The subscription system was seen as the next breakthrough of e-commerce, the combination of traditional retail experience and e-commerce convenience, and personal customization, and came into being in the DTC model of the customer-oriented, people-oriented business trend.
A new report from e-commerce industry data platforms PipeCandy and Rodeo shows that by 2023, 75% of DTC brands in the U.S. market will offer subscription-based shopping services as brands further change their operating strategies.
At least 15% of the world’s 2.14bn online shoppers are known to have signed up for a subscription e-commerce service, and subscriptions in Europe, the Middle East, and Africa have grown 25.6% in the past seven years. Around the world, many overseas DTC brands have even integrated subscriptions into their products as an essential component.
Subscription: Emerging Consumer Trends
Subscription-based is a form of transaction in which a brand offers services or delivers a specific product on a cycle-by-cycle basis after a certain fee is paid by the consumer in a lump sum.
For users, a subscription system is a new trend of consumption, which can help users reduce the cost of selection in the consumption process, and increase the quality and convenience of life.
For brands, the subscription model has one clear advantage: the compounding effect.
According to the relevant analysis, the cost of subscription mode is mainly in the early stage, and most of them are a one-time investment, as long as the user does not cancel the subscription, there will be continuous revenue. Therefore, if the user’s retention can be effectively guaranteed, the previous one-time expenditure of the cost of obtaining customers can be offset by the subsequently repeated profits.
As for the brand using DTC mode, because of the closer “distance” with the user, it can get more direct user feedback, and the user retention effect is much better than other brands.
From this perspective, the DTC brand and subscription are complementary. Four of the top five most popular subscription brands in 2018 were DTC brands, including Dollar Shave Club, Ipsy, Blue Apron, and Birchbox, according to Forbes.
It is learned that the current mainstream subscription systems are mainly in the following two forms:
01. Replenishment subscription: It is mainly used for low-value consumables, such as Dollar Shave Club shaver heads and blades.
After a one-time payment, users will receive the products regularly. The benefit of this subscription model is to help users reduce the time cost of choosing products in the consumption process, and conveniently meet their daily needs, to build user loyalty to the brand.
02. Personalized subscription: the user’s portrait is established through the user’s data, and the brand is distributed with different commodities.
A personalized subscription model will obtain the user’s needs, preferences, and other information through the inquiry, to provide personalized product series regularly (weekly, monthly, quarterly) or on demand, and even customized products.
Such as that blind dress box brand Stitch Fix. On Stitch Fix, users will be asked questions about their style preferences, while Stitch Fix will tailor personalized clothing and accessories to their answers, package them for regular delivery, and later gather feedback about the product — — a highly customized product that builds strong relationships between users and brands.
Tiles for Subscription and What are the ways to play?
Which brands are taking the lead now that subscription is so popular with the DTC brand?
- Fragrance subscription brand Scentbird
As a DTC provider of fragrance subscriptions, Scentbird aims to influence the way people use scents to express their own personal and personal feelings.
Scentbird’s discovery of dusty, expensive designer vases on display in cabinets or dressers, often referred to as “perfume graveyards,” was also an opportunity for Scentbird to change the status quo and allow consumers to buy and experience fragrances more practically. Scentbird’s work has also inspired it.
At Scentbird, users pay just $14.95 a month for an 8-milliliter bottle of sprays. Before you order, Scentbird asks you to do a perfume survey to better supply your users with the right perfume.
It is learned that Scentbird sees itself more as a platform for matching supply with demand. On the one hand, by introducing high-end branded products, and on the other hand, BAFTA is used to recommend more suitable fragrance brands to customers. On the official website of Scentbird, BAFTA matches the demand of 2.5 million active participants with an effective supply of 600+ brands, thus completing the whole transaction process.
- Pet blind box brand Barkbox
The product marketing logic of Barkbox, the blind box brand often dubbed “Bubble Mart for pets”, is fundamentally different from Bubble Mart.
Barkbox has found that its consumer base is largely focused on middle-class urban white-collar workers in their prime and busy working years. So the answer to these time-poor, time-poor consumers is to offer a “turnkey” service that will let you off the hook and not worry about what toy product to buy for your dog, as Barkbox promises to “give your dog what they want”.
Click on Barkbox’s website and you’ll be the first to ask questions about your dog’s name, size, weight, and food preferences. It’s more like a dog information registry than a subscription page, and you can ask him specific requests. Once you’ve written down your wish, Barkbox will personalize it based on the information you provide. Barkbox is known to provide about 120,000 blind boxes for different breeds of pets, depending on the size of the dog, breed, and specific allergies.
With good user feedback, Barkbox had 7.2 million subscribers in the 2022 fiscal year, and the retention rate remained above 90%, enough to prove Barkbox’s user stickiness.
- Clothing blind box brand Stitch Fix
In the Red Sea of clothing industries, countless brands are being created each year.
As the post-1990 and 2000 generations became the major consumers, their preferences, habits, and needs prompted the development of new features, and they paid more attention to personalized consumer experiences.
It is a headache for consumers to choose the one that is right for them in this ocean.
When faced with the common annoyance that makes it difficult for everyone to buy clothes, Stitch Fix helps consumers to solve just one of the most difficult aspects of shopping — — choice.
Stitch Fix uses algorithms and data more efficiently, coupled with the emotional temperature of a human stylist, to make “matching fees” by selling “blind boxes” of clothing, which The New York Times once identified as a potential start-up unicorn.
It is understood that users who make purchases from Stitch Fix will first need to fill out a detailed form containing their physical characteristics, preferred style, and shopping budget. The questions on the form are detailed to the height, weight, and even number of dates the customer has gone out, what style of jewelry he likes, and what style of clothes he wears.
Then, Stitch Fix’s matching tutors pick out clothes and accessories that fit their style and style preferences from more than 200 brands based on consumers’ questionnaires and their social profiles. Each month, Stitch Fix sends out a box containing five items that Stitch Fix believes are best for the consumer. Once a customer receives the box, they can try it on themselves at home, leaving all or part of their clothes to their liking and returning the unwanted items to Stitch Fix.
According to its 2021 annual report, Stitch Fix, a 10-year-old company with nearly 4.2 million active customers and $2.1 billion in sales, is a one-stop shop across all apparel and retail segments, serving the entire family’s shopping needs across the U.S. and Europe.
All in all, a subscription model alone is not enough to make a brand stand out. More important is the overall strength of the brand.
Scentbird, the aromatherapy brand, has captured the beauty movement with a “private made-to-order” product experience and a popular social platform to promote Scentbird, which has garnered tens of millions of dollars in funding.
Barkbox, a brand of blind boxes for pets, has chosen the economic circuit for pets, which is currently in a high fever. With the “blind box” of high fever and subscription, it has grasped the hearts of users with a user experience that exceeds expectations.
Stitch Fix, the brand of blind boxes for clothes, has deepened the use of data, flourishing in a sea of red with a combination of digitization and subscription.
With the global economy going down, many subscription brands are facing inevitable crises. The viability and sustainability of subscriptions as a business model still leaves time to test in the long run, with beauty subscription brand Birchbox laying off a quarter of its global workforce in February 2020 and Stitch Fix announcing in June 2022 that it would cut its workforce by 15%.
That said, subscription may be a way to break through, but how to hold on to your edge requires constant exploration by brands.
