From meals to shaving products, subscription boxes aim to offer customers quality, niche products at great convenience.
So how is the market changing post-pandemic? Read on for our guide.
The subscription box market
Lockdown caused the subscription box concept to accelerate: at the height of the pandemic, the Royal Mail estimated the UK market at £1.4bn, a 135% increase from 2017. It forecasts a further rise to £1.8bn by 2025.
Meal boxes were a big winner, with Gousto sales rising to £189 million in 2020 against £83 million in 2019. And with 55% of subscribers saying they wanted to treat themselves, boxes of beauty products or chocolates also proved popular. In 2021, 81% of households were signed up to at least one box, up from 65% in 2020.
But now we’re returning to our workplaces and the shops, we are no longer at home to receive deliveries. And some industry experts are sounding a note of caution, pointing to the high churn rates and customer acquisition costs of box schemes.
So how can brands adopt the model? Here are a few trends that we envisage for 2022 and beyond.
- Added value
Research from Barclaycard Payments found that 54% of customers cite good value as a key factor for subscription boxes.
Inserts can increase loyalty and discount codes can push your customers back to your website. Simple cards with information about your products help too, even a QR code is another touch point for your customer.
Cory Munchbach of customer data platform BlueConic told Retail Gazette: “Ultimately, they are only viable if retailers can continue to keep adding value.” He says that retailers should glean data from all their marketing channels before entering the market.
- Flexible contract
According to Barclaycard’s survey, 36% of existing customers want flexible contracts, and 38% want straightforward opt-out processes. Among non-subscribers, 41% cite reluctance to be locked into a contract.
Will your customer cancel through a simple form on your website, or will they have to ring up customer care? Getting this right might mean they come back to your brand once circumstances change.
Allowing customers to reduce the frequency of deliveries will ensure your subscriptions are flexible too.
Finding ways to keep business steady while offering customers flexibility will be key for brands in 2022.
Daniella Peri of Yoppie, which provides period care products, says the subscription lifestyle trend “offers a far more personal experience with many providers providing a great deal of personalisation, and this is something that resonates with the modern consumer.”
Gousto cites its wide variety of meal choices and range of delivery options as key to its competitive advantage.
So, how do you personalise your subscription? Your customer can select their preferences when they sign up, gathering data about them will help too. For example, knowing your customer is a middle aged woman with sensitive skin will enable you to personalise your products. However, don’t spread yourself too thin. Keep your personalisation simple and effective, cut your customer groups down as little as possible.
- Major retailers and partnerships
So far, there have been low barriers to entry into the subscription box market, making it ripe for start-ups.
However, major retailers are now launching their own services. Multinational cosmetics store Sephora, for example, offers beauty boxes that rival those from Birchbox and other brands.
Some subscription brands have partnered with retailers, e.g. Graze snack boxes are now sold in supermarkets. But others risk being muscled out by the big names.
So, is it better to get your product included in one of these big-named boxes? Alternatively, find a niche gap in the market and fill it. Once you are established you can then grow your offering.
- Rising sectors
While food is the most popular subscription box sector (31% of the market), the second is startling: shaving products, accounting for 24%.
Subscriptions of male grooming products rose by 108% between 2017 and 2020, and are forecast to grow to £86 million by 2022.
Further popular categories are clothing (22%), perfumes and cosmetics (18%), and pet products (14%).
So, if you don’t think there is an audience for a subscription box of your product, do your research, you might be surprised.
- Improved infrastructure
Experts interviewed by Retail Gazette stress the importance of having the infrastructure in place to manage large-scale online ordering, supply chains, warehousing, and delivery. Be on the lookout for tell-tale signs for when you start to outgrow your warehouse or current 3PL supplier; are products shipping out late? Are wrong products often sent out? We have created a separate article with some tops tips for when it’s time to move.
Gousto points to its automated factory as a key factor in its success. Like Linney, 3PL suppliers and bigger businesses often have automated systems for picking (and occasionally packing). These huge robots are highly accurate and give greater stock security.
As concerns about sustainability rise, brands are seeking to reduce waste and cut energy usage, so shout about your credentials online and in the subscription box itself. Just be aware of ‘greenwashing’- be sure to put your money where your mouth is and become a market leader.
Sustainable packaging is now becoming expected, paper packing and recyclable tape are increasing in popularity.
Another approach is to reduce consumption by allowing customers to rent rather than buy. LK Bennett and Marks and Spencer, for example, now offer clothing rental service subscriptions.
- Better packaging
So there’s no need to trudge to the sorting office after your long day at work – just sit back and enjoy your treats!
Here is where you might need an experienced packaging partner for potentially technical designs. Fitting weirdly shaped products into a letterbox- shaped hole securely is an artform. However, the effort is worth the great marketing angle!
Linney – your full-scale partner
The subscription box model presents a range of challenges and opportunities to brands.
Linney offers design, marketing, packaging, warehousing and fulfilment services to give your subscription boxes a competitive edge. Contact us today to discuss working together.