Subscriptions are as old as the Wall Street Journal, but subscriptions today have taken on a whole new meaning. Monthly subscription boxes are delivering products to consumers’ doorsteps once a month that are tailored directly to their interests. Boxes for your dog, boxes for your skin, boxes for your husband, boxes for your knitting hobby … there is a box for everything these days and businesses nationwide are starting to take notice of these monthly subscriptions and what they can bring to businesses and consumers alike.
The concept behind boxes-of-the-month is simple: consumers receive a monthly delivery to their doorstep of whatever they are interested in. It’s online shopping with an element of surprise, as well as the possibility to discover something new in a convenient way. Think of it as an appetizer sampler platter delivered monthly to your doorstep.
There are several different ways that companies are approaching the box-of-the-month. With some, the box is a complete surprise as consumers simply sign-up and the company decides what products are sent (i.e. Bulu Box). With other subscriptions, the box is a customized surprise, meaning consumers are asked to fill out their preferences upfront so the business can tailor the products to each specific client (i.e. Birchbox). Some businesses allow subscribers to choose their products each month (i.e. Nature Box), while others create one box a month, but let consumers see what the box offers before they subscribe that month (i.e. Club Yandy). Many boxes, particularly in the fashion realm, send subscribers several items a month that they can either purchase or send back within a certain timeframe (i.e Stitchfix). The types of boxes available are endless, as are the time limits on subscriptions – some are annual with no option to cancel while others are six months, three months or even month-to-month.
Boxes-of-the-month began in September 2010 with the launch of Birchbox, a women’s cosmetics box that delivers samples from skincare to makeup directly to your door. Since then, many start-up companies have modeled their business after Birchbox’s success, now making anything and everything a monthly box subscription. Boxes range from $10-$100/month, and there are currently 400-600 box services in the United States alone.
The Consumer Perspective
While some consumers see send-a-box as Christmas once a month, others see it as a waste of money. Some consumer reviews show that recipients don’t feel the boxes are designed specifically for them, even with companies like Birchbox where consumer preferences are provided with the intention of each box being tailored to individual people. With Stitchbox, subscribers pay a monthly membership fee and they receive five clothing items per month based on a fashion survey filled out by the subscriber with style, preferences and sizes. If the subscriber ends up purchasing one of the five items, the membership fee is waived; however, if nothing is purchased from the box, the membership fee is still charged and everything must be postmarked and returned within 48 hours of receipt. Reviews on this type of box are split – some consumers love the box because it provides them with items they normally would not pick out on their own, forcing them out of their comfort zone. But on the other hand, some reviews state that the items sent were not their style and it has ended up being a waste of money.
The Business Perspective
From a business perspective, subscription boxes can provide recurring revenue, give consumers a push to try something new as well as allow companies to glean personal data from subscribers, helping with market research and product development. One way revenue continues to flow in is through consumers that want to unsubscribe but are too lazy to, or don’t have time to hit the unsubscribe button. Additionally, these subscriptions are a revenue home run because they cater to all demographics, including those on a tight budget because trendy and designer products for a small fee each month seems like a deal.
So how are subscription boxes doing in the market? CNNmoney.com provides some telling statistics in an article titled “The Send-a-Box Boom.” The article reveals that Quarterly.com, which launched in November of 2011, doubled in size every six months. NatureBox’s subscriber base has grown by 50%-100% every month since it launched in January 2012. BarkBox has gone from 1,500 to 55,000 subscribers in one year. These statistics alone show that these monthly subscriptions aren’t going anywhere anytime soon, and perhaps we are just on the cusp of where these subscriptions can go.
The Bottom Line
The bottom line with boxes-of-the-month is know your demographic. In “The Subscription Box-Model Goes Local” article on Inc.com, Marshal Cohen, chief industry analyst of The NPD Group, states that “The key to recognize is that the consumer loves to buy within their lifestyle. It’s the only way to buy a gift for yourself without knowing what the gift is going to be.” But at the end of the day, while boxes of the month work for some, it seems they don’t work for all. Whatever the case may be, experts in the industry are backing this concept with the thought that subscription boxes provide recurring revenue and product discovery. Plus, it’s the gift that keeps on giving!