription services than one-off e-commerce purchases. Boxes are here to stay, and brands need to take notice.
DISCUSSION QUESTIONS: What do you see as the keys to operating a successful subscription box service? Do subscription box services offer an incremental sales and loyalty-building opportunity for retailers?