Neiman Marcus’ $250 Mystery Box Sells Out

Discussion
Oct 21, 2013
Tom Ryan

Neiman Marcus has apparently become the first fashion retailer to offer a limited-edition subscription box deal, also known as a "mystery box" because consumers don’t exactly know what’s inside. Even at a lofty $250 price tag, the box sold out in less than 24 hours.

The luxury assortment of gifts, first available October 16, was hand-selected by Ken Downing, Neiman Marcus’ fashion director, and Lisa Sugar, founder and editor in chief of PopSugar, one of the leading monthly subscription box providers.

For $250, Neiman Marcus’ box is said to offer items worth over $600. The mix includes a chevron throw and undisclosed products from eight high-end brands including items from designer Jonathan Adler and a custom Le Métier De Beaute item, designed by Mr. Downing and Ms. Sugar exclusively. The exact contents of the box won’t be revealed until Nov. 17 when the items will be shipped to each subscriber’s address.

The deal was marketed under PopSugar’s monthly subscription box service, PopSugar Must Have.

"Neiman Marcus and PopSugar share a passion for procuring hip, hot and happening products that intrigue and delight," said Mr. Downing in a statement.

PopSugar is best known for its $35 monthly Must Have box, which offers a curated collection of beauty, fashion, home, fitness and food items. It also offers a $100 quarterly version — the 2012 holiday box sold out in 24 hours.

The internet has quickly become flooded with monthly subscription box offers tailored not only to the beauty/fashion crowd, but also to the eco-friendly set, pet owners, new parents, gamers, fitness enthusiasts and even more narrowly-defined audiences. The chance to try new products, the surprises, and the savings are driving their appeal. In most cases, the mystery box promises to deliver a curated selection holding a retail value at least double or triple the subscription price.

Retailers have been slow to explore opportunities around the trend. The most-widely covered attempt was Walmart’s test launched in November 2012 of Goodies Co., a $7.00-per-month subscription service that delivers five to eight small samples of upscale food items not typically found on shelves in Walmart stores.

However, TechCrunch on Saturday reported that Goodies Co. would be shutting down in the next few weeks. Walmart said in the e-mail to TechCrunch, "We are letting Goodies customers know we will discontinue shipping boxes, but the technology and learnings from Goodies have enabled several new products we are incorporating into our mainline Walmart.com business."

What do you think is the opportunity for retailers in the mystery box space? Does the response to Neiman Marcus and Walmart’s offerings suggest the strategy only works for upscale merchants or do you think it has broader potential?

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12 Comments on "Neiman Marcus’ $250 Mystery Box Sells Out"


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Ben Sprecher
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Ben Sprecher
7 years 1 month ago

Mystery boxes present both a challenge and an opportunity for retailers.

In one sense, mystery boxes can be deeply disruptive, since they provide competitive products to the things a retailer sells, but packaged in new, compelling ways and oriented around particular consumer interests (www.birchbox.com: “I want to try neat new beauty/grooming/lifestyle products”) or as solutions to real consumer problems (www.blueapron.com: “I want to cook great, easy, healthy meals”). And by the nature of curated mystery boxes, the companies that provide them can negotiate great deals with suppliers and can substitute at will without hurting consumer perception.

On the other hand, retailers can start experimenting with this format as a way to try out new products on their consumers at low risk (heck, the product is pre-bought!), at low cost (retailers already buy products at wholesale volumes), and building on the recognition of their existing brand.

Bill Davis
Guest
7 years 1 month ago

I personally think it’s limited at best. If I am spending my money, I like to know what I am getting for it and am a little skeptical of the underlying value claim, “In most cases, the mystery box promises to deliver a curated selection holding a retail value at least double or triple the subscription price.”

And buying a mystery box from Walmart is not something I would personally do unless it was a gag/joke box, as this strategy would seem to be a better fit with a higher-end retailer.

Cathy Hotka
Guest
7 years 1 month ago

I can completely see this working for the Neiman’s customer – a wealthy individual with significant monthly discretionary spend, and the many departments at Neiman’s make it possible to create gender-neutral boxes that can delight a broad swath of their audience. I have a much harder time trying to fit the box concept into other brands like White House Black Market or Gamestop….

