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Remember when you were a kid, and you wished it could be your birthday every day? Or at least every week? Now that we’re adults, we need the 11-month break to recover from our kids’ parties, shopping and family gatherings.
But we can have a little birthday every month, thanks to the growing trend of subscription boxes and subscription-based shopping available to consumers.
Subscription boxes are an extension of the old ___-of-the-month club, whether it was beer, cheese or jelly. You would subscribe to the club of your choice and every month, you would receive a sampler of that month’s chosen flavor.
The new subscription box services are a variation on the same theme, but in some cases, you have a chance to send back the things you don’t like without paying for them.
For example, Trunk Club is a personal style shopping service for men and women, sending a variety of choices of new shirts, pants, and even shoes for men; tops, pants, skirts, and shoes for women. Plus jackets and accessories for both. Your stylist picks out a few items, sends them to you to try on, and you send back the ones you don’t want, and pay for the ones you keep.
Birchbox is just one of many beauty and skincare product boxes for women (they also have a service for men). Birchbox sends out samples of their products for $10 every month, and you can go online and order full-size versions of the products you liked.
Usually targeted at busy executives and professionals who don’t have the time to run to the stores and shop for themselves, the subscription boxes seek to provide services and styles geared to your own personal tastes. Like many of the services, Stitch Fix starts with a short quiz to determine what you like and don’t like, and then matches shoppers with a personal stylist who selects items based on your quiz results. As you keep and send back different items, the subscription service learns more about what you like and don’t like, and tailors your subscriptions to more closely match the things you’re likely to buy.
From socks to makeup samples, to dog and cat treats, to new works of visual art, there’s a subscription box for almost everyone. As of a year ago, Liz Cadman, founder of My Subscription Addiction, listed more than 1,500 different subscription services on her website, and she gets four or five requests to be listed from new companies every day.
The ___-of-the-month clubs haven’t gone away either. Look at Dollar Shave Club and Harry’s, two razor and shaving services for men. Every month, you receive a new razor and/or blade in the mail, reminding you to swap out razors, but they do it at a fraction of the price as the more expensive in-store brands. Barkbox sells dog treats, toys and dog food samples to dog lovers, with over 800,000 subscribers and $96 million in total sales.
All told, the subscription box industry has been growing at a rate of 200 percent a year for the last five years, and the industry shows no signs of slowing. Venture capitalists are certainly jumping on the bandwagon as well. Birchbox, which started in 2010, has raised more than $70 million in VC funding, while Blue Apron, a company that sends recipes and ingredients every month, is valued at $2 billion, as much as some high-value tech companies.
Large retailers are taking notice of this growing retail channel and beginning to make inroads. For example, Walmart now offers subscription boxes for beauty and baby. It’s no wonder, as these small businesses are garnering not only walletshare, but also significant customer loyalty and attention on social media.
In a recent article in Fortune, Sharmila Chatterjee, academic head for the Enterprise Management Track at the MIT Sloan School of Management, said companies need superb marketing capabilities to identify heterogeneous customers, and have “phenomenal logistics and supply-chain management,” as well as be able to operate efficiently, given the low margins in the subscription box world. Something the big box retailers already know how to do, which makes subscription boxes a strong fit for the retail giants.
This will be an interesting category to watch in the months and years to come. It’s another way retail is using new fulfillment and marketing strategies to entice shoppers, and for those who do it well, there is profit to made.