E-Commerce Subscription Services Flourish As They Offer Consumers More Than Ever Before
Subscription services seem to have evolved with us. What started as a way to ensure replenishment, without the hassle, has evolved to meet changing consumer wants and needs. With the dawn of the digital age, and all the data that comes with it, there are always unmet needs and additional value to uncover and explore. With convenience being the classic draw that it is, we seem to have come full circle with the subscription business model. And business is booming.
A subscription business model offers consumers access to products or services in exchange for a reoccurring fee. With many subscription services being born online, these services still offer the same convenience as subscriptions always have, but today they are more personalised than ever. With three broad types of subscription services that cover a multitude of needs and wants, it's no wonder why the subscription e-commerce market has grown 100% over the last five years.
Types Of Subscription Services
The reason subscriptions exist in the first place. Replenishment subscriptions automate the purchase of commodity items that we are consistently needing to repurchase. The Dollar Shave Club is a perfect example of this and one of the first to be born digitally. Having launched in 2007, the company now has 3 million subscribers and was acquired by Unilever for $1 billion in 2016.
In access subscriptions, subscribers gain access to members-only perks or lower prices by paying a monthly fee. A common example of this is through access to content, such Netflix, which currently has 10 million subscribers in Australian alone. Or take for instance the car manufacturers trying on subscription services. Yes, you read that right. Several car manufacturers are adopting a subscription model similar to ride sharing platforms. Mercedes-Benz is piloting a subscription service that gives subscribers access to a different luxury vehicle every month...for monthly fee of $2,995.
The newest addition to subscription services, curation subscriptions seek to surprise and delight their customers. These companies do this by providing new products or highly personalised experiences in the form of customised food, apparel, or beauty offerings. Take Birchbox for example, where customers pay a monthly fee to receive an assortment of beauty product samples that meet their needs. Today, the company has 1 million subscribers.
What Customers Want
But which type of subscription services do consumers tend to gravitate towards more? According to a study by McKinsey, curation is the most popular subscription type, at 55% of the total subscriptions, which suggests a strong desire for personalised services. Replenishment follows closely behind at 32%, followed by access subscriptions at 13%.
With curation being a main draw in subscription services, who are the customers gravitating towards these offerings? The same study by McKinsey suggested that men value the automated purchasing that subscription services offer, with 42% of men having two or more subscriptions (compared to only 28% of women).
Online apparel subscriptions have grown as more opportunities to offer the convenience and added value of both curation and replenishment are uncovered. While women hold the majority of subscriptions, there are a growing number of apparel subscription services for men that tap into their need for replenishment while offering the variety that comes with curation.
On the Equitise platform, we've brought on a subscription service that is experiencing tremendous growth and can be categorised as both a replenishing and curated service. MANRAGS began by delivering high quality men's socks to customers every month with changing styles that reflected their preferences. In April last year, the company began offering the curated boxers to replenish drawers all over the world. And today, they are evolving to bring even more to the table. To learn more about MANRAGS and their offer, click here.
It All Boils Down To The Experience
In the realm of subscription services, no matter what a customer is looking for, there is one element that stays the same: a seamless customer experience from beginning to end that provides customers with the tangible benefits or added value that they're after. Whether it's lower prices or customised personalisation, consumers want it all with convenience.
Always remember to read the offer document and CSF general risk warning before investing.