The rise of subscription retail

The concept of subscription retail is no news – it has always been present, even way before the digital commerce boom. Newspapers and magazines have been doing it for years and with the rise of streaming apps like Spotify and Netflix, the subscription culture shifted to almost everything. From groceries to beauty items, books to snacks and other replenishment products, it is safe to say subscription-based businesses are on the rise.

Why embrace the subscription business model?

As well as other online services, retail subscription services were boosted by COVID-19 with a 41% membership adherence growth during this health crisis. According to Charged Retail, as of 2021, over 32% of British businesses offer subscription services and 71% of them said that subscriptions helped to keep a cash flow during the first UK lockdown. 

There was an 890% growth rate since 2014 and projections are looking up. Here is an overview of different subscription business models and how they positively impact customers and brands alike.

Replenishment items: automating everyday chores

Food (for you or your pet), cosmetics products, health commodities and even toothbrushes and toothpaste can be delivered to your doorstep on a recurring basis. Buying these items as part of subscription boxes offers the customer a convenient and seamless buying experience, without the need of ordering products weekly or monthly.Grocery stores, beauty companies, pet shops and pharmacies are the top sellers that offer subscription boxes. Brazilian grocery chain Zona Sul, male beauty product company Dollar Shave Club and specific recipes produce provider Hello Fresh are good examples of replenishment items subscription boxes.

Access subscriptions: content whenever, wherever

This type of subscription is well-known and more popular than the others. It gives you access to particular products, be it magazine editions, ebooks, images, videos, streaming services or any other content. 

A good example of this subscription model is Amazon Prime. Amazon combines different types of access subscriptions, offering on-demand content, free shipping and next-day delivery as part of the subscription package.

Also becoming increasingly popular are subscriptions to online newspapers and personalized and specific subjects newsletters, such as Business Of Fashion memberships and newsletters, ranging from career to exclusive Chinese fashion trends content.

Curated boxes: the element of surprise

These boxes contain items hand-picked by the seller, with the possibility of offering products on promotions and/or exclusive units for their subscribers. This is the type of subscription that creates curiosity and a sense of individuality. Plus, sometimes, the customer is able to customize what they would like to receive from that company itself.

Coffee clubs, book clubs, geek boxes, vinyl subscriptions… You name it! Anything that takes customers on a discovery journey while creating meaningful connections fits inside the curated box description. By being able to retain customers and expand a share of voice, brands can showcase and even test out products by listening to the feedback of faithful clients.

Examples of this type of subscription are pet-friendly and customizable BarkBox, Brazilian exclusive monthly subscription book club Tag Livros and for music lovers, Vinyl Me, Please

Subscription retail benefits

Long-term relationship and consistency

Subscription retail boxes showcase consistent service that brands can offer at an affordable price, eventually becoming a vital purchasing option for both the customer and the seller. Keeping the quality and excellence during the end-to-end customer journey is something that helps maintain clients subscribed to the offered services. 

From signing-up to payment method management, delivery time and product upkeep, customers start to foster a relationship of trust and even to promote the brand.

Newcomers brand to the spotlight!

Beauty boxes are very well-known for getting different brands together to collaborate at a lower price point in setting up personalized skincare, makeup and bath routines for customers. 

This is very significant for smaller brands getting started in any industry because it gives them the opportunity to sell their products alongside bigger brands and get customers to see, first-hand, how the product works and if it is worth it to buy it one more time.

Easier pay and sales forecast

With a shift in customer behavior and big economic changes, customers want discounts and sellers want to sell. Subscription boxes make a point of putting a low price point for clients, while sellers can measure more accurately how much they will make on sales that month. Also, most subscription boxes work on an automatic debit collection or recurring charge on credit card, making payment easier for customers and safer for sellers, without the risk of going with no pay. 

The future of the subscription economy

For existing subscription services, businesses are still ironing out the wrinkles as they go along and are working to keep customers engaged and subscribed for the long term. 

Embrace the changes that the subscription economy can bring. This new sales model often includes innovative ways to reach audiences and keep the dialogue going beyond the initial sale. If your business thrives on nurturing customer relationships (and almost all of them do), some aspect of the subscription economy is sure to help you reach your goals.

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