Chris Petersen, PhD.
Guest
7 years 1 month ago

Who isn’t intrigued by the surprise inside of Cracker Jacks? There is something to be said for the element of mystery, especially if it involves exclusives from designers.

Neiman Marcus is a luxury retail brand using the mystery box promotion to promote high-end designers and exclusives. It fits their target segments. Another critical success factor is that their mystery box is limited time/quantity promotion. Not the same thing as Walmart’s “Goodies.”

The challenge in today’s retail is that once an offer hits the market, the internet is flooded with clones. The question is … who is doing the “curating” … and do I trust the value of what they might select?

Robert DiPietro
Guest
7 years 1 month ago

I think the mystery box space is limited. Consumers like surprises but only if it has clear value vs cost.

I do think the subscription business model for retailers has a huge upside. Customers will pay for something to auto ship every month if they know what is coming and the surprise should be just that.

I subscribed to Goodies.co and the value wasn’t worth $7/month. As someone who loves retail I felt that Walmart was making money on the customer and probably charging the vendor for the samples. A snack pack of fig newtons, granola pack, and aloe drink is not worth $7.

Mel Kleiman
Guest
7 years 1 month ago

Great opportunity as long as the value is in the box. If the buzz ever goes bad, than it is going to have a very major impact on the brand that will far outweigh any profit or positive response generated.

Ed Dunn
Guest
7 years 1 month ago

Mystery boxes have been an great social network success story for e-commerce operations:

1) Promote the mystery box on Facebook or Pinterest. Show what could be in the box. Announce the release of the mystery box once 1000 likes, shares or comments are generated.

2) Activate the box on social networks and web site. A gigantic rush to the e-commerce web site will occur and a nice opportunity to stress test the web site for high-volume use.

3) Winners will brag on social networks what they received in the mystery box. Winners will interact with each other guessing the shipping weight of the mystery box to figure out what to expect in the box.

4) Winners also appear on YouTube unboxing their mystery box and have an exciting and surprised look on their face as they unveil each item.

Mystery boxes are an excellent marketing tool for e-commerce operations and would work well with social-savvy fashionistas.

Lee Kent
Guest
7 years 1 month ago

I love this concept for high-end retailers and for categories that have large numbers of enthusiasts. This could be a great idea for gift giving to the enthusiast in your life!

Of course, I have also been a big advocate of retailers finding those categories that can be transformed into subscription services and this plays nicely into that.

Go for it! It’s exciting and fun!

Matthew Keylock
Guest
Matthew Keylock
7 years 1 month ago

I could see value for higher-end and discretionary categories if used for one-off events, a gifting option or as a marketing lever.

It strikes me that a monthly box idea is not sustainable for many categories without losing the excitement and engagement of customers over time as they accumulate more unused or redundant stuff.

Craig Sundstrom
Guest
7 years 1 month ago

“Does the response to Neiman Marcus and Walmart’s offerings suggest the strategy only works for upscale merchants?” Yes, I think that’s exactly what it shows, although “iconic” rather than “upscale” might be a more accurate term. OTOH, there have long been “fruit-of-the-month” or “stamp of the month” or “whatever of the month” services that combine a broad product description with some element of mystery as to the exact composition – this seems to be what WM offered – so in that sense the idea continues to have potential.

Carlos Arambula
Guest
7 years 1 month ago

It’s an indulgence that the core consumer of Neiman’s can afford. In better economic times, I can see this type of indulgence working on a sliding scale for a variety of retailers, but outside of Neiman’s consumers, few will be willing to spend on an unknown and it may lead to consumer resentment.

Arun Channakrishnaiah
Guest
Arun Channakrishnaiah
7 years 1 month ago

Sure looks like a “high risk – high rewards” program. Customers like surprises, but only if they perceive that they got a higher value than the amount they shelled out to be surprised. Meet those expectations and these customers will spread the good message on your behalf, but dissatisfy them and the retailer will get creamed even faster.

Ultimately, the risk associated with this may be too much for most retailers to give it a shot.

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