As a retailer, you know how finicky customers can be, but you also understand why when you go home and become an everyday consumer of goods and services.
At home, you angle for the best deals. You develop affinities for certain stores and brands, then fall out of love with them. You listen to peers’ experiences, research your purchases, visit stores, shop online, pick up in store, order at kiosks, and use apps.
And, if you’re like 16% of people surveyed recently by RetailMeNot, you buy items through subscription services. Another 34% of respondents said they will use a subscription service in the future, suggesting that half of those surveyed have their eye on goods-by-subscription.
That gets our attention! How about you?
We’re not talking about newspapers and magazines here, or even Netflix. No, these subscription services often include typical retail items like lotion, shoes, and groceries. It’s one more way that consumer behavior is impacting corner grocers, pet shops, and even toy stores.
What is Subscription Ecommerce?
It’s really pretty simple. You make a recurring payment in exchange for some kind of ongoing service or auto-ship of a product. Subscriptions usually satisfy your craving for one of three experiences:
1. Discovery. What’s new, better, different? These subscription boxes cater to categories of consumers who like to sample curated products without searching them out. Let’s say you’re a car buff. It’s easy to find several companies who will send you a variety of samples of new care culture gear every month.
2. Convenience. What could be better than setting up the automatic replenishment of products you buy anyway, delivered just when you need them? No more running out of diapers, razor blades, or laundry detergent as long as you use them at your usual rate. No more wasted space to store more than you need.
3. Latest-and-Greatest. Up-to-date is empowering! While this may overlap with other subscription experiences (think fashion), it also stands on its own. If you use Microsoft Office 365 or Adobe Creative Cloud, this SAAS (Software as a Service) subscription takes the place of your ordering boxed software as new versions are released.
It’s not hard to see how any of these subscription-based models of delivering consumer goods and services can impact the traditional retail model. It’s one more way that e-commerce has wormed its way into the retail marketplace.
What are some examples of Subscription E-commerce?
Subscription box and shipment programs come in all shapes and sizes. Here are just a few examples of the various ways they can work.
Dollar Shave Club (grooming)
Your first box includes trial sizes you select. A restock box of full-size versions arrives two weeks later. You adjust future boxes to add or remove products and change shipment frequency. Visit Dollar Shave Club.
Kiwi Crate (child education)
You choose a level based on your child’s age, and a new science and art project is delivered each month. Kids build toys and learn at the same time, with levels that lead from explore and discover to engineering and design. Visit Kiwi Crate.
You take a style quiz to set up your preferences. You gain access to a personalized showroom of shoes each month, to purchase a VIP-discounted product or a credit toward a future purchase. Visit Shoedazzle.
Birchbox (beauty, grooming)
Based on the profile you enter, you receive a mix of prestige and niche brand samples. Ordering full size versions leads to loyalty point discounts in their online shop. The Birchbox+Walgreens program also makes their products available in certain Walgreens locations. Visit Birchbox.
Daily Harvest (healthy foods)
Customize your plan with chef-crafted food cups in various sizes, built on organic fruits and vegetables. Choose a weekly or monthly plan to receive what you need for smoothies, harvest bowls, or soups. Visit Daily Harvest.
Chewy (pet needs)
You can set up orders for just about any pet-related product: multiple brands of food, medications, litter, toys, and more. Auto-ship offers discounts in many cases. Visit Chewy.
Bean Box (coffee)
You choose either the bean box sampler or coffee of the month, then your roast preference. This monthly product seems to be popular for gift-giving as well as personal use. Visit Bean Box.
Stitch Fix (clothing)
You fill out your style, size and price preference, then request a delivery to your door (no subscription required). Buy what you like and send back the rest with free shipping both ways. Visit Stitch Fix.
Amazon (of course)
Amazon offers a subscription-delivery discount option on thousands of products. Visit Amazon Subscribe&Save.
In addition, traditional retailers such as Staples, Target, The Vitamin Shoppe, and others have joined the subscription e-commerce wave to make a wide variety of everyday items available with an auto-ship discount through their websites.
How might Subscription E-commerce HURT retailers?
Maybe “hurt” is too strong a word. Let’s just say, “What challenges does subscription e-commerce present to traditional retailers today?”
Convenience subscriptions eliminate the need for consumers to stop and make a new purchasing decision each time they run out of a product. They don’t run out. They bypass your store altogether – and your online commerce site as well.
In that case, you miss more than the sale of that product. You also miss any chance for impulse or add-on sales. If they don’t come through your door, they can’t see your specials. If they don’t visit your site, they can’t see complementary products you might suggest.
Another challenge is that discovery subscriptions may be used by companies to sample shoppers with their own proprietary brands, introducing them to product lines you can’t offer.
Finally, convenience subscriptions set up autopilot thinking for shoppers, who assume that the deal offered by their supplier when they signed up is still the best deal out there. That can make it very hard to win back business, no matter how well your new promotion stacks up.
How might Subscription E-commerce HELP retailers?
Thank goodness, the news about subscription e-commerce is not all bad for retailers. In fact, these services can actually do some good work for you.
One way is to jump on the subscription box bandwagon yourself. That gives you access to the same competitive advantage that subscription services bring to the rest of the marketplace:
Sign up ongoing sales to your own business with auto-replenish services. Use discovery boxes to sample your own house brands to customers who willingly hand over their personal preferences. Then use those profiles to craft permission-based email promotions that target customer and product categories. Don’t forget to employ important influencers in the subscription box space – bloggers, etc. – to promote what you offer.
But you can also ride on others’ discovery boxes, in a sense. Some companies provide widely-available brands in their subscriptions. That means that shoppers may happen on brands you carry – and they have to buy those someplace. It might as well be you.
A new frontier
It looks like the e-commerce subscription model for consumer goods and services has captured shoppers’ interest in a big way. It brings both challenges and opportunities.
In the end, it’s just one more way to satisfy customers, build loyalty, and win business – the very things that have made you successful so far.